The late day reversal on Friday and the continued broad market strength today is helping to validate the Morningstar pattern I highlighted on Thursday:
The closing strength in the Russell 2000 Index yesterday was a harbinger of good things to come. The volatility in the last several sessions has created a candlestick reversal pattern on the DJIA, S&P 500 Index, and NASDAQ Composite charts. The Morningstar pattern is a three-day formation that requires first a large dark or down candle, followed by a narrow opening and closing range candle, and is completed by a large white candle. It represents a transition from bearishness-to-bullishness and is usually seen at important bottoms and after significant declines. Like all patterns it requires confirmation, but perhaps it is another harbinger.