The market indexes showed some bullish reversal signals on Friday, the MorningStar signal. Although the NASDAQ did not form a pure MorningStar signal, it had a MorningStar characteristic and the NASDAQ closed above the T line. The Dow and the S&P 500. A positive open on Monday would indicate the confirmation of the MorningStar signal as well as showing the T line is not acting as a resistance level anymore. This would imply to start taking profits on short positions that are showing bullish signals and start adding long positions again.
The gaming stock sector is acting well SGMS, PENN, DKNG, GME, MGM, RCL. The biotech sector is also showing some good buy signals,SAVA, NVAX, INO, SRNE, TEST, MRNA.The oil and gas sector is showing a lot of weakness, be ready to short, COG, RRC, CNXM, APA, REGI.

The appearance of a MorningStar signal with stochastics in the oversold area at least indicates a possible bounce and/or upon strong confirmation the next wave starting in the up trending markets

The markets may be showing some support near the 50-day moving average. But a compelling indication that there is not a drastic selloff in progress is the fact that the transportation index has been moving sideways and upwards when the rest of the indexes have been selling off. Candlestick logic merely tells us that there is no consensus selling in this market, merely profit-taking. If new strength shows up in the markets you want to consider buying the shipping stocks GLMG, TNK, STNG, as well as FDX which has maintained a 45° for the past two months and now producing a slow curve upside breakout potential. The housing stocks are starting to move back up TOL, PHM, TMHC, KBH, LEN.  Application software stocks can be shorted on market weakness SMAR, VEEV, BLKB, WORK RPD, INOV. It would be prudent to have both long and short positions in the portfolio as long as the market indexes are not showing any direction. The bullish trend needs to see the market indexes close back up above the T line. The T line rule tells us the downtrend remains in progress with a much greater degree of probability as long as the indexes continue to trade below the T-line.

The candlestick charts gave a strong alert that a reversal was coming. Join us this Tuesday night to learn the five indications that a reversal is about to occur based upon candlestick analysis. This week, with the indexes trading below the T-line, there are some strong very sectors to pay attention to. Homebuilders and supplies have numerous bearish charts,PHM, FAST, NAS, and DY. The computer software area has good short setups, TENB, NEWR, PRO, SPSC, FEYE, RP. Internet software companies showed strong sell signals, MDLA, UPWK, CDLX, and PINS. The bullish sectors are toys and hobbies, OSW, TWMC, BBW. Retail stocks especially in the clothing area produced good bullish charts,ANF, TLYS, BKE, URBN, ans SCVL.

The market uptrend will not continue until the indexes show a close back up above the T-line. The current consolidation stage could last for two days or two weeks. These market conditions make it prudent to have both long and short positions established in the portfolio. Although the markets may not be showing a decisive trend movement, the simple candlestick scanning techniques allow for pinpointing the strongest or weakest sectors/stocks. There will always be good bullish charts in a down market as well as good bearish charts in an upmarket. The graphics of candlestick analysis make it easy to identify the strongest potential price moves.

The persistent uptrend of the markets are providing numerous sectors showing good strength. Candlestick charts allow for identifying which of those sectors might be trading a little bit stronger than the rest. The homebuilder stocks can still be bought, TOL, PHM, BZN, TMHC. The Biotech’s remain strong CDXC, BEAM, CYCN, OSUR, ACIU, CRDF. And diversified electronics are showing good strength, BE, OESX, NEON. Identifying the strongest stocks in each sector is simplified by knowing the strength/results of individual candlestick signals and patterns.SHALL it is coming out of a very large cradle pattern. A cradle pattern illustrates indecision between the bulls and the bears. The footboard, or the breakout candle, demonstrates which direction investors finally made their decision. The results of a cradle pattern are usually very powerful, especially the longer the indecision/Doji’s was illustrated.

Stocks to watch this week are mostly in the transportation area, airlines stocks can be bought on positive trading AAL, ALK, CPA.

Tracking stocks and shipping stocks are acting well, YRCW, GLNG, JBHT, GNK.

The frypan bottom pattern is producing some very strong upside potentials, VRNA, PENN, CIR, EB.

Bobble breakouts will produce high probability trades, CORR, SAIC, OPTN. The market should continue in an uptrend as long as they trade above the T line. The transportation index showing good strength is a sign that there is not any selling pressure yet in this market

Left/right combos: CVET, PBF, NAV,SMPL.

Doji sandwiches: ALT, TTWO, FSLY, AAOI, EA, AVLR

Internet stocks: BILI, CPTO, SFUN,  GDDY, ANGI

These can be bought based upon the markets opening positive and trading positive. The Dow traded lower most of Friday but during the final two hours, it went from a strong down move to trading up 114 points by the end of the day. The NASDAQ uses the T-line as a support level. If it opens positive on Monday, anticipate a Doji sandwich set up producing the probabilities of a Doji sandwich that would be breaking out through the recent highs. Gold stocks continue their uptrend, they can still be bought as long as they do not close below the T-line. However, watch gold prices. They have produced potential reversal signals in the overbought area over the past few trading days.

The NASDAQ formed a bearish Doji sandwich and closed below the T-line, this past week. Although the Dow did not create a sell signal, it also close below the T-line. This produces high probabilities that the market could be selling off, possibly moving back down toward the 50 day moving average. There are strong sectors identified, the restaurants and the homebuilders are producing strong bullish signals, fry pan bottom breakouts. Gold stocks continue their uptrends with a very simple trading analysis, stay long as long as the prices do not close below the T-line. These are market conditions that warrant having both long and short positions in the portfolio.

The slow market uptrend persists, as long as the indexes continue to trade above the T-line. Fortunately, candlestick analysis identifies what we call the “Top Ranked signals and patterns”. When you recognize and understand what each individual candlestick signal illustrates and can recognize when a pattern breakout is likely to occur, this puts the candlestick investor in high probability trades. However, there is even a more powerful candlestick trading process. The Top Ranked candlestick signals and patterns are a combination of the signals and patterns, . That produces more powerful profitable trades. They provide three major benefits. One, they produced an extremely high probability of the direction of a price move. Two, and more importantly, they illustrate when a very strong price move is about to occur. This combination produces optimal entry points for very strong trades. Finally, an additional benefit is that the price move, created by a top-ranked signal and pattern, will usually continue with good strength even if the market, in general, is trading flat or even negative.

The biotech’s as well as the gold stocks continue to produce good profits. The existing strong uptrends in these sectors are now in the process of producing classic patterns or J-hook patterns, indicating more upside. Uptrending markets will produce a lot of slow up-trending stock price moves. The advantage of candlestick analysis is the ability to recognize which uptrending price moves are going to be the strongest moves.