A Look At DIA, QQQQ, And SPY: Dojis At The Highs

All three major US Stock Market Indexes - along with their respective ETFs - have formed two dojis in a row above their upper Bollinger Bands.  While this certainly doesn’t guarantee a reversal, it’s at least a warning sign that would benefit us to take a closer look.

Let’s see the price moves of the DIA (DIA), QQQQ (QQQQ), and SPY (SPY) off their March lows and take a look at the current doji candles along with other instances where at least two dojis in a row formed… and see what happened next.

DIA (Dow Jones ETF):

The commentary will be roughly the same on all charts, so take a momentum to let “a picture be worth 1,000 words” in this post.

QQQQ (NASDAQ-100 ETF):

SPY (S&P 500 ETF):

In discussing each chart, the QQQQ was the only ETF not to have two dojis in a row at the March lows.

All ETFs formed multiple indecision candles (which is what dojis are) during the early part of June.

All ETFs except the SPY had doji-like candles at the July lows (bouncing off the 200 day SMA in the event of the SPY).

You can see the result in each case was either a major or minor reversal or turning point in the market - if just for a simple pull-back to support.

The DIA looks to have the worst (bearish) pattern, given that the current candle is a “Gravestone Doji,” which indicates a large-scale price rejection of the highs.

Bulls have so far ignored each and every non-confirmation and sell signal, driving prices to higher and higher levels so I probably wouldn’t jump all-in short just because a couple of dojis have formed at new highs above the daily Bollinger Bands… but I wouldn’t jump in here all-in long either.

Let’s see what happens in the next few trading sessions.

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