Is Fortune Brands Reversing?

Published on Monday, 23 August 2010 00:33 Written by Danny Miller

New York, August 23rd (TradersHuddle.com) - Shares of Fortune Brands, Inc. (NYSE:FO) closed the trading day lower by $0.38 or -0.88% from its previous close. Fortune Brands' 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.

Fortune Brands, Inc. (NYSE:FO) is a holding company with operating companies that offers home and hardware products, produces wines and spirits, and offers golf products. The company offers various distilled spirits, including bourbon, tequila, Canadian whisky, scotch whisky, and cognacs under Jim Beam, Maker?s Mark, Sauza, Canadian Club, Laphroaig, and Courvoisier names.

Fortune Brands' current stock range is defined by a trough, which marks calculated support at $43.55 and by a peak that marked the resistance point at $46.46. These levels are closely watched by traders managing their positions.

Traders wanting to establish a position in Fortune Brands 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 Fortune Brands, given that the stock finished the session lower, bears should monitor the stock, as it could reverse if it manages to trade above today's intraday high. Below a Doji illustration: