Blackstone Surges 3.68% on Bullish Engulfing, Closes 6.64% in Two-Day Rally

Blackstone (BX) has surged 3.68% in the most recent session, marking a two-day rally with a cumulative gain of 6.64%. This upward momentum is evident in the candlestick pattern, where the recent bullish engulfing and hammer formations suggest short-term buying pressure. Key support levels are identified at $153.77 (post-October 10 selloff) and $160.65 (October 9 low), while resistance aligns with the 50-day moving average ($160–161) and the recent high of $163.98.

Candlestick Theory

The recent price action reflects a strong reversal from the October 10 low, with a bullish engulfing pattern confirming a shift in sentiment. However, the overbought RSI (discussed below) and proximity to Bollinger Bands’ upper boundary suggest caution. A break above $163.98 could target the October 30 high of $168.45, but a rejection here might trigger a pullback to test the $153.77 support zone.

Moving Average Theory

Short-term momentum is reinforced by the 50-day MA crossing above the 100-day MA, indicating a bullish bias. The 200-day MA ($155) remains a critical baseline for trend sustainability. While the current price ($163.98) is above all three moving averages, a flattening 50-day MA could signal weakening momentum if the 100-day MA approaches $160 in the coming weeks.

MACD & KDJ Indicators

The MACD histogram is expanding in positive territory, reflecting strong upward momentum, but the KDJ stochastic oscillator (80/20 settings) is in overbought territory (K=85, D=70), hinting at potential near-term exhaustion. Divergence between the KDJ and price action—where the oscillator peaks while the stock continues higher—could foreshadow a correction.

Bollinger Bands

Volatility has spiked, with the price near the upper band ($165.09) and the bands widening. This suggests a potential breakout or breakdown. A move above the upper band might extend the rally, but a reversal below the middle band ($160) could trigger a mean reversion toward the 50% Fibonacci level at $160.

Volume-Price Relationship

Recent volume has surged, particularly on October 13 and 14, validating the rally. However, a decline in volume during the next upleg could signal waning conviction. Conversely, a surge in volume during a pullback might confirm renewed selling pressure.

Relative Strength Index (RSI)

The RSI is currently above 70, indicating overbought conditions. While this may not immediately trigger a reversal in a strong uptrend, a close below 60 would suggest a short-term pullback. Caution is warranted if the RSI fails to hold above 50, which could validate the Fibonacci retracement targets at $163 and $160.

Fibonacci Retracement

Key retracement levels from the October 30 high ($170.85) to the October 10 low ($153.77) include 38.2% at $163 and 50% at $160. A break below $160 could target the 61.8% level at $156.77, aligning with the October 14 low.

Backtest Hypothesis

A backtest of a strategy buying when RSI exceeds 70 and selling when it drops below 30 (2022–2025) yielded a -48.77% return, underperforming the benchmark by 100.81%. The strategy’s high volatility (50.65%) and negative Sharpe ratio (-0.34) underscore its ineffectiveness in trending markets like Blackstone’s recent uptrend. This highlights the risks of relying solely on RSI for mean reversion in strong trends. Integrating moving average crossovers or volume confirmation could improve outcomes, though the current confluence of overbought RSI, bullish MACD, and expanding Bollinger Bands suggests a high-risk environment for such a strategy.