What happens when you wish upon a falling or shooting star?
Legend suggests that wishing upon a shooting star makes the wish come true. Some believe it originated in ancient Greece around the 2nd century AD when Greek astronomer Ptolemy theorized that shooting stars represent a symbol of the gods looking down upon the earth. By making a wish upon seeing a shooting star would be heard and granted by the gods. Interestingly, the tradition of making a wish by blowing out the candles on a birthday cake originated from the ancient Greeks.
What if you tell someone your shooting star wishes?
By telling someone your wish, it is less likely to come true. While stargazing, it is best to look for a bright or shooting star. Make a wish in your head, or say it out loud when nobody else is around.
What is a shooting star candlestick?
According to Japanese Candlestick charting, a shooting star is a bearish candlestick pattern with a long upper shadow, little or no lower shadow, and a small body near the day’s low.
It is a reliable and effective candlestick pattern signaling an impending price reversal. The reversal pattern typically occurs in an uptrend when a price rallies sharply but then fails and closes near the open price.
The formation is one of the more bearish candlestick reversals, denoting sellers overwhelming the buyers, as evidenced by the price declining near the open. The open, low, and close also hover near the bottom of the candle. Upon confirmation, it warns of a potential price top and the start of a bearish reversal of an existing uptrend.
The days after the shooting star is crucial to deciding the next directional price trend. When the price declines during the next trading session, it warns of selling tendencies in the days ahead. When the price rises the day after a shooting star, it may have been a false signal that needs further investigation (more market actions).
With the last FOMC of the year, it will likely be another volatile week. Nonetheless, it is interesting that shooting stars developed in a few market indexes late last week (12/9/22), including the S&P 500 Index (SPX), Nasdaq Composite Index (COMPQ), and Nasdaq 100 Index (NDX).
Does this imply the 10/13/22 oversold rally has come to an end?
If so, does this warn of the resumption of the primary downtrend?
Or is this a false signal and a consolidation within an ongoing 10/13/22 oversold rally?
The days following the shooting star formation are crucial to substantiate the reversal. On the SPX daily chart, initial support converges near 3,906.54-3,918.39, coinciding with the 11/17 and 12/6/22 lows or the neckline support of a potential 1-month head and shoulders top.
Additional support is also visible near the 38.2% retracement (3,868) from the 10/13 to 12/1/22 rally, the 50-day ma (3,848.5), and the 11/10/22 gap-up (3,818-3,860).
Since the height of a potential 1-month head/shoulders top pattern is 193.97 points, violation of the neckline renders an SPX downside projection of 3,712.5, or a retest of the 11/3 and 11/9/22 higher lows (3,698/3,744), and the 61.8% retracement (3,724).
On the upside, a right shoulder has yet to develop, suggesting an incomplete head and shoulders top that needs time to decide the outcome.
Negating the head/shoulders top would allow for the resumption of the 10/13/22 oversold rally. However, SPX first needs to surge above the left shoulders at 4,029-4,034 (11/15 and 11/25/22 highs). It must also clear its 200-day ma at 4,035.5 and breakout above the head or the 12/1/22 high at 4,100.51 (12/1/22 high).
A breakout above 4,100.51 suggests +193.97 points for an SPX target of 4,294.5, or near the 8/16/22 reaction high of 4,325.28.