Spinning Tops

Spinning tops suggest that the market is indecisive about a stock at the moment, but it might also give a hint as to what could happen.

The spinning top is formed in this manner:

1. On the first candle, the stock will move up or down. The shadows on the top and bottom will be about the same size. This will remind you of a doji, but the difference is that there is a legitimate change from the top to the bottom.
2. The second candle will move in the opposite direction to the first. The difference between the open and close and the sizes of the shadows will be virtually identical to what the first candle had.

The spinning tops show that something might go up or down in value, but even then, the stock might not change very much. The best strategy to use here is to stay with very brief positions that only last for a few hours at a time. The spinning top might also show that a dramatic change will appear after a while. When the second candle goes down in value, it suggests that the stock will keep going down. You can always keep a long position in the hopes that the stock will move in the direction the second candle suggested it will move. Even then you should place a stop-loss order on the opposite end. Keep that order about two candle shadow lengths away from the original value. This gives you enough coverage for what might happen with the stock.