Gaps, from James Sogi

June 18, 2007 |

 In his book, Beyond Candlesticks, Nison says, "The Japanese emphasize the number three. …[T]he Japanese view a market that has had three rising or falling windows in a row as a market that has reached maturity."

Nison refers to a book written in the mid-1700s entitled, The Fountain of Gold - The Three Monkey Record of Money. They refer to the yin and yang, yang being bullish, yin bearish. From the book, "When yang movement reaches an extreme, there is stillness. This stillness gives rise to yin." Nison recommends waiting for confirmation with a bearish movement.

The Sept S&P mini futures has had four gap ups in a row and two weeks ago three down gaps in a row. Today's low range market could easily be called stillness. The candlestick patterns have interesting names and history and are a fun source of ideas for testing. Time will soon tell whether these ideas have any merit or predictive properties.


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