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Registered User
Joined: 2/8/2006
Posts: 73
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Both of these stocks formed a Bullish Engulfing on 04/17 and I would like to know if it is a good time to buy them now or wait till the reversal is done.
Thanks
Aslan007
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Registered User
Joined: 12/2/2004
Posts: 1,775
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Aslan, I'm not an expert on bullish engulfing but I don't think you had that on either stock yesterday, the 17th. I think the reason is because the candle is supposed to totally engulf the entire candle from previous day. Regardless, I like the setup for TGEN a lot more than RAE. TGEN is moving up on terrific recent volume, lot of momentum, while recent volume for RAE is anemic and only high volume was of the bad variety from early March.
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Registered User
Joined: 1/29/2005
Posts: 104
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Both stocks did have bullish engulfing signals. TGEN is forming a j-hook pattern and I would enter into either trade on a strong opening today. The DOW is at its upper resistance trend line so I would watch it as well. The market futures are lower this morning and may drag some stocks with them...
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Registered User
Joined: 12/2/2004
Posts: 1,775
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lpark, I googled the candle and the site I found stated the previous day's candle had to be fully engulfed by the most recent; the previous day's candles for both stocks was not fully engulfed, just the body (not the tail/tails). Splitting hairs I guess:)
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Registered User
Joined: 1/29/2005
Posts: 104
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According to Steve Nisan, Greg Morris, and Stephen Bigalow, all the candlestick experts, only the body needs to be engulfed in an engulfing pattern, not the tails. I've never heard of the tails having to be included.
Oh well,...
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Registered User
Joined: 2/8/2006
Posts: 73
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Thanks for your insights. Today the Dow did not open on a high.....I will wait a bit.
Aslan007 
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Registered User
Joined: 12/2/2004
Posts: 1,775
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lpark, the debate rages on! LOL. I visited 3 sites via google and one supports your definition, one mine (leavittbrothers), and one ambiguous. Can we call it a tie?:) Seriously though, the more I study this two-candle signal the more it's apparent that the engulfing signal be confirmed by being accompanied with two other factors....higher than avg. volume on the engulfing candle, and coming at a top or bottom in a trend of some length. For practical matters I don't think a trader should get caught up in a strict definition, I think we all know a bullish candle when we see it and then it's up to us to properly interpret it as to how it fits in with the recent candle and overall pattern.
Stockcharts site:
Engulfing Pattern: A reversal pattern that can be bearish or bullish depending
upon whether it is in an uptrend or downtrend. The first day is characterized by a
small body, followed by a day whose body completely engulfs the previous day's
body.
leavittbrothers site:
Engulfing Pattern: reversal
Reliability: moderate
Identification:
A white day is then completely “engulfed” by a large black day which gaps above
the white day's high and closes below its low.
streetauthority site:
A bullish engulfing candle occurs after a significant downtrend. Note that the
engulfing candle must encompass the real body of the previous candle, but need not
surround the shadows. Below you will find an illustration of a bullish engulfing
candle:
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Registered User
Joined: 1/29/2005
Posts: 104
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One line of thought on entering TGEN is wait until it clears the previous high (@4.96); another more agressive approach is enter as it begins its bounce up, which would be the confirming signal today - enter after it clears yesterday's close. TGEN has not met either criteria, so I would be waiting.
RAE is not showing any clear buy signals yet. Today's signal did not confirm a reversal, so I would look elsewhere to invest my funds... RAE still seems to be consolidating and moving sideways.
BIVN is similar to RAE, but today confirmed its reversal.
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