The surprise positive employment numbers allowed the Dow to break through the 200-day moving average. Thursday, a Doji formed in the Dow, just below the 200 day moving average, making the trading for Friday very simple. The Doji rule indicated if the markets opened positive on Friday, the 200-day moving average was not going to act as resistance. A lower open on Friday would’ve implied expecting a few days of consolidation/profit-taking. The strength of the buying on Friday providing some good bullish signals in specific sectors. Crude oil is now trading back up over $40 a barrel. Numerous oil stocks gapped up through resistance levels and can still be bought. The homebuilder sector is a strong viable sector for scanning for strong charts. PHM can be bought on positive trading creating a bullish Doji sandwich confirming a bobble breakout pattern, providing extremely high probabilities of wave three moving the price much higher.
One thing that should be noticed, the sectors that were already acting strong over the past few weeks showed an inordinate amount of strength with the strong buying on Friday. This allows the candlestick investor to concentrate on identifying the strongest stocks performing in the strongest sectors. The expectation is still more upside as the economy opens back up. The advantage of candlestick scanning techniques allows investors to identify which sectors are going to be the strongest during the uptrend.
