Big Up Day Tomorrow 3-4-08

[MKTrader]

Also, a large daily range and/or large volume give a hammer better odds. Some market lore surrounding hammers, like the necessity of a tiny upper shadow, is bunk. Extensive backtesting has shown that hammers with a moderate shadow fare much better.

While today's hammer didn't close above the open, it does look a bit stronger than Monday's based on volume (strong) and range (Ok, but nothing special).

Quote from Landis82:

For what it's worth . . .

The reliability of Bullish Hammer Pattern is low. It requires confirmation of the implied trend reversal by a white candlestick, a large gap up or a higher close on the next trading day.

If the hammer is characterized by a close above the open thus causing a white body, the situation looks even better for the bulls.

The Bullish Dragonfly Doji pattern is generally considered more bullish than the Bullish Hammer Pattern and a higher reliability is ascribed to this Doji than the Bullish Hammer Pattern.

Notice that the original poster never even described whether or not the "hammer" the other day was characterized by a close above the open, thus causing a white body.

 

[Aaron Copland]

I think buying these tails at support in an oversold market is a good risk reward set up. Maybe you want to wait for conformation with an up day, and maybe you don’t thats trading. Just use stops and put on a trade.

 

[MKTrader]

I don't know. It seems everyone is convinced that we're going to have another "leg down" and create new lows before things turn around for stocks. So far this week, the market has had a different plan.

When you start hearing something like "another leg down" everywhere (ET, Youtube videos by "expert" TA guys, financial press, etc.), be very skeptical...

Quote from ganesh6:

Double hammer -> Double trouble ?

 

[ammo]

Quote from Aaron Copland:

I think buying these tails at support in an oversold market is a good risk reward set up. Maybe you want to wait for conformation with an up day, and maybe you don’t thats trading. Just use stops and put on a trade.

theres a similar pattern on this chart on 11/1