The logical sequence of signals is as follows:
[BUY – STAY LONG – SELL (SHORT) – STAY IN CASH (STAY SHORT) – BUY] (For stocks that are in a Bull Trend, investors may opt to disregard SELL and subsequent STAY IN CASH signals until the Bull Trend ends.)
- If BUY comes after STAY IN CASH or right after SELL, then that means the stock will be bought.
- If BUY comes after STAY SHORT or right after SHORT, then that means the short positions (if applicable in this market) must be covered first and then the stock must be bought.
- If SELL comes after STAY LONG or right after BUY, then that means the stock must be sold.
- If SHORT comes after STAY LONG or right after BUY, then that means the long positions must be covered first and the stock must also be shorted (if applicable).
In rare instances, the system quits and discontinues analysis because the corrected stock data is not suitable for any meaningful candlestick pattern analysis. In such instances, the signals are as follows:
[QUIT – STAY OUT]
- If QUIT comes after STAY IN CASH or right after SELL, then no action is required.
- If QUIT comes after STAY SHORT or right after SHORT, then that means the short positions must be covered (if applicable in this market).
- If QUIT comes after STAY LONG or right after BUY, then that means the stock must be sold.
When the stock data is restored enough to resume candlestick pattern analysis, STAY OUT turns into STAY IN CASH.