Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30 years of stock market experience and widely regarded as a leading expert on chart patterns. His books, including the best selling Encyclopedia of Chart Patterns, have been translated into many languages. He may be reached at

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Bulkowski's White Spinning Top

Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P 500 (^GSPC):

As of 05/23/2013

15,295 -12.67 -0.1%

6,430 13.53 0.2%

505 -2.95 -0.6%

3,459 -3.88 -0.1%

1,651 -4.84 -0.3%

YTD

16.7%

21.2%

11.3%

14.6%

15.7%

Tom's Targets Overview: 05/14/2013

15,500 or 14,850 by 06/01/2013

6,750 or 6,200 by 06/01/2013

525 or 490 by 06/01/2013

3,600 or 3,300 by 06/01/2013

1,700 or 1,600 by 06/01/2013

Test Portfolios and CPI

Indus. strength: -1.0%

Mutt Losers: 5.1%

Mutt Winners: -0.7%

Wilder RSI: 26.7%

CPI:

on 05/22/2013

In my book, Encyclopedia of Candlestick Charts, pictured on the right, I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines in the tests.

The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines, performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators), and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy by clicking on the above link.

The white spinning top acts randomly. Thus, you cannot tell ahead of time which way price will breakout. Its frequency ranks second only to the black spinning top and that means it is as prolific as bugs in your garden. Overall performance ranks a distant 69, where 1 is best out of 103 candlestick patterns. Once price breaks out (a close above the top or below the bottom of the spinning top) it does not trend far before reversing. I really do not see any benefit to this candle.

Important Results

Discussion

Identification Guidelines

Three Trading Tidbits

Example

White Spinning Top: Important Results

Theoretical performance: Indecision

Tested performance: Reversal 50% of the time

Frequency rank: 2

Overall performance rank: 69

Best percentage meeting price target: 83% (bull market, up breakout)

Best average move in 10 days: -3.63% (bear market, down breakout)

Best 10-day performance rank: 58 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

White Spinning Top

White Spinning Top: Discussion

The white spinning top is an unremarkable candle, so let me tell you about it (that's a joke). It has a small white body but tall shadows and it acts randomly. That means the breakout can be with or against the prevailing price trend equally.

The best average move 10 days after a breakout is a drop of 3.63% in a bear market. A good move would be 6%, so the white spinning top falls well short of that.

White Spinning Top: Identification Guidelines

Characteristic	Discussion
Number of candle lines	One.
Price trend leading to the pattern	None required.
Configuration	Look for a small white bodied candle with tall shadows.

White Spinning Top: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

White spinning top candles that appear within a third of the yearly low perform best -- page 705.
White spinning tops with shadows taller than the median outperform those shorter than the median -- page 706.
Volume gives performance clues -- page 706.

White Spinning Top: Example

Black and white spinning top candlesticks on the daily scale

The chart shows black and white spinning tops on the daily scale. The candle at A is a black spinning top because the body is black, small, and the candle has shadows taller than the body. This one occurs in a downward price trend, but the breakout is upward. Thus, it acts as a reversal. And a breakout occurs when price closes either above the top or below the bottom of the candlestick.

Candle B is a white spinning top that appears in an upward price trend. Notice the small white body and tall upper and lower shadows. Price breaks out upward from this spinning top two days later, meaning the spinner acted as a continuation of the up trend.

Candles C, D, and E are also black spinning tops. Candles C and E act as continuations of the downward price trend whereas candle D is a reversal. Price enters and exits the candle from the top.

-- Thomas Bulkowski