Kicker Signals
The Kicker Signal is one of the most powerful Candlestick signals. This is due to the
signal having a gap built into it. In some cases the gap is very obvious. In other cases the
gap is not always recognized by investors.
As described in Mr. Bigalow’s book “Profitable Candlestick Trading”, the Kicker Signal
dramatically illustrates investor sentiment has changed. This is usually the result of a
major news announcement occurring overnight. The result of this signal is highly
predictable. The trend is now going to go in the opposite direction. And with enough
force to make it always a worthwhile trade.
The description of a Kicker Signal is that the first day of the signal opens and then
proceeds to trade in a specific direction for the rest of the day. The second day opens at
the same level as the open of the previous day. It then proceeds to trade in the opposite
direction of the previous day. On charts other that Candlesticks, it is difficult to see that
there was a definite change of investor sentiment. The two different-colored bodies of the
Candles make it clear the opposite camp has taken over between the bulls and the bears.
The gap when the candles open at the same level is not always recognized in this chart
pattern. The fact that the open on the second day is back at the open of the previous day
means it has already moved from where the price closed that day back up to the open.
The bullish signal is very clear in the Cigna Corporation chart, Figure 29. Not only is the
direction completely reversed, it gapped up with enough strength so that there should be
no doubt that the trend is not going to go higher.
This will also elicit the “chasing a stock” response from most investors. If you know what
this type of move represents, you should have no fear of buying at those higher prices.
Figure 29 – Cigna Corporation
The visual interpretation of the chart is clear. The trend was definitely down. The news
announcement was apparently completely unexpected and very favorable for the
company. Will prices go straight up after a Kicker Signal? Not necessarily, but it is
advisable to sit through whatever waffling may occur after the signal. The signal itself
depicts a strong change in investor sentiment. Sometimes that change of trend may have
to sop up the opposite stock before the trend gets to proceed.
Figure 30 – Gemstar TV Guide Intl. Inc.
The observant investor can easily locate the Kicker Signal. TC2000 has very easy search
programs that can be formulated and implemented. (See how to subscribe to TCNet on
our website, www.candlestickforum.com ) The trader would be well-advised to search
for Kicker Signal formations every day.
As seen in the Gemstar TV Guide Intl. Inc. chart, Figure 31, the Kicker Signal, although
small, did change the trend direction. As professed by the Japanese about the Doji,
always pay attention when you see it. The same should be said for the Kicker Signal,
always take notice of this formation.
Note in Figure 32 – ISIL, Intersil Corporation, had a close semblance to a Kicker Signal.
Despite the open not being at the exact identical open, the fact that the price gapped back
up to almost the same opening price was warranted by the strong buying through the
remainder of the day.
Figure 33 – Coca-Cola Corporation
The Kicker Signal is as effective to show inordinate selling as it does buying. Note in
Figure 33, Coca-Cola, the signal is formed by the gap down from the previous close to
open at that candle’s open and go the other way. Again, this would not be as clearly
defined on a Western Bar chart. The opposite colors and the opposite direction are better
seen on the Candlestick chart.
Kicker Signals do not occur very often. But when they do, they will add great value to
your portfolio. Having the faith that a gap in the opposite direction is not something to be
afraid of but something to be exploited will multiply your earnings many fold. The fact
that a price has already moved 5%, 10%, 15% in the other direction should not be a
reason to refuse to get into a position. The move should be the impetus for getting into
the position. The trend changed and moved dramatically in the other direction for a
reason. Buy the stock. Get rid of the investment psychology that you want to buy the
position if it pulls back to let you in. That is the exact opposite of why you want to get
into a position. Buy the position because you saw that the buyers are in with full force.
You want to be in that run.
Summary
Gaps have always played an important part in technical analysis. The movement away
from the previous trading range signifies an extraordinary shift in investor sentiment.
This shift can be more in the same direction as well as a complete reversal of the existing
trend. Most important is that a gap has many ramifications. As illustrated in the book,
gaps identify the force that can start a strong rally, or it can signify that final gasp of
enthusiasm. The Japanese observed these movements over hundreds of years and
accurately identified the results when combined with the signals.
With today’s computer capabilities, it is easy to do searches that specifically track
gapping situations. Investing in these situations alone can make for a high-profit trading
program. Putting the probabilities heavily in our favor, using Candlestick signals to
identify a direction and a gap demonstrating inordinate force, will provide a source of
profitable trades that no investment advisor is capable of doing. Most investors search
years for an advisor, broker, newsletter, or guru that will lead them to consistently
profitable trades. The well-versed Candlestick investor has a constant treasure trove for
generating big profits. These are not hidden secrets. Yet, the combination of these
investment tools have not been utilized by most investors. Having the backup of centuries
of actual participation in this profitable combination takes the guesswork out of
investment decisions.
The Candlestick Forum, distinguishes itself from other
Candlestick sites by enlightening investors to the actual implementation of profitable
Candlestick trading strategies. Our soon to be published “Formulas for Major Signals
Using TC2000” will describe how to develop your own search programs using the
effective TC2000 search software. When able to do your own searches, the formulation
of gap searches will put you in charts that have a strong move capability.
Isn’t that the foremost purpose for your investment plan, finding the best possible places
to put your funds? Remember, these signals, formations, and philosophy are not the
results of some quick, thrown-together back-tested investment program. The investment
concepts portrayed in this book are the results of hundreds of years of visual observations
confirmed with actual profitable experience. Once you have observed the results of a gap
up discovered by your search, you will lose past thought processes such as “it is not wise
to chase a stock”. A gap up is the indication that a new trend may be starting when it
occurs at the bottom. It also warns the investor when the exhaustion buying is occurring,
showing the end of the trend.
You can exploit profits that the common investor will shy away from. You will find
profitable trades that most investors do not fully understand. Your wealth will be
multiplied by common sense placement of funds, the same opportunities that the rest of
the investment community has been advised to avoid. You have this knowledge. Use it. If
you are a member of the Candlestick Forum, utilize the expertise of the staff.
