Short Stock Candidates – Bearish Candle Clusters

By | July 2, 2018

These charts all have a similar price pattern: a rally move off the May low and consolidation of those gains over the last two weeks.

A period of consolidation after a move higher is usually a constructive continuation process that leads to a resumption of the trend. That might not be the case with the four stocks presented on the chart.

While these stocks, Mendelez International (MDLZ), Dunkin’ Brands (DNKN), Career Education (CECO), and Discovery (DISCK) have all been under consolidation, in the process they have also formed a series of high wick or long upper shadow candles.

High wick candles, like shooting stars or gravestone dojis, represent an inability of the stock to hold in its upper range. Repeated and failed attempts to advance form high wick clusters. The implication is that either more consolidation is needed before an continuation of the primary trend or the stock needs to pullback.

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