Trading Idea - ArvinMeritor A Doji Close | Candlesticks

Sprint Nextel (S)

Yahoo! (YHOO)

Cisco (CSCO)

Netflix (NFLX)

Apple (AAPL)

Time Warner Inc. Reports Strong Results

Moody’s Reports Earnings

Emerson Near Resistance

Advance Auto Parts Upside Looming?

Above Resistance - Starbucks

Trading Idea - ArvinMeritor A Doji Close

Published on Tuesday, 03 August 2010 02:39 Written by Christopher Lynn

arm New York, August 3rd (TradersHuddle.com) - Shares of ArvinMeritor, Inc. (NYSE:ARM) closed the trading day higher by $0.39 or 2.38% from its previous close. ArvinMeritor's shares price action formed what is considered to be a doji close, where the open and close prices are very close to each other, mainly signaling an indecision between buyers and sellers.

ArvinMeritor, Inc. (NYSE:ARM) is a global provider of automotive systems, modules and components for light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. The company also provides coil coating applications, including those for the transportation, appliance, construction, and furniture industries.

ArvinMeritor's current stock range is defined by a trough, which marks calculated support at $13.64 and by a peak that marked the resistance point at $16.35. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in ArvinMeritor or traders that are already holding the stock can use the doji close to their advantage, since the pattern present a short term pause in the stock's price action. This pause results in an entry point for traders depending of which way the stock resolves this short term indecision.

Doji are important candlesticks that provide information on their own and as components in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns.

Any bullish or bearish bias is based on preceding price action and future confirmation. In the case of ArvinMeritor, given that the stock finished the session higher, bulls should monitor their positions for confirmation that stock will continue higher by taking today's intraday high. Below a Doji illustration:

JIM CRAMER wants to work for YOU. JIM does the research -- YOU get email alerts each time he trades. JIM provides access to his actual portfolio -- YOU can use it to guide your portfolio strategy. Try Jim's Action Alerts PLUS for FREE!