A Troublesome Outlook for Stocks SPY on 1 Month. In the last 12 Years we have seen 8+ Corrections Occur after a Doji Candle has formed on the One Month Chart. According to Investopedia "A doji candlestick forms when a security's open and close are virtually equal for the given time period and generally signals a reversal pattern for technical analysts." I have pin pointed 12 moments in the past 12 years where these candle formations have lead to a correction. (Not all Doji candles are perfect, the main detail I am looking for is an Open and Close that are virtually equal) All percentages were tallied at close of each month not wick.
October, 2007
% Lost: 53%
On October, 2007 a Green Doji Candle Formed, after that candle formed a green candle didn't form for the next 5 months, and the market fell over 50% for the next year and a 1/2.
April, 2010
% Lost: 16%
On April, 2010 a Green Doji Candle Formed, over the next 2 months the market saw a major correction of 16%. Now what is different about this correction compared to the 2008 crash is that volume was below the average at least 3 months prior. AVG 5.7B, ACT 3.9B. Now this is a trend we will see prior to the corrections in the future.
April, 2011
% Lost: 18%
On April, 2011 a Red Doji Candle formed, over the next 4 months the market fell 18%. The Volume 3 months prior was below the average, AVG 4B, ACT 2B. A new trend that we will see from here on out is that the bottom occurs around the 55 EMA line.
April, 2012
% Lost: 9%
April 20, 2012 a Red Doji Candle formed, over the next month the market fell 9% right around to the 55 EMA. The Volume 3 months prior was AVG 4.2, ACT 3B. Below Average.
April, May, July, 2015
%Lost: 10%
These 3 months each had a Green Doji candle leading up to a market correction of 10%. Which Lasted 7 Months, and two wicks ended around the 55 EMA. The volume was below the average at AVG 2.3B, ACT 1.9B.
September, 2018
% Lost 15%
On September, 2018 a Green Doji formed, for the next 4 months after the market fell 15%, and a wick landed right around the 55 EMA. The Volume 3 Months before was AVG 1.6B, ACT 1.3B.
January, 2020
% Lost 23%
On January 2020 a Red Doji formed, over the next 3 months the market fell 23%, and closed on the 55 EMA. At its peak the market fell 33%. 3 Months prior the Volume was below average Rectangle
Future Outlook:
The Last Two Months have been shaping up like the 7 corrections previously stated. 4 out of the last 5 months have been below average AVG 1.8B, ACT 1B. with TWO GREEN DOJI CANDLES FORMING. Not to mention the Market going up 40% in the last 15 month, Rates Expected to raise soon, Inflation expectations increased drastically, the Fed Artificially Stimulating the market (possibly easing up soon), 6 Trillion+ being printed in one year (possible 3 trillion more soon) Things are not looking good for the stock market. We all need to face the fact that a stock market crash/correction is coming.
The average of the last 7 Doji Corrections is 14%. If The SPY drops 14% it will go to $360.
The Last 6 Corrections have ended on or near the 55 EMA. if the SPY falls that far, it will fall around 28% to $303.
Only time will be able to tell what happens next, but things are not looking good. What do you think.
