THE BIG IDEA
If you look at a weekly chart of whatever your favorite stock market index is, you will see a Japanese candlestick pattern called “three white soldiers”.
As with many candlestick patterns, there can be some shades of grey in determining whether you have three white soldiers. However, the main points are all present on the current charts:
three long white candles with each one closing higher than the one before it
the opening price is within or near the body of the previous candle
the closing price is at or near the high of the candle
The current weekly chart of the S&P 500 is almost a textbook example of the pattern.
The internet’s interpretation of the three white soldiers is that it is a bullish pattern. That is somewhat true, but there are some caveats.
First, let’s quickly review what is “usually bullish” about it. To print those three candles so that they fulfill the requirements stated above, you need a persistently strong market. Such a market is unlikely to immediately reverse itself and so the path of least resistance is higher.
That’s the basic understanding of it. There are a couple of other factors to consider.
Start with what was happening before the three white soldiers were created. If the market was flat or going down, then this bullish pattern can be more meaningful. Seeing it in an existing uptrend doesn’t tell us much.
And then there is the unavoidable direct outcome from the three white soldiers pattern. It means that prices have moved up a lot in a short period of time. Maybe they have moved so much that it is no longer worth getting involved. The three white soldiers can be too much of a good thing.
On that last point, Steve Nison (who wrote the go-to book on Japanese candlesticks) said that he found the first and second “soldiers” to be areas of support for any market corrections that come after the completion of the pattern.
The better interpretation of the chart pattern is not up-up-and-away but rather that a price floor has been established in the possible (likely?) event that the market swings back in the opposite direction.
SEEN ON THE INTERNETS
Is the Strait of Hormuz open? Closed? Both at once?
This week we have seen several instances of people having a bit of fun with the knowledge that POTUS tends to respect/fear the financial markets. Developments in Iran seem to be associated with whether the U.S. stock market is open.
Here is a Google-style entry for a business called “The Strait of Hormuz”.
Will somebody suggest an update of their hours of operation?
A variation of the theme is in an AI-generated cartoon found on the Stock Twits website.
As of publication time of this newsletter, the Strait is closed. Maybe it will suddenly reopen Monday morning?
NUMBERS ONLY
13 | QQQ, the famous ETF holding most of the well-known tech stocks, is up 13 days in a row and still counting. |
$68.50 | A year ago, Intel seemed to be a dying company. Shares of the company are now sitting at an all-time high of $68.50. |
46.93% | The KOSPI index of the South Korean stock market tends to be boom or bust. Currently it is boom. Up 46.93% for the year. |
SWINGEX INDEX
As of market close on: 17 April 2026
Swingy says: Let's stop and celebrate our good fortunes. Now the index says to expect a hangover.
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.
IMKTA (Ingles Markets): In a time of unexpectedly big moves in both directions, let’s turn to something less correlated with the rest of the stock market.
Ingles Markets runs a chain of supermarkets. It doesn’t get much more boring than that, but let’s use that to our advantage.
Aside from being immune to the wild gyrations of the market, we see two things to like on the chart. The first is those two days in March when the shares briefly plunged (the blue arrows on the chart), but buyers stepped in to actually take the price higher for the day.
And then last week there were two consecutive doji candles, often seen at the end of a trend, followed by a strong advance on Friday.
We don’t expect it to be a huge percentage gainer. In the current circumstances, we will settle for a small, conservative win.