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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
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/26/2017
21,711 97.58 0.5%
9,484 -5.36 -0.1%
723 6.73 0.9%
6,423 10.58 0.2%
2,478 0.70 0.0%
YTD
9.9%
4.9%
9.5%
19.3%
10.7%
Tom's Targets    Overview: 07/14/2017
21,850 or 21,000 by 08/01/2017
9,950 or 9,400 by 08/01/2017
740 or 685 by 08/01/2017
6,450 or 6,175 by 08/01/2017
2,525 or 2,400 by 08/01/2017

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December 2011 Headlines


Archives


Thursday 12/29/11. Trading Thursday: Nasdaq

The index dropped by -1.3% or -35.22 points. Since 02/05/1971 the index made 94 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.7% on 34 occasions.
     Average loss was -1.0% on 60 occasions.
Look for the index to close lower 63.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 9/15 or 60.0% of the time.
     The prediction of the index closing lower has been right 7/13 or 53.8% 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.

Price made a triple bottom at noon (bottoms 1, 2, 3), confirmed when price closed above the horizontal red line at A.

That turned out to be one of the few duds I've have seen this year. The index didn't move much higher before collapsing. When it dropped, it confirmed a double top shown with AB on the chart. That confirmed as a valid chart pattern but so far, the down move hasn't lasted long either.

Since the index is moving down and since I believe the market indices are at overhead resistance, I think this one will close lower 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 

© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,335.61    
 Monthly S1  2,462.80  127.18   
 Weekly S2  2,474.78  11.98   
 Weekly S1  2,532.38  57.60   
 Daily S2  2,561.57  29.19   
 Monthly Pivot  2,568.66  7.10   
 Weekly Pivot  2,575.61  6.95   
 Daily S1  2,575.77  0.16   Yes! The Daily S1 is close to the Weekly Pivot.
 Low  2,586.85  11.08   
 Close  2,589.98  3.13   Yes! The Close is close to the Low.
 Daily Pivot  2,601.06  11.08   
 61.8% Down from Intraday High  2,601.94  0.88   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  2,606.59  4.66   
 38.2% Down from Intraday High  2,611.25  4.66   
 Daily R1  2,615.26  4.01   
 Open  2,626.19  10.93   
 High  2,626.34  0.15   Yes! The High is close to the Open.
 Weekly R1  2,633.21  6.87   
 Daily R2  2,640.55  7.34   
 Weekly R2  2,676.44  35.89   
 Monthly R1  2,695.85  19.41   
 Monthly R2  2,801.71  105.87   

Tuesday 12/27/11. Market Monday on Tuesday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show a chart of the Dow utilities index on the daily scale.

The chart shows a measured move up chart pattern. To me, this looks like it is time for a reverse.

Notice that leg AB almost equals the length of leg CD. After such a move, the most common behavior is that price retraces back to the corrective phase.

The corrective phase is the consolidation area BC. Thus, in the coming week, look for price to drop and approach B. It may not make it all the way back down since this is a short week, but I think the index will cover the ground.

Also note that the utility index is the star performer this year.

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: Down 100.13 points.
Tuesday: Up 337.32 points.
Wednesday: Up 4.16 points.
Thursday: Up 61.91 points.
Friday: Up 124.35 points.

For the Week...

The Dow industrials were up 427.61 points or 3.6%.
The Nasdaq composite was up 63.31 points or 2.5%.
The S&P 500 index was up 45.67 points or 3.7%.

Year to Date...

Dow Industrials
     4.5% down from the high of 12,876.00 on 05/02/2011.
     18.2% up from the low of 10,404.49 on 10/04/2011.
Nasdaq
     9.3% down from the high of 2,887.75 on 05/02/2011.
     13.9% up from the low of 2,298.89 on 10/04/2011.
S&P 500
     7.7% down from the high of 1,370.58 on 05/02/2011.
     17.7% up from the low of 1,074.77 on 10/04/2011.

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.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Chicago purchasing managers index9:45 ThBMonitors regional manufacturing activity.
Crude inventories11:00 Th?My guess: Measures oil inventory.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

As of 12/23/2011, the CPI had:

0 bearish patterns,
93 bullish patterns,
494 patterns waiting for breakout.
The CPI signal is 100.0%, 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  12,126  12,210  12,254  12,338  12,381 
Weekly  11,547  11,920  12,109  12,483  12,671 
Monthly  10,875  11,585  11,941  12,650  13,007 
S&P 500 (^GSPC): Daily  1,250  1,258  1,262  1,269  1,273 
Weekly  1,181  1,223  1,244  1,286  1,307 
Monthly  1,122  1,194  1,230  1,302  1,339 
Nasdaq (^IXIC): Daily  2,594  2,606  2,612  2,625  2,631 
Weekly  2,484  2,551  2,585  2,652  2,686 
Monthly  2,345  2,482  2,578  2,715  2,811 
  • 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.
 3 months up 21.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 40.7%  Expect a random direction.
 1 month up 53.2%  Expect a random direction.
 Nasdaq composite (^IXIC) 1 week up 39.6%  The trend may continue.
 2 months down 16.7%  Expect a reversal soon.

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: bearish.
S&P 500 Index: bearish.
Dow Transports: bearish.
Dow Utilities: bullish.

Top

Earnings, Chart Patterns & Industries

Earnings season is over.

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

I found 54 pipe bottoms last week, which is very bullish! Large numbers of pipe bottoms often signal the start of a short to intermediate-term move up before price drops back down, forming an unconfirmed double bottom.

 Found Chart Pattern Name
69Pipe bottom
52Pipe top
13Head-and-shoulders bottom
11Triangle, symmetrical
6Flag, high and tight
6Broadening top
5Triangle, descending
5Double Bottom, Adam and Adam
4Double Top, Adam and Eve
4Double Top, Eve and Eve

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. Electric Utility (Central)1. Household Products
2. Household Products2. Electric Utility (Central)
3. Electric Utility (East)3. Internet
4. Electric Utility (West)4. Electric Utility (East)
5. Internet5. Retail Store
48. Semiconductor48. Investment Co. (Foreign)
49. Telecom. Equipment49. Semiconductor
50. Precision Instrument50. Precision Instrument
51. Securities Brokerage51. Securities Brokerage
52. Coal52. Coal

-- Thomas Bulkowski

Top


Saturday 12/24/11. What I Got For Christmas.

Picture of a flower from my garden.

I received an early Christmas present this year in the form of Delphi Financial Group, DFG.

The stock jumped from the close of 25.43 on Tuesday to close the next day at 44, for a gain of 73%.

I joked to my brother that the 73% gain "brought me back up to break even!"

Tokio Marine Holdings is buying the company for $43.875 plus a $1 special dividend. I did not want to risk giving up the gain for additional profit of the dividend.

I sold a day later and received a fill at 43.93.

"Good news!" I told my dog. "We can eat again!"


Thursday 12/22/11. Trading Thursday: Nasdaq

The index dropped by -1.0% or -25.76 points. Since 02/05/1971 the index made 119 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 54 occasions.
     Average loss was -1.6% on 65 occasions.
Look for the index to close lower 54.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 9/15 or 60.0% of the time.
     The prediction of the index closing lower has been right 7/12 or 58.3% 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.

The stock shows a nice rounded turn from about 10:30 to near the close. At the bottom of this turn appeared a head-and-shoulders bottom chart pattern that acted as a reversal. Price broke out at A and threw back at B. The breakout was an opportunity to make some bucks and the throwback was another chance to go long.

I like the sedate nature of this turn. It speaks to me in bullish grunts. Those grunts could be the beans I had for lunch talking, so who knows.

The daily chart looks like a big symmetrical triangle with price nearing the breakout date, wobbling up and down. Intraday, a rounding bottom often makes an upward breakout. I am going to bet on an upside breakout tomorrow, meaning a higher close for the day. Be warned that the probabilities are against me, so I could be wrong.

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 

© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,317.38    
 Monthly S1  2,447.68  130.29   
 Weekly S2  2,467.34  19.66   
 Weekly S1  2,522.65  55.32   
 Daily S2  2,525.13  2.48   Yes! The Daily S2 is close to the Weekly S1.
 Low  2,544.66  19.53   
 Daily S1  2,551.55  6.89   
 61.8% Down from Intraday High  2,562.21  10.66   
 50% Down from Intraday High  2,567.64  5.42   
 Daily Pivot  2,571.08  3.45   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Monthly Pivot  2,571.77  0.69   Yes! The Monthly Pivot is close to the Daily Pivot.
 38.2% Down from Intraday High  2,573.06  1.28   Yes! The 38.2% Down from Intraday High is close to the Monthly Pivot.
 Close  2,577.97  4.91   
 Weekly Pivot  2,581.20  3.23   Yes! The Weekly Pivot is close to the Close.
 Open  2,589.77  8.57   
 High  2,590.61  0.84   Yes! The High is close to the Open.
 Daily R1  2,597.50  6.89   
 Daily R2  2,617.03  19.53   
 Weekly R1  2,636.51  19.48   
 Weekly R2  2,695.06  58.54   
 Monthly R1  2,702.07  7.01   
 Monthly R2  2,826.16  124.10   

Tuesday 12/20/11. Trading Tuesday: Dow

The index dropped by -0.8% or -100.13 points. Since 10/01/1928 the index made 477 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 246 occasions.
     Average loss was -0.9% on 231 occasions.
Look for the index to close higher 51.6% 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 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.

A double top appears early in the session, spelling a downward theme that lasted throughout the trading day. That would have made a nice opportunity to short the market.

Following that, a head-and-shoulders bottom appears (LS, RS = left and right shoulders) but this did not meet its measure rule potential.

A head-and-shoulders top confirms an hour before the close and predicts a bearish move, which happened.

The congestion region in the final hour should act as support for the opening tomorrow, but anything goes in this environment. I still think the markets will trend higher going into the new year and it might as well start tomorrow (Tuesday). Look for a higher 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

Top 

© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  10,725.72    
 Monthly S1  11,245.99  520.27   
 Weekly S2  11,516.46  270.47   
 Daily S2  11,618.42  101.96   
 Weekly S1  11,641.36  22.94   
 Daily S1  11,692.34  50.98   
 Low  11,735.19  42.85   
 Monthly Pivot  11,751.83  16.64   Yes! The Monthly Pivot is close to the Low.
 Close  11,766.26  14.43   Yes! The Close is close to the Monthly Pivot.
 61.8% Down from Intraday High  11,808.03  41.77   
 Daily Pivot  11,809.11  1.08   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  11,830.54  21.42   
 38.2% Down from Intraday High  11,853.04  22.50   
 Open  11,866.54  13.50   Yes! The Open is close to the 38.2% Down from Intraday High.
 Daily R1  11,883.03  16.49   Yes! The Daily R1 is close to the Open.
 Weekly Pivot  11,911.37  28.34   
 High  11,925.88  14.51   Yes! The High is close to the Weekly Pivot.
 Daily R2  11,999.80  73.92   
 Weekly R1  12,036.27  36.47   
 Monthly R1  12,272.10  235.83   
 Weekly R2  12,306.28  34.18   
 Monthly R2  12,777.94  471.66   

Monday 12/19/11. Market Monday: The Week Ahead

My Prediction

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

The picture of the S&P 500 index on the daily scale shows what a brutal week it was. But the holidays are coming, so cheer up.

Notice how the index looks like a head-and-shoulders bottom chart pattern. The left shoulder is LS, right is RS and head is, well head. Yes, it's a clever naming scheme.

Notice that this head-and-shoulders acts as a continuation pattern, not a reversal. In other words, price trends upward into the pattern instead of downward.

The chart pattern has not confirmed yet, so the pattern is nothing more than squiggles on a price chart. To confirm, price must close above the red neckline. If that happens, which I expect will, then look for an upward trend. That will probably happen in January, sometime.

If price closes below the right shoulder bottom, then look for another leg down.

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: Down 162.87 points.
Tuesday: Down 66.45 points.
Wednesday: Down 131.46 points.
Thursday: Up 45.33 points.
Friday: Down 2.42 points.

For the Week...

The Dow industrials were down 317.87 points or 2.6%.
The Nasdaq composite was down 91.52 points or 3.5%.
The S&P 500 index was down 35.53 points or 2.8%.

Year to Date...

Dow Industrials
     7.8% down from the high of 12,876.00 on 05/02/2011.
     14.1% up from the low of 10,404.49 on 10/04/2011.
Nasdaq
     11.5% down from the high of 2,887.75 on 05/02/2011.
     11.2% up from the low of 2,298.89 on 10/04/2011.
S&P 500
     11.0% down from the high of 1,370.58 on 05/02/2011.
     13.5% up from the low of 1,074.77 on 10/04/2011.

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
Housing starts8:30 TB-Number of homes beginning construction.
Building permits8:30 TB-Measures building permits for new construction.
Existing home sales10:00 WCCounts sales of used homes.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Gross domestic product8:30 ThBMeasures economic activity; GDP deflator measures inflation.
Michigan sentiment9:55 ThB-Consumer sentiment: Measures strength of consumer spending.
Leading indicators10:00 ThD-Summary of already known reports.
Durable goods orders8:30 FBMeasures orders, shipments of goods with lifespans >3 years.
Personal income & consumption8:30 FC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 FC+Covers durables, non-durables, and services.
New home sales10:00 FC+Shows sales of single-family homes.

Options Expiration

VIX expires on Wednesday.

Top

Swing and Position Traders: Chart Pattern Indicator

As of 12/16/2011, the CPI had:

8 bearish patterns,
11 bullish patterns,
327 patterns waiting for breakout.
The CPI signal is 57.9%, which is neutral (between 35% and 65%).

The chart pattern indicator is bearish with 1 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  11,736  11,801  11,885  11,950  12,033 
Weekly  11,550  11,708  11,945  12,103  12,340 
Monthly  10,759  11,313  11,785  12,339  12,811 
S&P 500 (^GSPC): Daily  1,206  1,213  1,222  1,229  1,238 
Weekly  1,182  1,201  1,228  1,247  1,274 
Monthly  1,107  1,163  1,215  1,272  1,324 
Nasdaq (^IXIC): Daily  2,525  2,540  2,563  2,578  2,600 
Weekly  2,460  2,508  2,574  2,621  2,688 
Monthly  2,310  2,433  2,564  2,687  2,819 
  • 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 down 30.8%  The trend may continue.
 1 month down 20.2%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week down 32.0%  The trend may continue.
 2 months down 12.2%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week down 34.4%  The trend may continue.
 2 months down 16.7%  Expect a reversal soon.

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: bearish.
S&P 500 Index: bearish.
Dow Transports: bearish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season is over.

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

I found 54 pipe bottoms last week, which is very bullish! Large numbers of pipe bottoms often signal the start of a short to intermediate-term move up before price drops back down, forming an unconfirmed double bottom.

 Found Chart Pattern Name
62Pipe bottom
47Pipe top
8Triangle, symmetrical
7Broadening top
6Head-and-shoulders bottom
6Flag, high and tight
5Triangle, descending
4Double Top, Adam and Eve
3Triple top
2Head-and-shoulders 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. Household Products1. Household Products
2. Electric Utility (Central)2. Retail (Special Lines)
3. Internet3. Apparel
4. Electric Utility (East)4. Retail Building Supply
5. Retail Store5. Shoe
48. Investment Co. (Foreign)48. Human Resources
49. Semiconductor49. Semiconductor
50. Precision Instrument50. Precision Instrument
51. Securities Brokerage51. Securities Brokerage
52. Coal52. Coal

-- Thomas Bulkowski

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Thursday 12/15/11. Trading Thursday: Nasdaq

The index dropped by -1.5% or -39.96 points. Since 02/05/1971 the index made 86 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.3% on 36 occasions.
     Average loss was -1.4% on 50 occasions.
Look for the index to close lower 58.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 9/15 or 60.0% of the time.
     The prediction of the index closing lower has been right 7/11 or 63.6% 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 flag appears early in the session, at BC. The interesting thing about flags is that the move before the flag (AB) is often duplicated after the flag (CD). In other words, the flag appears midway in the price trend. Thus, if you recognized the flag, you could have made money.

An inverted roof chart pattern appears in the afternoon. My feeling is that these patterns breakout downward most often, but I have not checked the statistics on that. From the picture, it is hard to discern a trend direction for tomorrow.

Thus, I'll go with the probabilities and guess that tomorrow will be another day down.

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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© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,281.48    
 Monthly S1  2,410.40  128.91   
 Daily S2  2,501.98  91.59   
 Weekly S2  2,520.15  18.17   
 Daily S1  2,520.65  0.50   Yes! The Daily S1 is close to the Weekly S2.
 Low  2,525.88  5.23   
 Weekly S1  2,529.73  3.85   Yes! The Weekly S1 is close to the Low.
 Close  2,539.31  9.58   
 61.8% Down from Intraday High  2,542.14  2.83   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  2,544.54  2.41   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  2,547.16  2.62   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  2,552.18  5.02   
 Daily R1  2,563.21  11.02   
 Open  2,566.21  3.00   Yes! The Open is close to the Daily R1.
 High  2,568.44  2.23   Yes! The High is close to the Open.
 Monthly Pivot  2,570.39  1.95   Yes! The Monthly Pivot is close to the High.
 Daily R2  2,587.10  16.71   
 Weekly Pivot  2,602.13  15.03   
 Weekly R1  2,611.71  9.58   
 Weekly R2  2,684.11  72.40   
 Monthly R1  2,699.31  15.20   
 Monthly R2  2,859.30  160.00   

Tuesday 12/13/11. Trading Tuesday: Dow

Picture of my shelves.

Let me tell you what I did on Sunday. I bought four boards, already painted, and shelf brackets to make three tiers of shelves in my master bedroom to hold the VCR and DVDs that I do not like, pictured. I spent half an hour using a putty knife to remove the $%^* Rubbermaid labels from the wood. Then I lined it up carefully against the wall, on the floor, measured and installed three brackets on the two four foot planks. The middle bracket is off center because this wall has only one stud. (I'm not kidding. I gave up using my magnetic stud finder and bought a sonic one. That found studs where there should not have been and another check of the magnetic finder confirmed the absence of studs. It's not a load bearing wall because it only holds up a plant ledge).

Anyway, when I rotated the shelf to hang it on the wall, the bracket no longer aligned with the one stud. Since I copied the placement on both long boards, I had to fix that. (Imagine a board with three nails poking up from the floor, the middle nail is off-center, closer to the right edge. When you rotate (not flip) it to hang it on the wall, the middle nail is now positioned on the left).

In the process of fixing it, I fastened the L-shaped shelf bracket on backwards. Two brackets were against the wall and the third was against air. I couldn't believe that.

Then I worked on the two smaller planks that would become the middle tier of three shelves. I fastened the brackets to the wood and then fastened the shelf to the wall. Only this time, I fastened the left shelf onto the right side (there was a difference in bracket locations). So, I had to remove the screws and stripped one (despite buying a 6" long Phillips drill bit, the bracket interfered with drilling).

So, I made three mistakes and it took all afternoon. Exhausting, but a fun diversion.

# # #

Today, I replaced my 25-year metal clad washer hoses with new ones. If you still have rubber washer hoses on your washing machine, then change them out quick! Those eventually burst and flood your home. Buy metal clad ones. They can burst too, since they are just rubber hoses clad in a flexible metal sleeve, but the ones I bought from GE (about $20 at Home Depot) have a third layer of clear plastic on the outside.

Yes, I shut off the water first and used Teflon tape on the faucet ends to prevent leaking. Took about 15 minutes to replace. I'll find out this weekend if it leaks. (It hasn't so far, but that is when I will use them).

# # #

The index dropped by -1.3% or -162.87 points. Since 10/01/1928 the index made 200 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 105 occasions.
     Average loss was -0.9% on 95 occasions.
Look for the index to close higher 52.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 16/23 or 69.6% 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.

After plunging within five minutes of the open, the Dow continued lower until finding support at A and again at B. The double bottom confirmed as a valid chart pattern at 1:45. If you missed that, a third bottom formed (C) which confirmed at D, about 2:20. That allowed you to jump in and ride the index higher.

What will tomorrow bring? I still have another project to do, that of hooking up my VCR/DVD player in my master bedroom to the TV and analog to digital converter.

As for the Dow, the large flat base would seem to be a nice launching board for a move up. However, I expect a throwback to the base before a move up. In the morning, expect a drop followed by a rise when the FED tells they did nothing. Why are we paying these guys to do nothing?

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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© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  10,810.76    
 Monthly S1  11,416.08  605.31   
 Weekly S2  11,790.31  374.23   
 Daily S2  11,807.36  17.05   Yes! The Daily S2 is close to the Weekly S2.
 Monthly Pivot  11,836.87  29.52   
 Weekly S1  11,905.85  68.98   
 Daily S1  11,914.37  8.52   Yes! The Daily S1 is close to the Weekly S1.
 Low  11,940.86  26.49   
 Close  12,021.39  80.53   
 61.8% Down from Intraday High  12,032.74  11.35   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  12,047.88  15.14   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  12,061.12  13.24   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Weekly Pivot  12,081.76  20.64   Yes! The Weekly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  12,089.50  7.74   Yes! The 38.2% Down from Intraday High is close to the Weekly Pivot.
 Daily R1  12,154.89  65.39   
 Open  12,181.08  26.19   
 High  12,181.38  0.30   Yes! The High is close to the Open.
 Weekly R1  12,197.30  15.92   Yes! The Weekly R1 is close to the High.
 Daily R2  12,288.40  91.10   
 Weekly R2  12,373.21  84.81   
 Monthly R1  12,442.19  68.98   
 Monthly R2  12,862.98  420.80   

Monday 12/12/11. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

I show a picture of the Dow transports on the daily scale.

What appeals to me in this picture is two things. First is the large drop out of the symmetrical triangle in late November. If the extent of that move is reflected above the top of the triangle, then expect a nice move up soon. Read about the swing rule.

Second is the upward breakout from the triangle. Price threw back to the triangle top and now it looks to resume the upward move.

However, I am still being cautious and leaving the targets showing more of a downward retrace. The direction for the coming week is unclear, but Friday's big move up was unexpected. It could signal a resumption of the move up...or not. My crystal ball gets cloudy this time of year...

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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 78.41 points.
Tuesday: Up 52.3 points.
Wednesday: Up 46.24 points.
Thursday: Down 198.67 points.
Friday: Up 186.56 points.

For the Week...

The Dow industrials were up 164.84 points or 1.4%.
The Nasdaq composite was up 19.92 points or 0.8%.
The S&P 500 index was up 10.91 points or 0.9%.

Year to Date...

Dow Industrials
     5.4% down from the high of 12,876.00 on 05/02/2011.
     17.1% up from the low of 10,404.49 on 10/04/2011.
Nasdaq
     8.3% down from the high of 2,887.75 on 05/02/2011.
     15.1% up from the low of 2,298.89 on 10/04/2011.
S&P 500
     8.4% down from the high of 1,370.58 on 05/02/2011.
     16.8% up from the low of 1,074.77 on 10/04/2011.

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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
Treasury budget2:00 MDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 TA-Reports total retail sales (not services). Are people spending?
Business inventories10:00 TC-Reports manufacturing, wholesale, retail inventories.
FOMC Rate decision2:15 T?The Federal Reserves reports on interest rate changes.
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Crude inventories10:30 W?My guess: Measures oil inventory.
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.
Industrial production9:15 ThB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 ThB-Gauges economic activity, hints of inflation.
Consumer price index8:30 FB+Inflation report. Measures cost of goods and services.

Options Expiration

The following is courtesy of the Options Industry Council.

OptionDate
A.M. settled index options cease trading.Thursday
Expiring equity, P.M. settled index options and treasury/interest rate options classes cease trading. Expiring cash-settled currency options cease trading at 12:00 P.M. EST.Friday
Equity, index, cash-settled currency and treasury/interest rate 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 12/09/2011, the CPI had:

3 bearish patterns,
17 bullish patterns,
281 patterns waiting for breakout.
The CPI signal is 85.0%, 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  11,914  12,049  12,131  12,266  12,348 
Weekly  11,845  12,014  12,136  12,306  12,428 
Monthly  10,865  11,525  11,891  12,551  12,917 
S&P 500 (^GSPC): Daily  1,226  1,240  1,249  1,264  1,273 
Weekly  1,216  1,235  1,251  1,271  1,287 
Monthly  1,112  1,183  1,230  1,302  1,349 
Nasdaq (^IXIC): Daily  2,584  2,616  2,634  2,666  2,685 
Weekly  2,556  2,601  2,638  2,683  2,720 
Monthly  2,317  2,482  2,606  2,771  2,895 
  • 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 30.8%  The trend may continue.
 3 months up 21.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 2 weeks up 28.9%  The trend may continue.
 1 month up 53.2%  Expect a random direction.
 Nasdaq composite (^IXIC) 2 weeks up 25.0%  The trend may continue.
 1 month up 47.4%  Expect a random direction.

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: bearish.
S&P 500 Index: bearish.
Dow Transports: bearish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season is over.

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

I found 54 pipe bottoms last week, which is very bullish! Large numbers of pipe bottoms often signal the start of a short to intermediate-term move up before price drops back down, forming an unconfirmed double bottom.

 Found Chart Pattern Name
56Pipe bottom
22Triangle, symmetrical
19Triple top
9Head-and-shoulders top
9Double Top, Adam and Adam
8Flag, high and tight
7Double Top, Adam and Eve
7Triangle, descending
7Pipe top
6Broadening 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. Household Products1. Household Products
2. Retail (Special Lines)2. Electric Utility (Central)
3. Apparel3. Retail Store
4. Retail Building Supply4. Electric Utility (East)
5. Shoe5. Toiletries/Cosmetics
48. Human Resources48. Semiconductor
49. Semiconductor49. Human Resources
50. Precision Instrument50. Precision Instrument
51. Securities Brokerage51. Securities Brokerage
52. Coal52. Coal

-- Thomas Bulkowski

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Picture of a flower from my garden.

Saturday 12/10/11. Saturday Supplement.

Referral fees to Amazon.com support this site.

When shopping for books or other good/services from Amazon.com, just click one of the pictures of my books (see far left). When you buy anything while there, it generates a referral fee. That fee does not increase your cost in any way.

Also, ad revenue for the site have plunged 60% from the high-water mark this past year. If you see an ad that interests you, then click on it. That click generates a referral fee which also helps support this website.

I like free and don't want to start a subscription-based service. Thanks for helping defray the cost of running this site!

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Thursday 12/8/11. Trading Thursday: Nasdaq

The index dropped by 0.0% or -0.35 points. Since 02/05/1971 the index made 551 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 309 occasions.
     Average loss was -1.0% on 242 occasions.
Look for the index to close higher 56.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 9/14 or 64.3% of the time.
     The prediction of the index closing lower has been right 7/11 or 63.6% 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.

The chart pattern that strikes me when I look at the chart is a rounding top. Despite what other authors may say about this chart pattern, I discovered that it breaks out upward most often. This is an example. The pattern begins at A and ends at B. At C, the index has thrown back to the top of the pattern.

The throwback suggests price will recover to close higher tomorrow. Fortunately, that assessment agrees with the probabilities above.

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 

© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,310.20    
 Weekly S2  2,453.88  143.68   
 Monthly S1  2,479.70  25.83   
 Weekly S1  2,551.54  71.84   
 Daily S2  2,593.31  41.77   
 Weekly Pivot  2,605.39  12.08   
 Monthly Pivot  2,610.99  5.60   
 Low  2,612.80  1.81   Yes! The Low is close to the Monthly Pivot.
 Daily S1  2,621.26  8.46   
 61.8% Down from Intraday High  2,630.92  9.66   
 50% Down from Intraday High  2,636.52  5.60   
 Open  2,638.61  2.09   Yes! The Open is close to the 50% Down from Intraday High.
 Daily Pivot  2,640.75  2.14   Yes! The Daily Pivot is close to the Open.
 38.2% Down from Intraday High  2,642.12  1.37   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  2,649.21  7.09   
 High  2,660.24  11.03   
 Daily R1  2,668.70  8.46   
 Daily R2  2,688.19  19.49   
 Weekly R1  2,703.05  14.86   
 Weekly R2  2,756.90  53.84   
 Monthly R1  2,780.49  23.60   
 Monthly R2  2,911.78  131.28   

Tuesday 12/6/11. Trading Tuesday: Dow

The index climbed by 0.7% or 78.41 points. Since 10/01/1928 the index made 606 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 333 occasions.
     Average loss was -0.7% on 273 occasions.
Look for the index to close higher 55.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 15/22 or 68.2% 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.

From 11:00 to about 1:30, the Dow moved horizontally, forming a long rectangle top. The breakout from this chart pattern saw the Dow make a strong move down, giving up a large portion of its gains.

Looking to tomorrow, the index is resting on a support area. Given that the probabilities suggest a higher close, that sounds good to me. Over the past 10 days, each day's low during the past 4 days shows it following a trendline upward. When will price pierce this trendline moving downward is unclear. It could be tomorrow or the next day or the next. I still think that the indices will retrace their gains, but today's gain suggests it may not happen.

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 

© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  10,840.08    
 Weekly S2  10,911.04  70.96   
 Monthly S1  11,468.95  557.92   
 Weekly S1  11,504.43  35.48   
 Weekly Pivot  11,825.56  321.12   
 Monthly Pivot  11,860.44  34.88   
 Daily S2  11,936.87  76.43   
 Daily S1  12,017.35  80.48   
 Low  12,021.46  4.11   Yes! The Low is close to the Daily S1.
 Open  12,021.54  0.08   Yes! The Open is close to the Low.
 61.8% Down from Intraday High  12,084.52  62.98   
 Close  12,097.83  13.31   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  12,101.94  4.11   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  12,104.00  2.05   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  12,123.47  19.48   
 Daily R1  12,182.42  58.95   
 High  12,186.53  4.11   Yes! The High is close to the Daily R1.
 Daily R2  12,267.01  80.48   
 Weekly R1  12,418.95  151.94   
 Monthly R1  12,489.31  70.36   
 Weekly R2  12,740.08  250.76   
 Monthly R2  12,880.80  140.72   

Monday 12/5/11. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utliities on the daily scale.

I show the Dow utilities on the daily scale, but it represents the other indices as well.

Price has made a strong move up in the last week or two, but now it appears to be falling.

How far will price drop? One way to answer that is to show a Fibonacci retrace of the AB move. I show that as 32%, 50% and 62%. My guess is that the index will drop about midway down the AB move by mid December.

If you look at the top of this page, you will see that I flipped my targets and trend direction to red (arrows), based on this type of analysis. In other words, I think the indices are going lower over the next 10 days.

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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 291.23 points.
Tuesday: Up 32.62 points.
Wednesday: Up 490.05 points.
Thursday: Down 25.65 points.
Friday: Down 0.61 points.

For the Week...

The Dow industrials were up 787.64 points or 7.0%.
The Nasdaq composite was up 185.42 points or 7.6%.
The S&P 500 index was up 85.61 points or 7.4%.

Year to Date...

Dow Industrials
     6.7% down from the high of 12,876.00 on 05/02/2011.
     15.5% up from the low of 10,404.49 on 10/04/2011.
Nasdaq
     9.0% down from the high of 2,887.75 on 05/02/2011.
     14.3% up from the low of 2,298.89 on 10/04/2011.
S&P 500
     9.2% down from the high of 1,370.58 on 05/02/2011.
     15.8% up from the low of 1,074.77 on 10/04/2011.

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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
Factory orders10:00 MD+Durable/non-durable goods orders w/factory inventories.
Crude inventories10:30 W?My guess: Measures oil inventory.
Consumer credit3:00 WD-Measures auto, credit card and other debt.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Wholesale inventories10:00 ThD-Wholesale sales and inventory statistics.
Trade balance8:30 FC+Signals balance of exports & imports.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 12/02/2011, the CPI had:

1 bearish patterns,
20 bullish patterns,
344 patterns waiting for breakout.
The CPI signal is 95.2%, 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  11,918  11,969  12,058  12,108  12,197 
Weekly  10,885  11,452  11,799  12,367  12,714 
Monthly  10,814  11,417  11,834  12,437  12,855 
S&P 500 (^GSPC): Daily  1,233  1,238  1,249  1,255  1,266 
Weekly  1,120  1,182  1,221  1,283  1,322 
Monthly  1,102  1,173  1,230  1,301  1,358 
Nasdaq (^IXIC): Daily  2,603  2,615  2,637  2,649  2,671 
Weekly  2,446  2,537  2,598  2,688  2,749 
Monthly  2,303  2,465  2,604  2,766  2,904 
  • 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 43.2%  Expect a random direction.
 1 month down 20.2%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 40.5%  Expect a random direction.
 2 months down 12.2%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week up 39.5%  The trend may continue.
 1 month up 47.4%  Expect a random direction.

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: bearish.
S&P 500 Index: bearish.
Dow Transports: bearish.
Dow Utilities: bullish.

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Earnings, Chart Patterns & Industries

Earnings season is over.

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

 Found Chart Pattern Name
27Triangle, symmetrical
16Triple top
14Double Top, Adam and Adam
13Head-and-shoulders top
9Pipe top
7Triangle, descending
6Double Top, Adam and Eve
5Diamond top
4Horn top
4Flag, high and tight

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. Household Products1. Short ETFs
2. Electric Utility (Central)2. Electric Utility (East)
3. Retail Store3. Household Products
4. Electric Utility (East)4. Electric Utility (Central)
5. Toiletries/Cosmetics5. Retail Store
48. Semiconductor48. Semiconductor
49. Human Resources49. Precision Instrument
50. Precision Instrument50. Human Resources
51. Securities Brokerage51. Securities Brokerage
52. Coal52. Coal

-- Thomas Bulkowski

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Thursday 12/1/11. Trading Thursday: Nasdaq

The index climbed by 4.2% or 104.83 points. Since 02/05/1971 the index made 5 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 4.2% on 2 occasions.
     Average loss was -4.4% on 3 occasions.
Look for the index to close lower 60.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 9/14 or 64.3% of the time.
     The prediction of the index closing lower has been right 7/10 or 70.0% 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 and B show a double top that formed just after lunch. Holding onto a short position until it fulfilled the measure rule is often a smart day trade play, and it would have worked today, too.

A double bottom formed at C and D and that one fulfilled the measure rule when the index took off in the final half hour.

Since the index soared so far today, I agree with the probabilities that a give back will occur tomorrow (Thursday). I expect the index to drop, maybe as much as 50 points. I think the rise was too far and over the last two days, it was too fast to be sustainable.

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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© 2011 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,293.17    
 Weekly S2  2,435.51  142.33   
 Monthly S1  2,456.76  21.25   
 Weekly S1  2,527.92  71.17   
 Weekly Pivot  2,533.90  5.97   
 Daily S2  2,569.87  35.98   
 Low  2,582.49  12.62   
 Open  2,586.39  3.90   
 Daily S1  2,595.11  8.72   
 61.8% Down from Intraday High  2,596.95  1.84   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  2,601.42  4.47   
 Monthly Pivot  2,605.06  3.65   Yes! The Monthly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  2,605.88  0.82   Yes! The 38.2% Down from Intraday High is close to the Monthly Pivot.
 Daily Pivot  2,607.72  1.84   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  2,620.34  12.62   
 High  2,620.34  0.00   Yes! The High is close to the Close.
 Weekly R1  2,626.31  5.97   
 Weekly R2  2,632.29  5.97   
 Daily R1  2,632.96  0.67   Yes! The Daily R1 is close to the Weekly R2.
 Daily R2  2,645.57  12.62   
 Monthly R1  2,768.65  123.07   
 Monthly R2  2,916.95  148.31   

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