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- Shooting Stars
THE BIG IDEA
A shooting star is one of several “star” patterns seen on candlestick charts. It looks deceptively simple but packs a lot of information into a single bar.
Like many candlestick patterns, there is some room for subjective definition. And yet, once you know what to look for you will immediately recognize them when you see them.
A shooting star is identified by a small real body positioned near the low of the candle, along with a long upper shadow. It can resemble… a shooting star! Importantly, a valid shooting star forms only after an upswing in price.
That shape tells a story: even after an uptrend, buyers still managed to push the market sharply higher. A bit later in the same period, sellers had stepped in aggressively enough to erase most - or all - of those gains. The result is a candle that visually depicts rejection of higher prices.
Traders interpret this as a potential early warning that the uptrend may be losing steam. The pattern should not be understood as a standalone sell signal, however. It is just one clue to be combined with other information you might normally look at to evaluate a stock.
The chart below of Biogen (BIIB) gives us two good examples of shooting stars.
Let’s start with Shooting Star #2, which occurred a week ago. We see that within a few days BIIB ran from $175 to briefly touch $190. At that point it seems that buyers ran out of ammo and sellers knocked it back down almost to where it started the day. The shift of control that day from buyers to sellers turned into a rout that is still ongoing.
Shooting Star #1 was actually bigger, but it did not lead to catastrophe. What it did do was mark the end of a strong bull run and the start of a choppy sideways period. Note how the stock was not able to get above the high point of the shooting star.
In terms of importance, the shooting star is considered one of the more reliable single‑candle bearish reversal patterns, but its power is highly sensitive to context. A shooting star should not automatically be treated as a signal to SELL!!! but as a clear message to PAY ATTENTION!!!
So when you see one - no matter if it is on a daily chart, weekly chart, or monthly chart - you really should stop and evaluate whether you want to continue owning that stock.
SEEN ON THE INTERNETS
This newsletter is focused on swing trading, but it never hurts to zoom out from time to time.
Below you see the “asset allocation quilt” compiled by Ben Carlson of A Wealth Of Common Sense. It is annual rankings of ten categories of investments, along with their average annual performance for the past ten years.
Interesting to us is that the ranking of 10-year averages ends up working out to be close to what they “should” be in theory.
Carlson makes a handful of observations about the results, so there is no need to repeat them here. It will be worth your time to go read the post for yourself.
NUMBERS ONLY
6.19% | The notorious ARK Innovation ETF is off to a good start in 2026, with a 6.19% gain. It is still down 11.73% from its recent high water mark in October. |
$296.12 | Who needs Adobe Photoshop when your favorite AI tool can fuss with your images? Shares of ADBE are down by a third from the price 12 months ago. |
2.13% | The Russell 2000 index continues to outperform with a 2.13% gain last week while the S&P 500 posted a loss. |
SWINGEX INDEX
As of market close on: 16 January 2026
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Swingy says: You should be able to find some tasty mangoes, but beware there are a few rotten ones lying around.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
ESI (Element Solutions): Sometimes it takes a stock a few tries to get to where it wants to go.
ESI bumped its head on an invisible ceiling back in November, and again in December, and again earlier this month. Finally, it has cleared that resistance area in the $27.50 - $28.00 range and ended the week at an all-time high of $29.48.
Stocks at all-time highs tend to continue going higher. The chart does not offer any reliable clues as to how much higher it can go in the short run. One thing we do know is there is no longer anybody holding the shares with a loss. The path of least resistance is to the upside.