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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 03/27/2017
20,551 -45.74 -0.2%
8,935 6.33 0.1%
702 -3.50 -0.5%
5,840 11.63 0.2%
2,342 -2.39 -0.1%
YTD
4.0%
-1.2%
6.5%
8.5%
4.6%
Tom's Targets    Overview: 03/14/2017
20,100 or 21,250 by 04/15/2017
8,500 or 9,500 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,275 or 2,425 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

April 2012 Headlines


Archives


Monday 4/30/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show a picture of the Dow utilities on the daily scale. Is this index leading the way for the rest of the market?

Shown in blue is an ascending triangle. This is a loose looking one with nothing to reverse so price does not make a lasting rise after the breakout. A month later we see signs of life in the index when it started a straight-line run upward.

Notice that the index closed above the prior peak (A). I think this is a good sign, but it could still 2B on us. That means it could stall here and form a peak.

I think that the index is leading the market, so look for the other indices to breakout to new highs.

$ $ $

On Saturday, I built a water feature in the back yard. That means I put in a stream in one of my flower beds. Actually, all I did was scrape away my rubber mulch and replace it with stones. I show a pic of a portion of it below. When it rains, the water should flow along the rock bed and serve as drainage, flooding my neighbor downhill.

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A Brief Look Back

Picture of a flower from my garden.

The following are economic reports that moved the markets last week. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Down 102.09 points.
Tuesday: Up 74.39 points.
Wednesday: Up 89.16 points.
Thursday: Up 113.9 points.
Friday: Up 23.69 points.

For the Week...

The Dow industrials were up 199.05 points or 1.5%.
The Nasdaq composite was up 68.75 points or 2.3%.
The S&P 500 index was up 24.83 points or 1.8%.

Year to Date...

Dow Industrials
     0.5% down from the high of 13,297.11 on 04/02/2012.
     8.2% up from the low of 12,221.19 on 01/03/2012.
Nasdaq
     2.1% down from the high of 3,134.17 on 03/27/2012.
     16.8% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     1.3% down from the high of 1,422.38 on 04/02/2012.
     11.5% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

The following information is derived from yahoo!finance and sometimes Bloomberg.com with times local to the east coast.

ReportTimeA-F
Rating
Description
Personal income & consumption8:30 MC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 MC+Covers durables, non-durables, and services.
Chicago purchasing managers index9:45 MBMonitors regional manufacturing activity.
Construction spending10:00 TDCovers residential/non-residential/public spending on new construction.
Auto & truck sales2:00 TC-Monthly sales of domestically produced vehicles.
Factory orders10:00 WD+Durable/non-durable goods orders w/factory inventories.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Productivity & costs8:30 ThD+Cost of producing a unit of output.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 04/27/2012, the CPI had:

2 bearish patterns,
48 bullish patterns,
278 patterns waiting for breakout.
The CPI signal is 96.0%, which is bullish (>= 65%).

The chart pattern indicator is bullish with 3 of 3 half triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, "Take a two-dimensional approach." He offers these tips.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  13,155  13,191  13,229  13,266  13,304 
Weekly  12,692  12,960  13,114  13,381  13,535 
Monthly  12,492  12,860  13,079  13,447  13,665 
S&P 500 (^GSPC): Daily  1,393  1,398  1,402  1,408  1,412 
Weekly  1,342  1,373  1,390  1,420  1,437 
Monthly  1,329  1,366  1,394  1,431  1,459 
Nasdaq (^IXIC): Daily  3,030  3,050  3,063  3,083  3,096 
Weekly  2,900  2,985  3,031  3,115  3,161 
Monthly  2,862  2,965  3,050  3,154  3,238 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Pivot point: P = (H + L + C)/3
First resistance level: R1 = (2 * P) - L
First support level: S1 = (2 * P) - H)
Second resistance level: R2 = P + (R1 - S1)
Second support level: S2 = P - (R1 - S1)
H = high price , L=low price, C=closing price

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 30.2%  The trend may continue.
 7 months up 2.6%  Expect a reversal soon.
 S & P 500 (^GSPC) 2 weeks up 29.5%  The trend may continue.
 1 month down 21.7%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week up 40.8%  Expect a random direction.
 1 month down 27.6%  The trend may continue.

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indexes, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Buy-and-Hold: 12-Month SMA

This indicator warns of an index moving into or out of a bear market. It's based on a 12-month simple moving average of monthly closing prices, so it only changes monthly. See 12-Month Moving Average for more details.
Dow Industrials: bullish.
Nasdaq Composite: bullish.
S&P 500 Index: bullish.
Dow Transports: bullish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season is either underway or should be starting soon. The sessions could be more volatile.

 Found Chart Pattern Name
18Triangle, symmetrical
7Rising wedge
7Head-and-shoulders bottom
7Head-and-shoulders top
6Rectangle top
6Double Bottom, Adam and Adam
5Triangle, descending
5Triple top
5Dead-cat bounce
4Pipe top

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example). However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The following industries, of 52 that I follow, were the best (1) and worst (52) performing.

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Retail Building Supply2. Retail Building Supply
3. Computers and Peripherals3. Chemical (Basic)
4. Chemical (Basic)4. Computers and Peripherals
5. Biotechnology5. Cement and Aggregates
48. Metals and Mining (Div.)48. Petroleum (Integrated)
49. Shoe49. Shoe
50. Natural Gas (Diversified)50. Natural Gas (Diversified)
51. Short ETFs51. Short ETFs
52. Coal52. Coal

-- Thomas Bulkowski

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Thursday 4/26/12. Trading Thursday: Nasdaq

The index climbed by 2.3% or 68.03 points. Since 02/05/1971 the index made 24 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.1% on 16 occasions.
     Average loss was -1.4% on 8 occasions.
Expect the index to close higher 66.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 17/25 or 68.0% of the time.
     The prediction of the index closing lower has been right 9/20 or 45.0% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

I show a picture of the Nasdaq composite on the 5-minute scale from Wednesday's trading.

A triple bottom appears at ABC which confirms when the index closes above the red line. By 2:30 or so, the index had climbed far enough to reach t the measure rule target (the height of the pattern added to the breakout price).

Leading into the end of the trading session, a wonderful example of an ascending triangle appeared (outlined in blue). This one did not breakout by the close.

Since the triangle breaks out upward most often, that is the way I am going to bet. Look for a higher close tomorrow.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,888.26    
 Weekly S2  2,938.56  50.30   
 Monthly S1  2,958.94  20.39   
 Weekly S1  2,984.09  25.15   
 Daily S2  3,003.03  18.94   
 Low  3,010.57  7.54   
 Open  3,013.65  3.08   
 Daily S1  3,016.33  2.68   
 61.8% Down from Intraday High  3,018.53  2.20   
 50% Down from Intraday High  3,020.99  2.46   
 Weekly Pivot  3,021.41  0.42   Yes! The Weekly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,023.45  2.04   Yes! The 38.2% Down from Intraday High is close to the Weekly Pivot.
 Daily Pivot  3,023.87  0.42   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  3,029.63  5.76   
 High  3,031.41  1.78   Yes! The High is close to the Close.
 Daily R1  3,037.17  5.76   
 Daily R2  3,044.71  7.54   
 Monthly Pivot  3,046.56  1.85   Yes! The Monthly Pivot is close to the Daily R2.
 Weekly R1  3,066.94  20.39   
 Weekly R2  3,104.26  37.31   
 Monthly R1  3,117.24  12.99   
 Monthly R2  3,204.86  87.61   

Tuesday 4/24/12. Trading Tuesday: Dow

The index dropped by -0.8% or -102.09 points. Since 10/01/1928 the index made 479 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 248 occasions.
     Average loss was -0.9% on 231 occasions.
Expect the index to close higher 51.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 23/37 or 62.2% of the time.
     The prediction of the index closing lower has been right 4/5 or 80.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

I show a picture of the Dow industrials on the 5-minute scale from Monday's trading.

A rectangle bottom appears and lasts for most of the session. Eventually, though, the index closes above the top of the pattern and stages a breakout.

As the chart shows, the height of the pattern projected upward meets its target by the close. That measure is called, quite cleverly, the measure rule.

Looking to Tuesday's action, the probabilities suggest a higher close and that has been right almost two-thirds of the time. I think it is right. There is support beneath today's movement, such that it looks as if we should have a multi-day recovery.

However, the daily scale says otherwise. The index is forming a head-and-shoulders top pattern with the left shoulder starting in late February with a nice rounding turn. The right shoulder does not look as smooth, but it's still there. The longer term chart is more reliable than the 10-day, 5 minute chart. Nevertheless, I'm going to expect a higher close tomorrow.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,391.73    
 Monthly S1  12,659.45  267.72   
 Weekly S2  12,680.42  20.97   
 Daily S2  12,751.03  70.61   
 Weekly S1  12,803.79  52.76   
 Daily S1  12,839.10  35.31   
 Low  12,845.58  6.48   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  12,915.34  69.76   
 Close  12,927.17  11.83   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  12,933.65  6.48   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  12,936.89  3.24   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  12,958.44  21.55   
 Weekly Pivot  12,974.18  15.74   Yes! The Weekly Pivot is close to the 38.2% Down from Intraday High.
 Monthly Pivot  12,978.28  4.10   Yes! The Monthly Pivot is close to the Weekly Pivot.
 Daily R1  13,021.72  43.44   
 Open  13,028.20  6.48   Yes! The Open is close to the Daily R1.
 High  13,028.20  0.00   Yes! The High is close to the Open.
 Weekly R1  13,097.55  69.35   
 Daily R2  13,116.27  18.72   
 Monthly R1  13,246.00  129.73   
 Weekly R2  13,267.94  21.94   
 Monthly R2  13,564.83  296.89   

Monday 4/23/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utilities on the daily chart.

The index is forming a triple top which I show as ABC. This will confirm as a true double top when price closes below D. The pattern also resembles a head-and-shoulders top or even a diamond top. The common ingredient is that they are all reversal patterns.

Does that mean the index is going down? Not necessarily. Since the markets have trended upward over the years, price will rise above the peaks sooner or later. Why not now?

The answer may be found in the economy and the economy of Europe. The talking heads say the economy is slowing down again and Europe has other countries in trouble like Greece is/was.

What does this mean for the coming week. Looking at the chart, my guess is this means the index will move down, but I'll keep my targets showing an up move so I have both directions covered.

$ $ $

On Saturday morning, I was sitting in my chair and heard what sounded like an electric mower run by my neighbor. I turned my head and visiting my hummingbird feeder was a hummer (about 3 feet away). First visit of the season. Way cool!

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A Brief Look Back

Picture of a flower from my garden.

The following are economic reports that moved the markets last week. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 71.82 points.
Tuesday: Up 194.13 points.
Wednesday: Down 82.79 points.
Thursday: Down 68.65 points.
Friday: Up 65.16 points.

For the Week...

The Dow industrials were up 179.67 points or 1.4%.
The Nasdaq composite was down 10.88 points or 0.4%.
The S&P 500 index was up 8.27 points or 0.6%.

Year to Date...

Dow Industrials
     2.0% down from the high of 13,297.11 on 04/02/2012.
     6.6% up from the low of 12,221.19 on 01/03/2012.
Nasdaq
     4.3% down from the high of 3,134.17 on 03/27/2012.
     14.2% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     3.1% down from the high of 1,422.38 on 04/02/2012.
     9.5% up from the low of 1,258.86 on 01/03/2012.

Top

Economic Reports

The following information is derived from yahoo!finance and sometimes Bloomberg.com with times local to the east coast.

ReportTimeA-F
Rating
Description
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
New home sales10:00 TC+Shows sales of single-family homes.
Durable goods orders8:30 WBMeasures orders, shipments of goods with lifespans >3 years.
Crude inventories10:30 W?My guess: Measures oil inventory.
FOMC Rate decision12:30 W?The Federal Reserves reports on interest rate changes.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Gross domestic product8:30 FBMeasures economic activity; GDP deflator measures inflation.
Michigan sentiment9:55 FB-Consumer sentiment: Measures strength of consumer spending.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 04/20/2012, the CPI had:

21 bearish patterns,
34 bullish patterns,
299 patterns waiting for breakout.
The CPI signal is 61.8%, which is neutral (between 35% and 65%).

The chart pattern indicator is bearish with 3 of 3 full triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, "Take a two-dimensional approach." He offers these tips.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,907  12,968  13,025  13,086  13,144 
Weekly  12,714  12,872  13,008  13,166  13,302 
Monthly  12,426  12,728  13,012  13,314  13,599 
S&P 500 (^GSPC): Daily  1,371  1,375  1,381  1,385  1,391 
Weekly  1,352  1,365  1,379  1,392  1,406 
Monthly  1,321  1,350  1,386  1,415  1,451 
Nasdaq (^IXIC): Daily  2,976  2,988  3,011  3,024  3,047 
Weekly  2,929  2,965  3,012  3,047  3,095 
Monthly  2,879  2,939  3,037  3,098  3,195 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Pivot point: P = (H + L + C)/3
First resistance level: R1 = (2 * P) - L
First support level: S1 = (2 * P) - H)
Second resistance level: R2 = P + (R1 - S1)
Second support level: S2 = P - (R1 - S1)
H = high price , L=low price, C=closing price

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.3%  Expect a random direction.
 1 month down 20.7%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 42.2%  Expect a random direction.
 1 month down 21.7%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 3 weeks down 16.2%  Expect a reversal soon.
 1 month down 27.6%  The trend may continue.

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indexes, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Buy-and-Hold: 12-Month SMA

This indicator warns of an index moving into or out of a bear market. It's based on a 12-month simple moving average of monthly closing prices, so it only changes monthly. See 12-Month Moving Average for more details.
Dow Industrials: bullish.
Nasdaq Composite: bullish.
S&P 500 Index: bullish.
Dow Transports: bullish.
Dow Utilities: bullish.

Top

Earnings, Chart Patterns & Industries

Earnings season is either underway or should be starting soon. The sessions could be more volatile.

 Found Chart Pattern Name
20Triangle, symmetrical
9Pipe top
9Rectangle top
8Rising wedge
6Head-and-shoulders top
6Head-and-shoulders bottom
6Triple top
5Double Top, Adam and Adam
4Rectangle bottom
4Triangle, ascending

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example). However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The following industries, of 52 that I follow, were the best (1) and worst (52) performing.

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Retail Building Supply2. Retail Building Supply
3. Chemical (Basic)3. Chemical (Basic)
4. Computers and Peripherals4. Computers and Peripherals
5. Cement and Aggregates5. Insurance (Life)
48. Petroleum (Integrated)48. Metals and Mining (Div.)
49. Shoe49. Natural Gas (Diversified)
50. Natural Gas (Diversified)50. Shoe
51. Short ETFs51. Short ETFs
52. Coal52. Coal

-- Thomas Bulkowski

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Thursday 4/19/12. Trading Thursday: Nasdaq

The index dropped by -0.4% or -11.37 points. Since 02/05/1971 the index made 364 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 180 occasions.
     Average loss was -1.2% on 184 occasions.
Expect the index to close lower 50.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 17/25 or 68.0% of the time.
     The prediction of the index closing lower has been right 8/19 or 42.1% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

I show a picture of the Nasdaq composite on the 5-minute scale from Wednesday's trading.

I find this an interesting chart. First, there is a broadening top outlined in blue. Second comes a double bottom at AB. This one, however, reminds me of a Big W pattern. The tall left side at D begins the pattern. The double bottom acts as the reversal, and then the index returns to the price level of D. No need to calculate a measure rule prediction, just use the start of the Big W as the target. That worked well in this case.

On the daily chart, if we close above the congestion region of the last week, then look for the index to make a double top. If it breaks out downward, then look for a measured move down pattern to take the index lower, to about 2900. That won't likely happen tomorrow. Intrday, using the 5-min scale over the last 10 days shows that the index has a weird symmetry going on. The peaks and valleys tend to repeat. If this trend continues, we should see the index move up to 3050 but then drop to 3,000 tomorrow. That is going to be my guess. Look for a lower close.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,885.90    
 Weekly S2  2,953.64  67.74   
 Monthly S1  2,958.68  5.03   
 Weekly S1  2,992.55  33.87   
 Daily S2  3,012.34  19.79   
 Daily S1  3,021.89  9.56   
 Low  3,023.91  2.02   Yes! The Low is close to the Daily S1.
 Weekly Pivot  3,025.90  1.99   Yes! The Weekly Pivot is close to the Low.
 Close  3,031.45  5.55   
 Open  3,031.82  0.37   Yes! The Open is close to the Close.
 61.8% Down from Intraday High  3,031.98  0.16   Yes! The 61.8% Down from Intraday High is close to the Open.
 Daily Pivot  3,033.47  1.49   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,034.48  1.01   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  3,036.97  2.49   
 Daily R1  3,043.02  6.06   
 High  3,045.04  2.02   Yes! The High is close to the Daily R1.
 Monthly Pivot  3,046.42  1.38   Yes! The Monthly Pivot is close to the High.
 Daily R2  3,054.60  8.17   
 Weekly R1  3,064.81  10.21   
 Weekly R2  3,098.16  33.36   
 Monthly R1  3,119.20  21.03   
 Monthly R2  3,206.94  87.75   

Tuesday 4/17/12. Trading Tuesday: Dow

The index climbed by 0.6% or 71.82 points. Since 10/01/1928 the index made 783 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 433 occasions.
     Average loss was -0.7% on 350 occasions.
Expect the index to close higher 55.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 22/36 or 61.1% of the time.
     The prediction of the index closing lower has been right 4/5 or 80.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

I show a picture of the Dow industrials on the 5-minute scale from Monday's trading.

Twin double bottoms appear at AB and CD. When the index closed above their respective red lines, it confirmed the bottoms. Eventually, price made its way higher, fulfilling the measure rule predictions of how far the index might rise (and then some).

Looking to tomorrow (Tuesday), the probabilities suggest a higher close, which has been correct 61% of the time. What do I think?

On the daily scale, it looks like the index is forming the right shoulder of a head-and-shoulders top. That would mean the index is going to move sideways for the next several days, but eventually turn down. Over the past 10 days, it looks like a triple top has been forming since Thursday. I think that the index will close modestly higher tomorrow. I can see the short term view (10-day chart, 5 min scale) following a trendline upward. But I also see that head-and-shoulders limiting the upside.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,389.81    
 Weekly S2  12,549.40  159.59   
 Monthly S1  12,655.61  106.21   
 Weekly S1  12,735.41  79.80   
 Daily S2  12,783.69  48.28   
 Low  12,850.80  67.11   
 Open  12,850.88  0.08   Yes! The Open is close to the Low.
 Daily S1  12,852.55  1.67   Yes! The Daily S1 is close to the Open.
 Weekly Pivot  12,896.56  44.01   
 61.8% Down from Intraday High  12,902.74  6.18   Yes! The 61.8% Down from Intraday High is close to the Weekly Pivot.
 50% Down from Intraday High  12,918.79  16.04   
 Daily Pivot  12,919.66  0.88   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  12,921.41  1.75   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  12,934.83  13.42   Yes! The 38.2% Down from Intraday High is close to the Close.
 Monthly Pivot  12,976.36  41.53   
 High  12,986.77  10.41   Yes! The High is close to the Monthly Pivot.
 Daily R1  12,988.52  1.75   Yes! The Daily R1 is close to the High.
 Daily R2  13,055.63  67.11   
 Weekly R1  13,082.57  26.94   
 Monthly R1  13,242.16  159.59   
 Weekly R2  13,243.72  1.56   Yes! The Weekly R2 is close to the Monthly R1.
 Monthly R2  13,562.91  319.19   

Monday 4/16/12. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

I thought I'd post this on Saturday afternoon since tornadoes might eat my house this evening.

I show the Nasdaq composite on the daily scale.

In the last week or so, the index has dropped in a straight-line run, and for the last three days, it has been moving sideways. Could this be the start of a measured move down chart pattern? I show it as an ABC correction of the recent uptrend using blue lines.

On the Nasdaq, this looks like a possible and perhaps probable outcome. On the Dow, I expect the index to move up before it tumbles. That is based on a pullback to the recent congestion region.

With earnings season now underway, anything can happen. If I am right, look for the index to move down this week, bottoming at 2900 (but maybe not all of that move this week). If I'm wrong, the index will move sideways to up, forming another peak near the price of the prior peaks at 3125 or so.

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A Brief Look Back

Picture of a flower from my garden.

The following are economic reports that moved the markets last week. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Down 130.55 points.
Tuesday: Down 213.66 points.
Wednesday: Up 89.46 points.
Thursday: Up 181.19 points.
Friday: Down 136.99 points.

For the Week...

The Dow industrials were down 210.55 points or 1.6%.
The Nasdaq composite was down 69.17 points or 2.2%.
The S&P 500 index was down 27.82 points or 2.0%.

Year to Date...

Dow Industrials
     3.4% down from the high of 13,297.11 on 04/02/2012.
     5.1% up from the low of 12,221.19 on 01/03/2012.
Nasdaq
     3.9% down from the high of 3,134.17 on 03/27/2012.
     14.6% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     3.7% down from the high of 1,422.38 on 04/02/2012.
     8.8% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

The following information is derived from yahoo!finance and sometimes Bloomberg.com with times local to the east coast.

ReportTimeA-F
Rating
Description
Retail sales8:30 MA-Reports total retail sales (not services). Are people spending?
Business inventories10:00 MC-Reports manufacturing, wholesale, retail inventories.
Housing starts8:30 TB-Number of homes beginning construction.
Building permits8:30 TB-Measures building permits for new construction.
Industrial production9:15 TB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 TB-Gauges economic activity, hints of inflation.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Existing home sales10:00 ThCCounts sales of used homes.
Leading indicators10:00 ThD-Summary of already known reports.

Options Expiration

The following is courtesy of the Options Industry Council.

OptionDate
VIX expiresWednesday
A.M. settled index options cease trading.Thursday
Expiring equity and P.M. settled index options cease trading. Expiring cash-settled currency options cease trading at 12:00 P.M. EST.Friday
Equity, index, and cash-settled currency options expireSaturday

Many options expire this week, so traders will be looking to close out their positions ahead of that, and that suggests increased volatility (large daily price swings).

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Swing and Position Traders: Chart Pattern Indicator

As of 04/13/2012, the CPI had:

26 bearish patterns,
4 bullish patterns,
215 patterns waiting for breakout.
The CPI signal is 13.3%, which is bearish (<= 35%).

The chart pattern indicator is bearish with 3 of 3 full triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, "Take a two-dimensional approach." He offers these tips.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,753  12,801  12,894  12,942  13,035 
Weekly  12,525  12,688  12,873  13,035  13,220 
Monthly  12,366  12,608  12,952  13,194  13,539 
S&P 500 (^GSPC): Daily  1,358  1,364  1,376  1,382  1,394 
Weekly  1,335  1,353  1,375  1,393  1,415 
Monthly  1,318  1,344  1,383  1,409  1,448 
Nasdaq (^IXIC): Daily  2,988  3,000  3,023  3,034  3,057 
Weekly  2,947  2,979  3,019  3,051  3,091 
Monthly  2,879  2,945  3,040  3,106  3,200 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Pivot point: P = (H + L + C)/3
First resistance level: R1 = (2 * P) - L
First support level: S1 = (2 * P) - H)
Second resistance level: R2 = P + (R1 - S1)
Second support level: S2 = P - (R1 - S1)
H = high price , L=low price, C=closing price

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks down 18.8%  Expect a reversal soon.
 1 month down 20.7%  Expect a reversal soon.
 S & P 500 (^GSPC) 2 weeks down 19.9%  Expect a reversal soon.
 1 month down 21.7%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 2 weeks down 22.3%  Expect a reversal soon.
 1 month down 27.6%  The trend may continue.

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indexes, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Buy-and-Hold: 12-Month SMA

This indicator warns of an index moving into or out of a bear market. It's based on a 12-month simple moving average of monthly closing prices, so it only changes monthly. See 12-Month Moving Average for more details.
Dow Industrials: bullish.
Nasdaq Composite: bullish.
S&P 500 Index: bullish.
Dow Transports: bullish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season is either underway or should be starting soon. The sessions could be more volatile.

 Found Chart Pattern Name
19Triangle, symmetrical
10Pipe top
8Rising wedge
8Head-and-shoulders top
8Rectangle top
8Double Top, Adam and Adam
7Broadening top
6Triple top
5Rectangle bottom
5Head-and-shoulders bottom

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example). However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The following industries, of 52 that I follow, were the best (1) and worst (52) performing.

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Retail Building Supply2. Retail Building Supply
3. Chemical (Basic)3. Furn/Home Furnishings
4. Computers and Peripherals4. Human Resources
5. Insurance (Life)5. Insurance (Life)
48. Metals and Mining (Div.)48. Electric Utility (East)
49. Natural Gas (Diversified)49. Natural Gas (Diversified)
50. Shoe50. Shoe
51. Short ETFs51. Coal
52. Coal52. Short ETFs

-- Thomas Bulkowski

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Thursday 4/12/12. Trading Thursday: Nasdaq

The index climbed by 0.8% or 25.24 points. Since 02/05/1971 the index made 343 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 225 occasions.
     Average loss was -0.9% on 118 occasions.
Expect the index to close higher 65.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 16/24 or 66.7% of the time.
     The prediction of the index closing lower has been right 8/19 or 42.1% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

I show a picture of the Nasdaq composite on the 5-minute scale from Wednesday's trading.

A double top appears at A and B, confirmed when the index closed below the red line. If you waited for the close, most of the move was already over. So even though the measure rule correctly predicted the extent of the move, following the rules, it would have been too late.

The obvious solution to that problem is to short on a piercing of the red line.

A double bottom appears at CD but it has yet to confirm. If it confirmed, it would imply a rising price trend. However, the open often gaps from the prior close, making any prediction using this pattern to be almost useless. Still, it shows a positive bias (bullish) going into the close.

Looking forward to tomorrow (Thursday), the daily chart shows the index resting on support setup by prior valleys since February.

On the 5 minute chart over the last 10 trading days, the downward trend seems scary with nary a hint of bullishness. We could see another plunge back to 12,700.

My view is that the longer-term support will win out and the index will close higher. That agrees with the probabilities that have been correct 67% of the time.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,783.08    
 Monthly S1  2,899.77  116.69   
 Weekly S2  2,990.09  90.32   
 Daily S2  2,996.81  6.72   
 Weekly S1  3,003.28  6.46   
 Daily S1  3,006.64  3.36   
 Low  3,008.75  2.11   Yes! The Low is close to the Daily S1.
 Close  3,016.46  7.71   
 Monthly Pivot  3,016.97  0.51   Yes! The Monthly Pivot is close to the Close.
 61.8% Down from Intraday High  3,017.06  0.09   Yes! The 61.8% Down from Intraday High is close to the Monthly Pivot.
 Daily Pivot  3,018.57  1.51   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,019.63  1.06   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Open  3,020.15  0.52   Yes! The Open is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,022.20  2.05   Yes! The 38.2% Down from Intraday High is close to the Open.
 Daily R1  3,028.40  6.20   
 High  3,030.51  2.11   Yes! The High is close to the Daily R1.
 Daily R2  3,040.33  9.82   
 Weekly Pivot  3,065.76  25.43   
 Weekly R1  3,078.95  13.18   
 Monthly R1  3,133.66  54.71   
 Weekly R2  3,141.43  7.77   
 Monthly R2  3,250.86  109.43   

Tuesday 4/10/12. Trading Tuesday: Dow

The index dropped by -1.0% or -130.55 points. Since 10/01/1928 the index made 351 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 172 occasions.
     Average loss was -1.0% on 179 occasions.
Expect the index to close lower 51.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 22/36 or 61.1% of the time.
     The prediction of the index closing lower has been right 3/4 or 75.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

I show a picture of the Dow industrials on the 5-minute scale from Monday's trading.

The Dow made an Adam & Eve double bottom at AB. This confirmed as a valid chart pattern at C, and it also looks like the measure rule prediction (the height of the pattern added to the breakout price) reached its target, too.

In the afternoon, a head-and-shoulders top appeared and confirmed after a close below the blue neckline. This easily met the predicted target.

Looking to tomorrow, I think that the index is resting on support setup by the head-and-shoulders. I expect an early morning rebound with the index climbing upward. This is in contrast to the lower close expected by the above probabilities that have been right 75% of the time. Yes, the Friday employment did not meet expectations, but haven't we been punished enough for that already? Maybe not, but I remain hopeful. I expect a higher close but with my track record over the last 2 months or so, expect a lower close. It's your money.

We could drop to 12,900 easily (forming a triple bottom) or rise to 13,020 (resistance of the last two trading days) just as easily.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,424.94    
 Monthly S1  12,677.26  252.33   
 Weekly S2  12,795.07  117.81   
 Daily S2  12,809.76  14.69   Yes! The Daily S2 is close to the Weekly S2.
 Weekly S1  12,862.33  52.57   
 Daily S1  12,869.67  7.34   Yes! The Daily S1 is close to the Weekly S1.
 Low  12,903.78  34.11   
 Close  12,929.59  25.81   
 61.8% Down from Intraday High  12,962.58  33.00   
 Daily Pivot  12,963.70  1.11   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  12,980.75  17.05   
 Monthly Pivot  12,987.19  6.44   Yes! The Monthly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  12,998.92  11.73   Yes! The 38.2% Down from Intraday High is close to the Monthly Pivot.
 Daily R1  13,023.61  24.70   
 Open  13,057.57  33.96   
 High  13,057.72  0.15   Yes! The High is close to the Open.
 Weekly Pivot  13,079.72  22.00   
 Daily R2  13,117.64  37.92   
 Weekly R1  13,146.98  29.34   
 Monthly R1  13,239.51  92.53   
 Weekly R2  13,364.37  124.86   
 Monthly R2  13,549.44  185.07   

Monday 4/9/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show a pic of the Dow industrials on the daily scale. ABC forms a triple top. It has not confirmed yet because price has not closed below D, the lowest low.

What does that mean? Look back at G. This tight congestion area supported the index when it dropped to F. Notice that area E is at the same level of D. It could support price. It has done that twice so far (at D).

Friday's employment report was below expectations, so expect the market to open lower on Monday. Depending on how severe the drop, I expect the Dow to be under pressure and head down before staging a pullback. That will probably occur later this week. After that, who knows?

Top 

A Brief Look Back

Picture of a flower from my garden.

The following are economic reports that moved the markets last week. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 52.45 points.
Tuesday: Down 64.94 points.
Wednesday: Down 124.8 points.
Thursday: Down 14.61 points.
Friday: Holiday or other weird event!

For the Week...

The Dow industrials were down 151.9 points or 1.1%.
The Nasdaq composite was down 11.07 points or 0.4%.
The S&P 500 index was down 10.39 points or 0.7%.

Year to Date...

Dow Industrials
     1.8% down from the high of 13,297.11 on 04/02/2012.
     6.9% up from the low of 12,221.19 on 01/03/2012.
Nasdaq
     1.7% down from the high of 3,134.17 on 03/27/2012.
     17.3% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     1.7% down from the high of 1,422.38 on 04/02/2012.
     11.1% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

The following information is derived from yahoo!finance and sometimes Bloomberg.com with times local to the east coast.

ReportTimeA-F
Rating
Description
Wholesale inventories10:00 TD-Wholesale sales and inventory statistics.
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Crude inventories10:30 W?My guess: Measures oil inventory.
Treasury budget2:00 WDTracks budget deficit. Important in April (tax filing).
FEDs Beige book2:00 W?Reports on economic conditions.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Producer price index8:30 ThB-Measures wholesale goods cost. An indication of future inflation.
Trade balance8:30 ThC+Signals balance of exports & imports.
Consumer price index8:30 FB+Inflation report. Measures cost of goods and services.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 04/05/2012, the CPI had:

42 bearish patterns,
5 bullish patterns,
310 patterns waiting for breakout.
The CPI signal is 10.6%, which is bearish (<= 35%).

The chart pattern indicator is bearish with 2 of 3 half triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, "Take a two-dimensional approach." He offers these tips.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,978  13,019  13,054  13,095  13,129 
Weekly  12,839  12,949  13,123  13,234  13,408 
Monthly  12,468  12,764  13,031  13,327  13,593 
S&P 500 (^GSPC): Daily  1,389  1,393  1,398  1,402  1,406 
Weekly  1,375  1,387  1,404  1,416  1,434 
Monthly  1,304  1,351  1,387  1,434  1,469 
Nasdaq (^IXIC): Daily  3,053  3,067  3,075  3,089  3,097 
Weekly  3,011  3,046  3,087  3,122  3,163 
Monthly  2,804  2,942  3,038  3,176  3,272 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Pivot point: P = (H + L + C)/3
First resistance level: R1 = (2 * P) - L
First support level: S1 = (2 * P) - H)
Second resistance level: R2 = P + (R1 - S1)
Second support level: S2 = P - (R1 - S1)
H = high price , L=low price, C=closing price

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 30.4%  The trend may continue.
 1 month down 20.7%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week down 30.8%  The trend may continue.
 1 month down 21.7%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week down 33.6%  The trend may continue.
 1 month down 27.6%  The trend may continue.

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indexes, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Buy-and-Hold: 12-Month SMA

This indicator warns of an index moving into or out of a bear market. It's based on a 12-month simple moving average of monthly closing prices, so it only changes monthly. See 12-Month Moving Average for more details.
Dow Industrials: bullish.
Nasdaq Composite: bullish.
S&P 500 Index: bullish.
Dow Transports: bullish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season will be starting in about 5 days.

 Found Chart Pattern Name
25Triangle, symmetrical
9Broadening top
7Rising wedge
7Head-and-shoulders top
6Triangle, ascending
5Rectangle bottom
5Pipe top
4Flag, high and tight
4Broadening wedge, descending
4Pipe bottom

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example). However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The following industries, of 52 that I follow, were the best (1) and worst (52) performing. Please note that last week's list is incorrect. It's the same as this week's.

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Retail Building Supply2. Retail Building Supply
3. Furn/Home Furnishings3. Furn/Home Furnishings
4. Human Resources4. Human Resources
5. Insurance (Life)5. Insurance (Life)
48. Electric Utility (East)48. Electric Utility (East)
49. Natural Gas (Diversified)49. Natural Gas (Diversified)
50. Shoe50. Shoe
51. Coal51. Coal
52. Short ETFs52. Short ETFs

-- Thomas Bulkowski

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Thursday 4/5/12. Trading Thursday: Nasdaq

The index dropped by -1.5% or -45.48 points. Since 02/05/1971 the index made 87 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.2% on 37 occasions.
     Average loss was -1.4% on 50 occasions.
Expect the index to close lower 57.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 16/24 or 66.7% of the time.
     The prediction of the index closing lower has been right 8/18 or 44.4% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

I show a picture of the Nasdaq composite on the 5-minute scale from Wednesday's trading.

A head-and-shoulders bottom appears in the middle of the session with a left shoulder (LS), head, and right shoulder (RS). When price closed above the blue neckline at A, it confirmed the chart pattern as a valid one. The index climbed far enough to fulfill the measure rule prediction.

Looking toward tomorrow's close, I expect the up trend to continue. The probabilities say otherwise, that the index will close lower.

On the daily scale, the index is resting at 3050, a small support area setup by a small congestion area in mid March. On the 10-day, five minute chart, the index looks like it has bounced off a bottom after completing a large double top. It's pulling back to the breakout of the double top. I expect that recovery to continue.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,800.29    
 Monthly S1  2,934.19  133.90   
 Weekly S2  3,026.33  92.14   
 Monthly Pivot  3,034.18  7.85   
 Daily S2  3,035.24  1.06   Yes! The Daily S2 is close to the Monthly Pivot.
 Weekly S1  3,047.21  11.97   
 Daily S1  3,051.66  4.45   
 Low  3,052.58  0.92   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  3,065.48  12.90   
 Close  3,068.09  2.61   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  3,069.01  0.92   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  3,069.47  0.46   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  3,073.45  3.98   
 Daily R1  3,085.43  11.98   
 Open  3,085.46  0.03   Yes! The Open is close to the Daily R1.
 High  3,086.35  0.89   Yes! The High is close to the Open.
 Weekly Pivot  3,090.69  4.34   
 Daily R2  3,102.78  12.09   
 Weekly R1  3,111.57  8.79   
 Weekly R2  3,155.05  43.48   
 Monthly R1  3,168.08  13.03   
 Monthly R2  3,268.07  99.99   

Tuesday 4/3/12. Trading Tuesday: Dow

The index climbed by 0.4% or 52.45 points. Since 10/01/1928 the index made 994 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 526 occasions.
     Average loss was -0.6% on 468 occasions.
Expect the index to close higher 52.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 22/35 or 62.9% of the time.
     The prediction of the index closing lower has been right 3/4 or 75.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

I show a picture of the Dow industrials on the 5-minute scale from Monday's trading.

When the index trends, chart patterns disappear. To reverse that, the index must consolidate for a chart pattern to appear. That is true of most patterns. I mention that because the potential double top at A and B failed to materialize when the index climbed above the AB peaks, continuing a strong up trend. That set the stage for a good uphill run.

At C, the index formed a long ascending triangle, but this one broke out downward. Almost as quickly the index moved above the top of the triangle and then down again, giving up some gains going into the close.

The strong push down from 3:00 on suggests a downward move tomorrow (Tuesday), but notice that the index flattened out in the last 15 minutes of trading (the last three bars).

What does that mean for tomorrow? I have no idea.

Combining the daily charts with intraday, the index shows underlying support from last Tuesday's action. The daily chart shows an upward breakout to a symmetrical triangle that formed in the last two weeks. Thus, I agree with the probabilities that the index will close higher tomorrow, but make up your own mind.

$ $ $

Friday's patterns for the weekend will have a new feature. I will include potential retrace trades, as requested by one of the visitors to this website. In other words, I list stocks, ETFs and indices where price has retraced between 57% and 67% of the prior up move. That location, in theory, is a site of support. Swing traders can take a bullish position and ride the recovery upward while setting a close stop. See the RetraceSetup page for more information and the print for this past Friday's stocks.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, sorted by value. When several are near each other (small differences), the area might act as support or resistance.

-- Thomas Bulkowski

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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,541.92    
 Monthly S1  12,903.21  361.28   
 Weekly S2  12,955.07  51.86   
 Daily S2  13,095.01  139.94   
 Monthly Pivot  13,096.14  1.13   Yes! The Monthly Pivot is close to the Daily S2.
 Weekly S1  13,109.78  13.64   Yes! The Weekly S1 is close to the Monthly Pivot.
 Low  13,153.69  43.91   
 Daily S1  13,179.75  26.06   
 Weekly Pivot  13,187.38  7.63   Yes! The Weekly Pivot is close to the Daily S1.
 61.8% Down from Intraday High  13,208.48  21.10   
 Open  13,211.36  2.88   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  13,225.40  14.04   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  13,238.43  13.03   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  13,242.32  3.89   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  13,264.49  22.17   
 High  13,297.11  32.62   
 Daily R1  13,323.17  26.06   
 Weekly R1  13,342.09  18.92   
 Daily R2  13,381.85  39.76   
 Weekly R2  13,419.69  37.84   
 Monthly R1  13,457.43  37.74   
 Monthly R2  13,650.36  192.94   

Monday 4/2/12. Market Monday: The Week Ahead

My Prediction

Picture of the S and P 500 on the daily scale.

I show a pic of the S&P 500 index on the daily scale because it shows a diamond top.

Diamonds tops can breakout upward or downward, but do so downward 69% of the time according to statistics in my book, Encyclopedia of Chart Patterns, 2nd edition.

Given that the market has been difficult to predict, I am going to guess that this pattern will break out upward. It really shouldn't since it is at the end of a long uphill run, but the diamond is ill-formed (loose looking) and appearing less like a diamond that just more rise-retraces in an upward climb.

In other words, I have no idea what the breakout direction will be, so I am going with the primary trend and guessing upward.

If it is downward, then 1300 is a possibility. That would put the index back near the late February peak.

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A Brief Look Back

Picture of a flower from my garden.

The following are economic reports that moved the markets last week. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 160.9 points.
Tuesday: Down 43.9 points.
Wednesday: Down 71.52 points.
Thursday: Up 19.61 points.
Friday: Up 66.22 points.

For the Week...

The Dow industrials were up 131.31 points or 1.0%.
The Nasdaq composite was up 23.65 points or 0.8%.
The S&P 500 index was up 11.36 points or 0.8%.

Year to Date...

Dow Industrials
     0.6% down from the high of 13,289.08 on 03/16/2012.
     8.1% up from the low of 12,221.19 on 01/03/2012.
Nasdaq
     1.4% down from the high of 3,134.17 on 03/27/2012.
     17.7% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     0.8% down from the high of 1,419.15 on 03/27/2012.
     11.9% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

The following information is derived from yahoo!finance and sometimes Bloomberg.com with times local to the east coast.

ReportTimeA-F
Rating
Description
Construction spending10:00 MDCovers residential/non-residential/public spending on new construction.
Factory orders10:00 TD+Durable/non-durable goods orders w/factory inventories.
FOMC Minutes2:00 T?Minutes of the prior Federal Reserve meeting.
Auto & truck sales2:00 TC-Monthly sales of domestically produced vehicles.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Consumer credit3:00 FD-Measures auto, credit card and other debt.
Market holidayFriday It's Miller Time!

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 03/30/2012, the CPI had:

11 bearish patterns,
21 bullish patterns,
297 patterns waiting for breakout.
The CPI signal is 65.6%, which is bullish (>= 65%).

The chart pattern indicator is bullish with 3 of 3 full triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, "Take a two-dimensional approach." He offers these tips.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  13,118  13,165  13,195  13,242  13,271 
Weekly  12,938  13,075  13,170  13,307  13,402 
Monthly  12,524  12,868  13,079  13,422  13,633 
S&P 500 (^GSPC): Daily  1,397  1,403  1,407  1,412  1,416 
Weekly  1,379  1,394  1,406  1,421  1,434 
Monthly  1,310  1,359  1,389  1,438  1,468 
Nasdaq (^IXIC): Daily  3,062  3,077  3,094  3,109  3,127 
Weekly  3,034  3,063  3,099  3,127  3,163 
Monthly  2,808  2,950  3,042  3,184  3,276 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Pivot point: P = (H + L + C)/3
First resistance level: R1 = (2 * P) - L
First support level: S1 = (2 * P) - H)
Second resistance level: R2 = P + (R1 - S1)
Second support level: S2 = P - (R1 - S1)
H = high price , L=low price, C=closing price

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.6%  Expect a random direction.
 6 months up 5.0%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 42.4%  Expect a random direction.
 4 months up 25.4%  The trend may continue.
 Nasdaq composite (^IXIC) 7 weeks up 3.2%  Expect a reversal soon.
 3 months up 28.4%  The trend may continue.

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indexes, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Buy-and-Hold: 12-Month SMA

This indicator warns of an index moving into or out of a bear market. It's based on a 12-month simple moving average of monthly closing prices, so it only changes monthly. See 12-Month Moving Average for more details.
Dow Industrials: bullish.
Nasdaq Composite: bullish.
S&P 500 Index: bullish.
Dow Transports: bullish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season will be starting in about 12 days.

 Found Chart Pattern Name
19Triangle, symmetrical
16Pipe bottom
10Rectangle top
9Head-and-shoulders top
8Head-and-shoulders bottom
8Broadening top
8Rectangle bottom
7Double Bottom, Adam and Adam
7Rising wedge
6Triangle, ascending

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example). However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The following industries, of 52 that I follow, were the best (1) and worst (52) performing.

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Retail Building Supply2. Insurance (Life)
3. Furn/Home Furnishings3. Human Resources
4. Human Resources4. Furn/Home Furnishings
5. Insurance (Life)5. Retail Building Supply
48. Electric Utility (East)48. Metals and Mining (Div.)
49. Natural Gas (Diversified)49. Natural Gas (Diversified)
50. Shoe50. Shoe
51. Coal51. Coal
52. Short ETFs52. Short ETFs

-- Thomas Bulkowski

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