Friday’s trading saw an interesting pattern form on consumer staple stock Colgate-Palmolive (NYSE: CL). The pattern is known as a shooting star pattern in candlestick charting and it is considered a bearish reversal pattern.
What happens with a shooting star is that the stock opens slightly higher, jumps considerably higher during the day, and then falls to close at a similar level that it opened at.
The thinking behind the pattern is that the bulls have been in control and have driven the stock price higher. The bulls are in control on the day in question, but at some point during the day the bears seize control and drive the price down. Here is what it looks like on Colgate-Palmolive’s chart.
We see that the stock moved higher from the December 26 low, jumping from down close to $57 and moved above $63 on Friday. The stock opened at $62.01 on Friday, jumped to a high of $63.27, but closed at $62.21. This meets the definition of a shooting star pattern.
What is particularly interesting about Colgate-Palmolive is that the company is set to release earnings on Friday, January 25. When the company reported earnings back on October, the stock gapped sharply lower after the earnings disappointed investors. The earnings per share missed estimates. The company did see earnings and sales decline in the most recent quarterly report.