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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. He may be reached at

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Bulkowski's Spikes or Tails

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/24/2017
21,513 -66.90 -0.3%
9,428 -43.07 -0.5%
719 -6.46 -0.9%
6,411 23.06 0.4%
2,470 -2.63 -0.1%
YTD
8.9%
4.2%
9.0%
19.1%
10.3%
Tom's Targets    Overview: 07/14/2017
21,850 or 21,000 by 08/01/2017
9,950 or 9,400 by 08/01/2017
740 or 685 by 08/01/2017
6,450 or 6,175 by 08/01/2017
2,525 or 2,400 by 08/01/2017

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My book, Getting Started in Chart Patterns, Second EditionGetting Started in Chart Patterns, Second Edition book., pictured on the left, has a section titled, "Spikes and Tails," starting on page 212, that may interest you.

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Spikes, or tails as they are sometimes called, represent short-term price turning points. Bullish spikes plunge downward and are more reliable than those that tower upward. This may be due to the upward bias the stock market has shown over time (for proof, look at the price of the Dow in the 1920s -- it was below 400).

 

 

Spikes or tails chart pattern

Spikes or Tails Chart Pattern

Spikes or Tails: Identification Guidelines

CharacteristicDiscussion
Price trendCan be any direction leading to the pattern, but is usually in the direction of the spike (downward for bullish spikes, upward for bearish spikes).
ShapeA tall price move with the closing price near the base of the spike.
Closing priceFor upward spikes, the close should be near the intraday low. For downward spikes, the close should be near the intraday high.
VolumeUsually heavy.
Bullish spikePrice spikes downward before closing near the intraday high. Price often represents a low turning point.
Bearish spikePrice spikes upward but closes near the intraday low. Price often forms a peak but usually does not represent a major or sustained turning point.
Wait a dayWait a day to be sure that the price spike stands alone like the above picture shows.
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Spikes or Tails: Trading Tips

Trading TacticExplanation
Upward spikeFor swing traders, expect a downward price swing. The turn may not last long, however.
Downward spikeDownward spikes represent more reliable price turning points than do upward ones. Buy once it's clear the spike or tail stands alone like a tall pine tree on a barren hill (that is, if you can imagine the hill and tree upside down).
Short termBoth upward and downward price spikes usually represent short-term turning points. Thus, don't expect price to make a major and lasting trend change.
CautionBe cautious with spikes where the close is not near the intraday low (upward spike) or high (downward spike).

-- Thomas Bulkowski

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Other Spikes or Tails Examples

  • Tail in the Nasdaq composite, Jan 2010 (near end of post)

See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. I like you, but I wouldn't want to see you working with sub-atomic particles.