When Candlesticks Cast Long Shadows by Sharon Yamanaka
Not all candlestick patterns are statistically significant. Some, such as the various stars, hammers, and hanging men, occur too frequently, in all possible places: in the beginning, middle, and end of stocks trading in trends and ranges. But sometimes even these candlestick patterns can be useful.
S uddenly, everybody was my friend. I had just bought
some Krispy Kremes — not the stock, but the doughnuts themselves — and was being mobbed as I walked through the Las Vegas airport with the half-empty box. Even the woman at the Ethel M’s counter looked as though she would trade a couple of truffles for a raspberry glazed. Who would have ever thought you could scalp a doughnut? And
with a product like that, who can resist the stock?
This was the beginning of my interest in Krispy Kreme. And this is how you can use the hammer, hanging man, and spinning top candlestick patterns — formations with long shadows, short bodies, and little statistical significance — to your advantage.