The Kicker Formula

The Kicker Signal can be easily formulated for search purposes. The position of the signal, in a trend, is not important. The important factor is that a severe change in investor sentiment has occurred. Because the Kicker signal is a two-day signal, two opposite elements are required. First, in a Bullish Kicker Signal, the predominant trend should have been downward. The first day of the signal would have opened, traded down, then closed lower than where it opened.


(OPEN1 > CLOSE1)

Day two should have opened equal to or above the open of day one and then closed higher than the open of day two.


AND (OPEN => OPEN1) AND (CLOSE > OPEN)

Do not let the magnitude of a kicker reversal signal deter you from making the trade. The announcement or event that created the Kicker signal in that stock is not going to be a one-day affair. It has reversed the direction of investor sentiment. That was the surprise in which the investment community reversed its outlook. The big percentage move, that first day before you got in, is just a small part of the rest of the move.

Many investors will mistakenly wait for the price to pull back so that they can get in. The candlestick investor does not want to see a pullback. The buyers should maintain their buying to make this trade a strong one. To wait for a pullback is not the buying pressure that you would want for a strong up-move stock.

The Bearish Kicker Pattern has the opposite formulas. Of course the trend should be in a predominantly upward direction. Usually a bad news announcement will send the stock price crashing. The formula should be


(OPEN1 < CLOSE1)

The open on the following day is equal to or lower than the open of the previous day and continues down, closing lower than the open.


AND (OPEN <= OPEN1) AND (CLOSE <= OPEN)

The more overbought when the signal started, the better. Again, the magnitude of the reversal is directly related to the strength that should be conveyed in the remaining portion of the new trend. Do not be afraid to participate in the move despite the magnitude of the initial move. Because the news was a surprise, it will take at least a few days, if not much longer, for the investment community to digest and assess the ramifications of the surprise.

Example: