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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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Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 05/23/2017
20,938 43.08 0.2%
9,010 45.02 0.5%
711 1.33 0.2%
6,139 5.09 0.1%
2,398 4.40 0.2%
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5.9%
-0.4%
7.7%
14.0%
7.1%
Tom's Targets    Overview: 05/15/2017
21,400 or 20,450 by 06/01/2017
9,500 or 8,700 by 06/01/2017
685 or 720 by 06/01/2017
6,350 or 6,000 by 06/01/2017
2,330 or 2,450 by 06/01/2017

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December 2016 Headlines


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Friday 12/30/16. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 18 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 623 stocks searched, or 2.9%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

I found 1 pipe bottom chart patterns, which is neutral. High numbers of pipe bottoms can signal a bullish move (I see many of them just before a bear market ends or during a bear market rally. Often it means the first bottom of a double bottom has formed. Thus, expect a move down to the second bottom).

Excluding ETFs, there were 12 bullish chart patterns this week and 2 bearish ones with any remaining (4) being undecided. The ratio of bullish to bearish patterns suggests the market is bullish.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
AMDFlag, high and tight      11/10/201612/28/2016Semiconductor
AXETriangle, ascending      12/02/201612/29/2016Electronics
ATRTriangle, symmetrical      11/11/201612/29/2016Packaging and Container
ARWTriangle, symmetrical      12/14/201612/29/2016Electronics
BGTriangle, symmetrical      12/13/201612/28/2016Food Processing
CDITriangle, symmetrical      11/30/201612/27/2016Human Resources
CEBRising wedge      11/25/201612/29/2016Information Services
COTYTriangle, symmetrical      11/28/201612/29/2016Toiletries/Cosmetics
CRHTriangle, symmetrical      11/03/201612/28/2016Cement and Aggregates
^DJUChannel      07/22/201612/27/2016None
^DJIPennant      12/14/201612/27/2016None
FISTriangle, symmetrical      11/25/201612/29/2016Computer Software and Svcs
KMBTriangle, symmetrical      11/17/201612/29/2016Household Products
MCOFalling wedge      11/16/201612/29/2016Information Services
NWYPipe top      12/19/201612/19/2016Apparel
PGTriangle, symmetrical      12/14/201612/29/2016Household Products
^GSPCPennant      12/13/201612/23/2016None
TKRChannel      11/15/201612/29/2016Metal Fabricating
UNGPipe bottom      12/12/201612/19/2016Natural Gas (Diversified)

 

Weekly screen for chart patterns ending between 12/22/2016 and 12/29/2016. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Advanced Micro Devices, Inc (AMD)
Industry: Semiconductor
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 3 out of 56
Stock RS rank: 2 out of 615
12/29/16 close: $11.59
1 Month avg volatility: $0.50. Volatility stop (for upward breakout): $10.01 or 13.7% below the close.
Change YTD: 303.83%
Volume: 50,147,700 shares. 3 month avg: 47,483,349 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/10/2016 to 12/28/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Anixter International Inc (AXE)
Industry: Electronics
Industry RS rank: 9 out of 56
Stock RS rank: 31 out of 615
12/29/16 close: $81.95
1 Month avg volatility: $1.93. Volatility stop (for upward breakout): $77.05 or 6.0% below the close.
Change YTD: 35.70%
Volume: 61,900 shares. 3 month avg: 159,778 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, ascending reversal pattern from 12/02/2016 to 12/29/2016
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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AptarGroup Inc (ATR)
Industry: Packaging and Container
Industry RS rank: 34 out of 56
Stock RS rank: 489 out of 615
12/29/16 close: $73.69
1 Month avg volatility: $1.28. Volatility stop (for upward breakout): $70.76 or 4.0% below the close.
Change YTD: 1.43%
Volume: 139,400 shares. 3 month avg: 284,095 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/11/2016 to 12/29/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Arrow Electronics (ARW)
Industry: Electronics
Industry RS rank: 9 out of 56
Stock RS rank: 190 out of 615
12/29/16 close: $72.16
1 Month avg volatility: $1.07. Volatility stop (for upward breakout): $69.49 or 3.7% below the close.
Change YTD: 33.19%
Volume: 244,100 shares. 3 month avg: 449,182 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 12/14/2016 to 12/29/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Bunge Ltd (BG)
Industry: Food Processing
Industry RS rank: 32 out of 56
Stock RS rank: 184 out of 615
12/29/16 close: $70.83
1 Month avg volatility: $1.26. Volatility stop (for upward breakout): $68.13 or 3.8% below the close.
Change YTD: 3.73%
Volume: 422,700 shares. 3 month avg: 1,077,798 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 12/13/2016 to 12/28/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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CDI Corp (CDI)
Industry: Human Resources
Industry RS rank: 13 out of 56
Stock RS rank: 80 out of 615
12/29/16 close: $7.90
1 Month avg volatility: $0.40. Volatility stop (for upward breakout): $7.00 or 11.4% below the close.
Change YTD: 16.86%
Volume: 24,000 shares. 3 month avg: 56,578 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/30/2016 to 12/27/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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CEB Inc (CEB)
Industry: Information Services
Industry RS rank: 35 out of 56
Stock RS rank: 407 out of 615
12/29/16 close: $60.75
1 Month avg volatility: $1.17. Volatility stop (for downward breakout): $63.18 or 4.0% above the close.
Change YTD: -1.04%
Volume: 112,700 shares. 3 month avg: 257,640 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Rising wedge reversal pattern from 11/25/2016 to 12/29/2016
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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Coty (COTY)
Industry: Toiletries/Cosmetics
Industry RS rank: 54 out of 56
Stock RS rank: 609 out of 615
12/29/16 close: $18.41
1 Month avg volatility: $0.46. Volatility stop (for upward breakout): $17.43 or 5.3% below the close.
Change YTD: -28.17%
Volume: 2,510,900 shares. 3 month avg: 13,573,738 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/28/2016 to 12/29/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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CRH plc (CRH)
Industry: Cement and Aggregates
Industry RS rank: 11 out of 56
Stock RS rank: 204 out of 615
12/29/16 close: $33.86
1 Month avg volatility: $0.37. Volatility stop (for upward breakout): $33.05 or 2.4% below the close.
Change YTD: 17.49%
Volume: 331,200 shares. 3 month avg: 1,108,643 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/03/2016 to 12/28/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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DJ 15 Utilities (^DJU)
Industry: None
Industry RS rank is unavailable.
12/29/16 close: $662.93
1 Month avg volatility: $8.25. Volatility stop (for upward breakout): $639.04 or 3.6% below the close.
Change YTD: 14.73%
Volume: 29,786,400 shares. 3 month avg: 23,549,051 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Channel from 07/22/2016 to 12/27/2016

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DJ 30 Industrials (^DJI)
Industry: None
Industry RS rank is unavailable.
12/29/16 close: $19,819.78
1 Month avg volatility: $103.87. Volatility stop (for upward breakout): $19,581.20 or 1.2% below the close.
Change YTD: 13.74%
Volume: 172,038,800 shares. 3 month avg: 152,480,455 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Pennant continuation pattern from 12/14/2016 to 12/27/2016
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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Fidelity National Information Svcs (FIS)
Industry: Computer Software and Svcs
Industry RS rank: 25 out of 56
Stock RS rank: 343 out of 615
12/29/16 close: $77.00
1 Month avg volatility: $1.11. Volatility stop (for upward breakout): $74.30 or 3.5% below the close.
Change YTD: 27.06%
Volume: 1,469,400 shares. 3 month avg: 1,731,600 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/25/2016 to 12/29/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Kimberly-Clark Corp (KMB)
Industry: Household Products
Industry RS rank: 55 out of 56
Stock RS rank: 574 out of 615
12/29/16 close: $115.08
1 Month avg volatility: $1.29. Volatility stop (for upward breakout): $111.76 or 2.9% below the close.
Change YTD: -9.60%
Volume: 968,500 shares. 3 month avg: 1,863,078 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/17/2016 to 12/29/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Moodys Corp (MCO)
Industry: Information Services
Industry RS rank: 35 out of 56
Stock RS rank: 394 out of 615
12/29/16 close: $94.29
1 Month avg volatility: $1.66. Volatility stop (for upward breakout): $90.94 or 3.6% below the close.
Change YTD: -6.03%
Volume: 535,500 shares. 3 month avg: 1,042,520 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Falling wedge from 11/16/2016 to 12/29/2016
Breakout is upward 68% of the time.
Average rise: 32%.
Break-even failure rate: 11%.
Throwbacks occur 56% of the time.
Price hits measure rule target 70% of the time.

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New York and Company Inc (NWY)
Industry: Apparel
Industry RS rank: 52 out of 56
Stock RS rank: 56 out of 615
12/29/16 close: $2.13
1 Month avg volatility: $0.12. Volatility stop (for downward breakout): $2.42 or 13.4% above the close.
Change YTD: -6.99%
Volume: 155,700 shares. 3 month avg: 73,254 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pipe top reversal pattern from 12/19/2016 to 12/19/2016
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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Procter and Gamble Co (PG)
Industry: Household Products
Industry RS rank: 55 out of 56
Stock RS rank: 431 out of 615
12/29/16 close: $84.35
1 Month avg volatility: $0.81. Volatility stop (for upward breakout): $82.48 or 2.2% below the close.
Change YTD: 6.22%
Volume: 3,684,900 shares. 3 month avg: 17,579,532 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 12/14/2016 to 12/29/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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S and P 500 (^GSPC)
Industry: None
Industry RS rank is unavailable.
12/29/16 close: $2,249.26
1 Month avg volatility: $13.14. Volatility stop (for upward breakout): $2,218.27 or 1.4% below the close.
Change YTD: 10.05%
Volume: 2,336,370,000 shares. 3 month avg: 2,798,394,631 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pennant continuation pattern from 12/13/2016 to 12/23/2016
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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Timken Co., The (TKR)
Industry: Metal Fabricating
Industry RS rank: 10 out of 56
Stock RS rank: 83 out of 615
12/29/16 close: $39.95
1 Month avg volatility: $0.83. Volatility stop (for upward breakout): $38.15 or 4.5% below the close.
Change YTD: 39.73%
Volume: 343,300 shares. 3 month avg: 641,842 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Channel from 11/15/2016 to 12/29/2016

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United States Natural Gas (UNG)
Industry: Natural Gas (Diversified)
Industry RS rank: 47 out of 56
Stock RS rank: 253 out of 615
12/29/16 close: $9.50
1 Month avg volatility: $0.29. Volatility stop (for upward breakout): $8.80 or 7.4% below the close.
Change YTD: 9.57%
Volume: 13,058,700 shares. 3 month avg: 14,789,011 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pipe bottom reversal pattern from 12/12/2016 to 12/19/2016
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Thursday 12/29/16. Intraday Market Direction: Nasdaq

The index dropped by -0.9% or -48.88 points. Since 02/05/1971 the index made 190 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 88 occasions.
     Average loss was -1.2% on 102 occasions.
Expect the index to close lower 53.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 119/206 or 57.8% of the time.
     The prediction of the index closing lower has been right 40/79 or 50.6% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale.

This is an interesting pic because of all that's going on.

I drew red line AB. This demonstrates how price can, and sometimes does, return to the launch price.

Price started moving up at A, peaked early Tuesday, and then returned to earth today (at B). Many times, when this happens, price tends to settle just a bit above the launch price. That means B will remain above A. It didn't this time, though.

Next, I drew line C to show that the blue trendline resistance blocked the upward move. Could this have been predicted? Maybe, if you connected the peaks as I did.

Finally, I drew the bottom line D to form the blue pattern called a broadening formation, right-angled and ascending.

The bottom of this pattern should lend support, so I'm looking for price to close higher on Thursday.

$ $ $

I spent a good deal of Monday working on my dishwasher. As you will recall, the trouble started when a wash cycle finished and yet there was a few inches of water on the bottom of the machine.

I tore it apart and lubricated the timer and put it back together.

The next time I used the machine, it only completed 1/3 of the wash before it stopped. I slowly advanced the timer until it start working again, and it completed the last third of the cycle.

So on Monday, I tore it apart again. This time, I lubed the timer again, but more of it, then reassembled it.

The machine wouldn't work at all. Sigh.

So I tore it apart and put it back together again. No dice.

I tore it apart a third time. This time, I pulled forward a contact from the wire harness connector. That pin was pushed back into the harness when I refastened the connector. It was responsible for the machine playing dead.

I ran the machine though a wash cycle but it again had the original problem: The water wouldn't drain (but at least the machine worked).

The last time I tore it apart, I cleaned all of the contacts with sandpaper, made sure the connector pin was correctly fastened. I haven't run it again because of a lack of dishes to wash, but I'm hopeful that I cured the problem.

If not, I'll either search for a replacement timer or just buy a new machine.

$ $ $

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Nasdaq composite, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  5,137.49    
 Monthly S1  5,288.02  150.54   
 Monthly Pivot  5,388.75  100.72   
 Daily S2  5,393.18  4.43   Yes! The Daily S2 is close to the Monthly Pivot.
 Weekly S2  5,396.90  3.72   Yes! The Weekly S2 is close to the Daily S2.
 Daily S1  5,415.87  18.97   
 Weekly S1  5,417.73  1.86   Yes! The Weekly S1 is close to the Daily S1.
 Low  5,434.70  16.97   
 Close  5,438.56  3.86   Yes! The Close is close to the Low.
 Weekly Pivot  5,453.60  15.04   
 Daily Pivot  5,457.39  3.79   Yes! The Daily Pivot is close to the Weekly Pivot.
 61.8% Down from Intraday High  5,459.23  1.84   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  5,466.81  7.58   
 38.2% Down from Intraday High  5,474.38  7.58   
 Weekly R1  5,474.43  0.05   Yes! The Weekly R1 is close to the 38.2% Down from Intraday High.
 Daily R1  5,480.08  5.65   Yes! The Daily R1 is close to the Weekly R1.
 Open  5,497.44  17.36   
 High  5,498.91  1.47   Yes! The High is close to the Open.
 Weekly R2  5,510.30  11.39   
 Daily R2  5,521.60  11.30   
 Monthly R1  5,539.28  17.68   
 Monthly R2  5,640.01  100.72   

Wednesday 12/28/16. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

I know this sounds like a broken record and I've discussed this in the past, but the bearish divergence is still in place.

I show that with the two magenta lines. One slopes upward and the other downward. Sometime in the future, the two will agree on a direction. Part of that is happening now, with the top line curling down.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Friday, 18% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 17%.
The fewest was 14% on 12/09/2016.
And the most was 69% on 02/11/2016.
Shown as a blue line on the above chart...
The 520 stocks in my database are down an average of 11% from their yearly high.
A week ago, the average was 11%.
The peak was 10% on 12/09/2016.
And the bottom was 32% on 02/11/2016.

As the above says, the stocks in my database are showing signs of weakness. The red line shows this best. A week ago 17% of my stocks were in bear market territory. Today, it ticked up to 18%.

That's not a huge move. In fact, the blue line hasn't budged from the prior week.

So there's still a chance, perhaps a large one, that the indices will move considerably higher. Or they could crash. Maybe they'll split the difference and head sideways, going nowhere.

-- Thomas Bulkowski

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Tuesday 12/27/16. Market Tuesday: The Week Ahead

My Prediction

Picture of the Dow industrials on the weekly scale.

I show the Dow industrials, but this time, on the weekly scale.

I wanted to highlight the extent of the moves in the Dow.

I'm not an Elliott waver, so I'm just guessing here. But price moves in waves. When the wave follows the primary trend (a motive wave), it moves in three waves up and two back.

The up waves are 1, 3 and 5. Down waves are 2 and 4.

Notice how wave 5 is almost as long as wave 1. Hmm.

After wave 5 ends, the pattern forms an ABC correction, where price drops on wave A and C (not shown), and rises in wave B. Overall, the index drops from A to C.

The theory gives these rules:

  • Wave 2 never moves beyond the start of wave 1.
  • Wave 3 is never the shortest wave.
  • Wave 4 never overlaps wave 1.

All of these rules apply but I'd have to take out my ruler and measure the length of wave 3. It could be the shortest wave on the chart and it's certainly the shortest of the three advancing waves.

What does all of this means? Again, look for an ABC correction to follow. Unless the thing extends by another advance/retrace pair.

Adding an extension when things don't work out is why I don't care for this wave theory. Still, maybe we can learn something here and if we can get out near the top, then that's peachy with me.

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A Brief Look Back

Picture of a my dog

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 39.65 points.
Tuesday: Up 91.56 points.
Wednesday: Down 32.66 points.
Thursday: Down 23.08 points.
Friday: Up 14.93 points.

For the Week...

The Dow industrials were up 90.4 points or 0.5%.
The Nasdaq composite was up 25.53 points or 0.5%.
The S&P 500 index was up 5.7199 points or 0.3%.

Year to Date...

Dow Industrials
     0.3% down from the high of 19,987.63 on 12/20/2016.
     29.0% up from the low of 15,450.56 on 01/20/2016.
Nasdaq
     0.5% down from the high of 5,489.47 on 12/20/2016.
     29.8% up from the low of 4,209.76 on 02/11/2016.
S&P 500
     0.6% down from the high of 2,277.53 on 12/13/2016.
     25.1% up from the low of 1,810.10 on 02/11/2016.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 12/23/2016, the CPI had:

10 bearish patterns,
17 bullish patterns,
669 patterns waiting for breakout.
The CPI signal is 63.0%, which is neutral (between 35% and 65%).

The chart pattern indicator is bearish with 1 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  19,887  19,911  19,922  19,946  19,957 
Weekly  19,763  19,849  19,918  20,003  20,073 
Monthly  18,497  19,215  19,602  20,320  20,706 
S&P500 (^GSPC): Daily  2,257  2,260  2,262  2,265  2,267 
Weekly  2,248  2,256  2,264  2,272  2,281 
Monthly  2,151  2,208  2,243  2,299  2,334 
Nasdaq (^IXIC): Daily  5,435  5,449  5,456  5,470  5,477 
Weekly  5,405  5,434  5,462  5,491  5,518 
Monthly  5,146  5,304  5,397  5,555  5,648 
  • 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) 7 weeks up 4.2%   Expect a reversal soon. 
 2 months up 38.5%   The trend may continue. 
 S & P 500 (^GSPC) 1 week up 41.5%   Expect a random direction. 
 2 months up 41.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 44.3%   Expect a random direction. 
 2 months up 38.5%   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 indices, 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.

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
17Triangle, symmetrical
10Flag, high and tight
9Double Top, Adam and Adam
7Head-and-shoulders bottom
6Pipe bottom
5Triple top
5Triangle, ascending
5Double Bottom, Adam and Adam
3Pipe top
3Scallop, ascending and inverted

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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Securities Brokerage1. Securities Brokerage
2. Semiconductor2. Insurance (Life)
3. Insurance (Life)3. Semiconductor
4. Semiconductor Cap Equip.4. Semiconductor Cap Equip.
5. Air Transport5. Trucking/Transp. Leasing
50. Electric Utility (West)50. Electric Utility (Central)
51. Biotechnology51. Biotechnology
52. Medical Supplies52. Electric Utility (West)
53. Electric Utility (East)53. Apparel
54. Household Products54. Household Products
55. Apparel55. Toiletries/Cosmetics
56. Toiletries/Cosmetics56. Short ETFs
57. Short ETFs57. Electric Utility (East)

-- Thomas Bulkowski

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Saturday 12/24/16. Happy Holidays!

Tony Berg shared the reason for the increase in volume in the indices. You can read about it here.

The notice explains that as of 12/5/2016, "all eligible prices and volume as reported through the Consolidated Tape will be included in intraday index calculations for all indices covering U.S. equities." That's clear enough.

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I released a new version of patternz: 5.14. It supports four more chart patterns (horns and pipes, tops and bottoms) as well as daily/weekly/monthly charts.

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Have a safe and happy holiday. And try not to kill anyone. There's too much of that going on in this world.

-- Thomas Bulkowski


Friday 12/23/16. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 18 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 625 stocks searched, or 2.9%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

Excluding ETFs, there were 9 bullish chart patterns this week and 3 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
AGUPipe top      12/05/201612/12/2016Chemical (Specialty)
AMZNTriangle, symmetrical      11/14/201612/22/2016Internet
APHTriangle, symmetrical      11/30/201612/22/2016Electronics
CSCTriangle, symmetrical      11/25/201612/22/2016Computer Software and Svcs
EMNTriangle, symmetrical      12/06/201612/22/2016Chemical (Diversified)
HOVFlag, high and tight      11/02/201612/19/2016Homebuilding
MLMTriangle, symmetrical      11/09/201612/22/2016Cement and Aggregates
POTPipe top      12/05/201612/12/2016Chemical (Diversified)
PPGDiamond top      11/15/201612/19/2016Chemical (Diversified)
RLITriangle, symmetrical      11/25/201612/22/2016Insurance (Prop/Casualty)
SEERising wedge      09/26/201612/22/2016Packaging and Container
SETriangle, symmetrical      11/14/201612/22/2016Oilfield Svcs/Equipment
TKRChannel      11/15/201612/22/2016Metal Fabricating
WMBTriangle, ascending      11/02/201612/22/2016Natural Gas (Distributor)
ECHPipe top      12/05/201612/12/2016Investment Co. (Foreign)
PEJTriangle, symmetrical      12/07/201612/22/2016Long ETFs
PHOHead-and-shoulders top      11/28/201612/21/2016Investment Co. (Domestic)
XRTHead-and-shoulders top      11/25/201612/20/2016Retail Store

 

Weekly screen for chart patterns ending between 12/15/2016 and 12/22/2016. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Agrium, Inc (AGU)
Industry: Chemical (Specialty)
Industry RS rank: 16 out of 56
Stock RS rank: 303 out of 617
12/22/16 close: $100.70
1 Month avg volatility: $2.36. Volatility stop (for downward breakout): $105.65 or 4.9% above the close.
Change YTD: 12.72%
Volume: 220,700 shares. 3 month avg: 516,686 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Monday.
 
Chart pattern: Pipe top reversal pattern from 12/05/2016 to 12/12/2016
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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Amazon.com Inc. (AMZN)
Industry: Internet
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 20 out of 56
Stock RS rank: 296 out of 617
12/22/16 close: $766.34
1 Month avg volatility: $11.66. Volatility stop (for upward breakout): $739.69 or 3.5% below the close.
Change YTD: 13.38%
Volume: 2,518,300 shares. 3 month avg: 4,150,918 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/14/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Amphenol Corp (APH)
Industry: Electronics
Industry RS rank: 14 out of 56
Stock RS rank: 186 out of 617
12/22/16 close: $68.28
1 Month avg volatility: $0.77. Volatility stop (for upward breakout): $66.02 or 3.3% below the close.
Change YTD: 30.73%
Volume: 900,500 shares. 3 month avg: 1,400,238 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/30/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Computer Sciences Corp (CSC)
Industry: Computer Software and Svcs
Industry RS rank: 28 out of 56
Stock RS rank: 168 out of 617
12/22/16 close: $60.67
1 Month avg volatility: $1.36. Volatility stop (for upward breakout): $57.60 or 5.1% below the close.
Change YTD: 85.65%
Volume: 639,300 shares. 3 month avg: 1,834,269 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/25/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Eastman Chemical (EMN)
Industry: Chemical (Diversified)
Industry RS rank: 41 out of 56
Stock RS rank: 328 out of 617
12/22/16 close: $75.93
1 Month avg volatility: $1.27. Volatility stop (for upward breakout): $72.92 or 4.0% below the close.
Change YTD: 12.47%
Volume: 602,500 shares. 3 month avg: 1,452,809 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 12/06/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Hovnanian Enterprises Inc (HOV)
Industry: Homebuilding
Industry RS rank: 27 out of 56
Stock RS rank: 12 out of 617
12/22/16 close: $2.78
1 Month avg volatility: $0.14. Volatility stop (for upward breakout): $2.48 or 10.7% below the close.
Change YTD: 53.59%
Volume: 2,027,700 shares. 3 month avg: 1,645,092 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/02/2016 to 12/19/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Martin Marietta Materials, Inc (MLM)
Industry: Cement and Aggregates
Industry RS rank: 9 out of 56
Stock RS rank: 143 out of 617
12/22/16 close: $224.15
1 Month avg volatility: $4.76. Volatility stop (for upward breakout): $213.85 or 4.6% below the close.
Change YTD: 64.12%
Volume: 382,600 shares. 3 month avg: 883,755 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/09/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Potash Corp of Saskatchewan Inc. (POT)
Industry: Chemical (Diversified)
Industry RS rank: 41 out of 56
Stock RS rank: 264 out of 617
12/22/16 close: $18.13
1 Month avg volatility: $0.47. Volatility stop (for downward breakout): $19.13 or 5.5% above the close.
Change YTD: 5.90%
Volume: 3,680,200 shares. 3 month avg: 6,891,229 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe top reversal pattern from 12/05/2016 to 12/12/2016
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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PPG Industries Inc (PPG)
Industry: Chemical (Diversified)
Industry RS rank: 41 out of 56
Stock RS rank: 550 out of 617
12/22/16 close: $95.00
1 Month avg volatility: $1.43. Volatility stop (for downward breakout): $98.85 or 4.1% above the close.
Change YTD: -3.87%
Volume: 1,177,500 shares. 3 month avg: 1,917,537 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Diamond top reversal pattern from 11/15/2016 to 12/19/2016
Breakout is downward 69% of the time.
Average decline: 21%.
Break-even failure rate: 6%.
Pullbacks occur 57% of the time.
Price hits measure rule target 76% of the time.

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RLI Corp (RLI)
Industry: Insurance (Prop/Casualty)
Industry RS rank: 13 out of 56
Stock RS rank: 466 out of 617
12/22/16 close: $62.92
1 Month avg volatility: $1.15. Volatility stop (for upward breakout): $60.07 or 4.5% below the close.
Change YTD: 1.89%
Volume: 135,600 shares. 3 month avg: 202,931 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/25/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Sealed Air Corp (SEE)
Industry: Packaging and Container
Industry RS rank: 37 out of 56
Stock RS rank: 463 out of 617
12/22/16 close: $46.24
1 Month avg volatility: $0.77. Volatility stop (for downward breakout): $48.43 or 4.7% above the close.
Change YTD: 3.68%
Volume: 613,400 shares. 3 month avg: 1,894,303 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rising wedge reversal pattern from 09/26/2016 to 12/22/2016
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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Spectra Energy Corp (SE)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 21 out of 56
Stock RS rank: 156 out of 617
12/22/16 close: $41.67
1 Month avg volatility: $0.72. Volatility stop (for upward breakout): $39.59 or 5.0% below the close.
Change YTD: 74.06%
Volume: 2,687,800 shares. 3 month avg: 3,690,186 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/14/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Timken Co., The (TKR)
Industry: Metal Fabricating
Industry RS rank: 10 out of 56
Stock RS rank: 124 out of 617
12/22/16 close: $40.55
1 Month avg volatility: $0.82. Volatility stop (for upward breakout): $38.66 or 4.7% below the close.
Change YTD: 41.83%
Volume: 476,800 shares. 3 month avg: 644,572 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Channel from 11/15/2016 to 12/22/2016

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Williams Companies Inc. (WMB)
Industry: Natural Gas (Distributor)
Industry RS rank: 23 out of 56
Stock RS rank: 39 out of 617
12/22/16 close: $30.30
1 Month avg volatility: $0.93. Volatility stop (for upward breakout): $28.24 or 6.8% below the close.
Change YTD: 17.90%
Volume: 10,499,200 shares. 3 month avg: 7,045,006 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, ascending reversal pattern from 11/02/2016 to 12/22/2016
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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MSCI Chile Investable Mkt Idx (ECH)
Industry: Investment Co. (Foreign)
Industry RS rank: 43 out of 56
Stock RS rank: 401 out of 617
12/22/16 close: $36.68
1 Month avg volatility: $0.60. Volatility stop (for downward breakout): $38.30 or 4.4% above the close.
Change YTD: 14.91%
Volume: 498,400 shares. 3 month avg: 385,426 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pipe top reversal pattern from 12/05/2016 to 12/12/2016
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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PowerShares Dynamic Leisure (PEJ)
Industry: Long ETFs
Industry RS rank: 25 out of 56
Stock RS rank: 162 out of 617
12/22/16 close: $40.69
1 Month avg volatility: $0.47. Volatility stop (for upward breakout): $39.66 or 2.5% below the close.
Change YTD: 10.69%
Volume: 14,400 shares. 3 month avg: 40,338 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 12/07/2016 to 12/22/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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PowerShares Water Resources (PHO)
Industry: Investment Co. (Domestic)
Industry RS rank: 29 out of 56
Stock RS rank: 323 out of 617
12/22/16 close: $24.78
1 Month avg volatility: $0.20. Volatility stop (for downward breakout): $25.32 or 2.2% above the close.
Change YTD: 14.35%
Volume: 48,400 shares. 3 month avg: 64,263 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Head-and-shoulders top reversal pattern from 11/28/2016 to 12/21/2016
Breakout is downward 100% of the time.
Average decline: 22%.
Break-even failure rate: 4%.
Pullbacks occur 50% of the time.
Price hits measure rule target 55% of the time.

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SPDR Retail ETF (XRT)
Industry: Retail Store
Industry RS rank: 32 out of 56
Stock RS rank: 293 out of 617
12/22/16 close: $44.74
1 Month avg volatility: $0.69. Volatility stop (for downward breakout): $47.74 or 6.7% above the close.
Change YTD: 3.47%
Volume: 11,577,800 shares. 3 month avg: 4,383,694 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Head-and-shoulders top reversal pattern from 11/25/2016 to 12/20/2016
Breakout is downward 100% of the time.
Average decline: 22%.
Break-even failure rate: 4%.
Pullbacks occur 50% of the time.
Price hits measure rule target 55% of the time.

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Thursday 12/22/16. Intraday Market Direction: Nasdaq

The index dropped by -0.2% or -12.51 points. Since 02/05/1971 the index made 477 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 248 occasions.
     Average loss was -0.9% on 229 occasions.
Expect the index to close higher 52.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 119/205 or 58.0% of the time.
     The prediction of the index closing lower has been right 40/79 or 50.6% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

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I show a picture of the Nasdaq composite on the 5-minute scale.

There's not a lot you can say about this chart.

The index is just waiting to make its move. The downward tilt of the channel (red lines) is typical of a flag or pennant pattern. They often slant against the prevailing trend.

On the daily chart, the chart pattern indicator is looking more bearish. It hasn't issued a bearish signal, but it has turned down again. It could turn bearish on Thursday if the indices fall.

Nevertheless, the above probabilities suggest a higher close. And that's the breakout direction of many flags and pennants.

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More than two months ago, I had the roof of my house replaced. My Farmers insurance agent said that a new roof would mean a lower insurance rate (a rebate, in other words) because it is less likely that damage would require a roof replacement.

Anyway, I'm still waiting to hear from them, either my agent or the insurance company. I think when I chose my agent (I transferred from one agent to another because the one I liked was retiring), I picked a lemon. She doesn't return emails and doesn't reply to voice messages. Sigh.

I'll be glad when 2016 is over. I've done very well in the markets this year, but everything else is lousy. And it's the little stuff that bothers me.

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The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Nasdaq composite, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  5,088.71    
 Monthly S1  5,280.07  191.36   
 Weekly S2  5,358.54  78.47   
 Monthly Pivot  5,383.41  24.87   
 Weekly S1  5,414.98  31.57   
 Weekly Pivot  5,450.87  35.88   
 Daily S2  5,453.38  2.52   
 Daily S1  5,462.41  9.02   
 Low  5,465.31  2.90   
 Close  5,471.43  6.12   
 61.8% Down from Intraday High  5,473.31  1.88   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  5,474.33  1.02   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  5,475.79  1.45   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  5,478.26  2.47   
 Open  5,482.63  4.37   
 Daily R1  5,483.36  0.73   Yes! The Daily R1 is close to the Open.
 High  5,486.26  2.90   
 Daily R2  5,495.28  9.02   
 Weekly R1  5,507.31  12.03   
 Weekly R2  5,543.20  35.88   
 Monthly R1  5,574.77  31.57   
 Monthly R2  5,678.11  103.34   

Wednesday 12/21/16. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

I show the bearish divergence in magenta on the pic.

The bearish signal I discussed a few days ago in the indicator has disappeared.

Sigh.

The chart still suggests weakness in the markets, but it's not clear when they will turn down.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Monday, 17% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 16%.
The fewest was 14% on 12/09/2016.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 522 stocks in my database are down an average of 11% from their yearly high.
A week ago, the average was 10%.
The peak was 10% on 12/09/2016.
And the bottom was 32% on 02/11/2016.

These two charts make it clear that over the past week, the markets have weakened.

Both lines have peaked and turned lower. The above numbers also confirm that.

However, just because the stocks I follow are getting weaker doesn't mean a sustained retrace. I'm thinking that when earnings season comes, it'll take the market down. Fast.

$ $ $

Picture of my dog

"We don't care. We don't have to. We're the phone company." That's an old joke but it could be relevant today.

A few days ago, I called the phone company (Verizon, now Frontier) to have them remove call waiting from my phone service. I never answer call waiting because I know it's a telemarketer camped on my line and the clicking tones are sooo annoying.

They removed the call waiting feature easily enough, but they also removed my caller ID by accident. Now I don't care about called ID, but I do use that to report telemarketers to the FTC because I'm on the do not call list.

So, today I called Verizon to have them put back my caller ID service. The first guy pushed to have me listen to a free quote. Fine. He couldn't give me a cheaper rate. Then he said that call waiting and caller ID were together, so that if you ditch one, you'd lose the other. (That's wrong). So add it back, I told him. "There's a charge for the service, $13.95 per month," he said. Of course, I was not given a rebate when I had it removed a few days ago (it's included as part of my bundled service). To add it back, he transferred me to the repair people.

They put me on hold for like 20 minutes before telling me they couldn't help me, that I needed to talk to customer service. In other words, back to the people that transferred me to repair in the first place. So, back to customer service.

The customer service person explained that they needed to talk to the repair people to have the problem fixed, hence the reason I was transferred. He said he'd put me on hold while he contacted the repair people. About every 5 minutes, he'd come back on the line. After about 20 minutes of waiting, he said I was 25th in the queue. Then 12 then five or something like that.

Finally, after over an hour waiting on the phone, they said caller ID would be fixed in the next five to ten minutes...

I just wonder if the extended wait is to test people's patience. Some would just hang up, I'll bet.

-- Thomas Bulkowski

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Tuesday 12/20/16. Intraday Market Direction: Dow

The index climbed by 0.2% or 39.65 points. Since 10/01/1928 the index made 1269 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 689 occasions.
     Average loss was -0.5% on 580 occasions.
Expect the index to close higher 54.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 129/215 or 60.0% of the time.
     The prediction of the index closing lower has been right 32/64 or 50.0% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Dow industrials on the 5 minute scale.

$ $ $

I show a picture of the Dow industrials on the 5-minute scale.

There's a old saying that goes, if a stock fails to make a new high, it's going down.

That saying may or may not apply to indices.

I don't know if that's true, either, but look at the chart. Shown is a rectangle top chart pattern, highlighted by the two red lines.

The breakout from a rectangle top is upward 63% of the time, according to my new book, Chart Patterns: After the BuyChart Patterns: After the Buy.

I show a picture of the book on the left.

So there are two conflicting theories about horizontal price movements (trading ranges). One says if price fails to rise, it'll fall (put that way, it sounds stupid). The other says the index will break out upward.

What caught my eye today is that volume is down. To me, that suggests weakness, so I'm leaning toward a lower close on Tuesday. The above probabilities suggest an upward breakout.

The choice is yours.

$ $ $

On Saturday, the airport hit a high of 72 degrees at noon and I woke up to find it at 18. That's a drop of, well, too much.

An hour after my heater kicked in at 9:00 PM, it had pushed the temp in my "great room" (downstairs) up to 68. Upstairs in my office, it was 86. Wow. That's due to hot air rising but mostly because the room (air vent) is so close to the furnace. Plus, it's a small room.

Normally, the temp differential is about three degrees.

$ $ $

I also tore apart my dishwasher and oiled the timer thingy Sunday. No joy. Although the timer turns much easier, the machine still gets stuck about one-third of the way through the cycle.

At one point, there's a water solenoid that turns on. Then off. Then on again. And it keeps cycling until I turn the timer knob a smidgen. Then it gets stuck again.

About 1/4 later, it starts working again.

I'll have to tear it apart and look at it once more. I checked to see if the main drive gear was stripped (tooth missing) but couldn't see anything wrong. I'll probably take my bicycle chain lube (it's wax based) a grease the timer sprocket. Maybe clean the metal contacts in the thing, too.

I think I'll save the operation for Christmas day. It'll give me something to do.

$ $ $

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Dow industrials, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  18,391.48    
 Monthly S1  19,137.27  745.79   
 Monthly Pivot  19,551.85  414.58   
 Weekly S2  19,647.05  95.20   
 Weekly S1  19,765.06  118.00   
 Daily S2  19,793.10  28.04   
 Low  19,832.95  39.85   
 Open  19,836.66  3.71   Yes! The Open is close to the Low.
 Daily S1  19,838.08  1.42   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  19,865.36  27.28   
 Weekly Pivot  19,865.74  0.39   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  19,875.37  9.62   
 Daily Pivot  19,877.93  2.56   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  19,883.06  5.13   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  19,885.38  2.31   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  19,917.78  32.40   
 Daily R1  19,922.91  5.13   Yes! The Daily R1 is close to the High.
 Daily R2  19,962.76  39.85   
 Weekly R1  19,983.75  20.99   
 Weekly R2  20,084.43  100.69   
 Monthly R1  20,297.64  213.21   
 Monthly R2  20,712.22  414.58   

Monday 12/19/16. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

I show the Dow transports on the daily scale because I think this is important.

I circled two areas on the chart.

The first is a flag that has formed. That's the top red circle. You might think of this as the corrective phase of a measured move up chart pattern, but I beg to differ.

I believe this to be an indication of the retrace that I've been expecting for a while now.

Notice how volume has increased significantly.

To me, this says that the smart money is selling, getting out at the top.

What you have to remember, is that someone is buying every share sold. One could argue that the smart money is also buying. Hmm.

Usually, I ignore volume, but my program has been bugging me that the volume in the indices is well above average. And that's a concern.

Let's take a look at the second (next) chart.

Picture of the CPI on the daily scale.

I snagged this chart from the three I post here each Friday after the close of trading (or as soon as I update the site)

The chart shows obvious bearish divergence.

The idea is that the index will follow the indicator lower. Like most things in technical analysis, sometimes it works and sometimes not.

If you look at the signals (another chart at the above link), you'll see that the indicator signaled red. That's a bearish signal, and it happened on Friday.

Signals can change in the indicator for up to a week, and frequently do. So it's hard to say this really is the start of a bearish turn.

But, when you combine the two charts, the evidence begins to stack up of a trend change about to happen (that is, a significant market drop).

I'm not saying it'll happen. But I'm saying I'm concerned.

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A Brief Look Back

Picture of my dog.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 39.58 points.
Tuesday: Up 114.78 points.
Wednesday: Down 118.68 points.
Thursday: Up 59.71 points.
Friday: Down 8.83 points.

For the Week...

The Dow industrials were up 86.56 points or 0.4%.
The Nasdaq composite was down 7.34 points or 0.1%.
The S&P 500 index was down 1.4599 points or 0.1%.

Year to Date...

Dow Industrials
     0.6% down from the high of 19,966.43 on 12/14/2016.
     28.4% up from the low of 15,450.56 on 01/20/2016.
Nasdaq
     0.9% down from the high of 5,486.75 on 12/13/2016.
     29.2% up from the low of 4,209.76 on 02/11/2016.
S&P 500
     0.9% down from the high of 2,277.53 on 12/13/2016.
     24.7% up from the low of 1,810.10 on 02/11/2016.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

The chart pattern indicator is bearish with 1 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  19,760  19,802  19,863  19,904  19,965 
Weekly  19,634  19,739  19,853  19,957  20,071 
Monthly  18,378  19,111  19,539  20,271  20,699 
S&P500 (^GSPC): Daily  2,246  2,252  2,260  2,266  2,274 
Weekly  2,232  2,245  2,261  2,274  2,290 
Monthly  2,109  2,184  2,231  2,305  2,352 
Nasdaq (^IXIC): Daily  5,397  5,417  5,446  5,466  5,494 
Weekly  5,347  5,392  5,439  5,484  5,532 
Monthly  5,077  5,257  5,372  5,552  5,667 
  • 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) 6 weeks up 6.6%   Expect a reversal soon. 
 2 months up 38.5%   The trend may continue. 
 S & P 500 (^GSPC) 1 week down 27.4%   The trend may continue. 
 2 months up 41.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week down 28.5%   The trend may continue. 
 2 months up 38.5%   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 indices, 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.

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
10Flag, high and tight
8Triangle, symmetrical
6Head-and-shoulders bottom
5Double Top, Adam and Adam
4Dead-cat bounce
4Triangle, ascending
4Double Bottom, Adam and Adam
3Broadening wedge, descending
3Scallop, ascending and inverted
3Triple 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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Securities Brokerage1. Securities Brokerage
2. Insurance (Life)2. Insurance (Life)
3. Semiconductor3. Semiconductor
4. Semiconductor Cap Equip.4. Trucking/Transp. Leasing
5. Trucking/Transp. Leasing5. Retail (Special Lines)
50. Electric Utility (Central)50. Drug
51. Biotechnology51. Medical Supplies
52. Electric Utility (West)52. Electric Utility (West)
53. Apparel53. Electric Utility (East)
54. Household Products54. Biotechnology
55. Toiletries/Cosmetics55. Household Products
56. Short ETFs56. Toiletries/Cosmetics
57. Electric Utility (East)57. Short ETFs

-- Thomas Bulkowski

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Friday 12/16/16. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 13 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 625 stocks searched, or 2.1%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

I found 2 pipe bottom chart patterns, which is neutral. High numbers of pipe bottoms can signal a bullish move (I see many of them just before a bear market ends or during a bear market rally. Often it means the first bottom of a double bottom has formed. Thus, expect a move down to the second bottom).

Excluding ETFs, there were 9 bullish chart patterns this week and 1 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is bullish.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
ATWFlag, high and tight      11/08/201612/12/2016Petroleum (Producing)
CSODPipe bottom      11/28/201612/05/2016E-Commerce
^DJUChannel      07/22/201612/14/2016None
ERAFlag, high and tight      11/01/201612/12/2016Air Transport
GLFFlag, high and tight      11/01/201612/14/2016Oilfield Svcs/Equipment
IPIFlag, high and tight      10/14/201612/09/2016Chemical (Diversified)
MURDouble Top, Adam and Adam      12/01/201612/12/2016Petroleum (Integrated)
PFEHorn bottom      11/21/201612/05/2016Drug
PPLTriangle, symmetrical      09/27/201612/12/2016Electric Utility (East)
ROGRising wedge      11/14/201612/15/2016Electronics
SHWTriangle, symmetrical      11/21/201612/15/2016Chemical (Basic)
SUMTriangle, symmetrical      11/14/201612/15/2016Cement and Aggregates
EWZTriangle, descending      11/11/201612/15/2016Investment Co. (Foreign)
EWYBroadening wedge, descending      10/19/201612/13/2016Investment Co. (Foreign)
QLDPipe bottom      11/28/201612/05/2016Long ETFs

 

Weekly screen for chart patterns ending between 12/08/2016 and 12/15/2016. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Atwood Oceanics Inc. (ATW)
Industry: Petroleum (Producing)
Industry RS rank: 14 out of 56
Stock RS rank: 205 out of 617
12/15/16 close: $13.55
1 Month avg volatility: $0.80. Volatility stop (for upward breakout): $11.07 or 18.3% below the close.
Change YTD: 32.45%
Volume: 2,866,500 shares. 3 month avg: 4,507,129 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/08/2016 to 12/12/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Cornerstone OnDemand Inc (CSOD)
Industry: E-Commerce
Industry RS rank: 43 out of 56
Stock RS rank: 455 out of 617
12/15/16 close: $41.63
1 Month avg volatility: $1.44. Volatility stop (for upward breakout): $38.33 or 7.9% below the close.
Change YTD: 20.56%
Volume: 737,000 shares. 3 month avg: 825,908 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pipe bottom reversal pattern from 11/28/2016 to 12/05/2016
WARNING: A dead-cat bounce occurred on 11/04/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 02/03/2017 and a 38% chance by 05/05/2017.
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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DJ 15 Utilities (^DJU)
Industry: None
Industry RS rank is unavailable.
12/15/16 close: $649.23
1 Month avg volatility: $9.01. Volatility stop (for upward breakout): $622.64 or 4.1% below the close.
Change YTD: 12.36%
Volume: 56,789,600 shares. 3 month avg: 20,087,438 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Channel from 07/22/2016 to 12/14/2016

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Era Group Inc (ERA)
Industry: Air Transport
Industry RS rank: 7 out of 56
Stock RS rank: 73 out of 617
12/15/16 close: $14.45
1 Month avg volatility: $0.80. Volatility stop (for upward breakout): $11.95 or 17.3% below the close.
Change YTD: 29.60%
Volume: 116,500 shares. 3 month avg: 78,992 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/01/2016 to 12/12/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Gulfmark Offshore Inc (GLF)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 20 out of 56
Stock RS rank: 616 out of 617
12/15/16 close: $1.64
1 Month avg volatility: $0.22. Volatility stop (for upward breakout): $1.16 or 29.3% below the close.
Change YTD: -64.88%
Volume: 825,600 shares. 3 month avg: 519,366 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/01/2016 to 12/14/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Intrepid Potash Inc (IPI)
Industry: Chemical (Diversified)
Industry RS rank: 40 out of 56
Stock RS rank: 23 out of 617
12/15/16 close: $2.41
1 Month avg volatility: $0.24. Volatility stop (for upward breakout): $1.54 or 36.1% below the close.
Change YTD: -18.31%
Volume: 2,784,700 shares. 3 month avg: 1,485,094 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Flag, high and tight continuation pattern from 10/14/2016 to 12/09/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Murphy Oil Corporation (MUR)
Industry: Petroleum (Integrated)
Industry RS rank: 15 out of 56
Stock RS rank: 274 out of 617
12/15/16 close: $32.42
1 Month avg volatility: $1.32. Volatility stop (for downward breakout): $35.09 or 8.2% above the close.
Change YTD: 44.41%
Volume: 4,967,600 shares. 3 month avg: 3,445,720 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Double Top, Adam and Adam reversal pattern from 12/01/2016 to 12/12/2016
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 8%.
Pullbacks occur 61% of the time.
Price hits measure rule target 72% of the time.

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Pfizer Inc. (PFE)
Industry: Drug
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 46 out of 56
Stock RS rank: 520 out of 617
12/15/16 close: $32.75
1 Month avg volatility: $0.55. Volatility stop (for upward breakout): $31.51 or 3.8% below the close.
Change YTD: 1.46%
Volume: 20,821,500 shares. 3 month avg: 25,896,006 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Horn bottom reversal pattern from 11/21/2016 to 12/05/2016
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 9%.
Throwbacks occur 29% of the time.
Price hits measure rule target 76% of the time.

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PPL Corporation (PPL)
Industry: Electric Utility (East)
Industry RS rank: 56 out of 56
Stock RS rank: 561 out of 617
12/15/16 close: $34.15
1 Month avg volatility: $0.54. Volatility stop (for upward breakout): $32.45 or 5.0% below the close.
Change YTD: 0.06%
Volume: 4,125,400 shares. 3 month avg: 4,893,277 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/27/2016 to 12/12/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Rogers Corp (ROG)
Industry: Electronics
Industry RS rank: 13 out of 56
Stock RS rank: 151 out of 617
12/15/16 close: $77.46
1 Month avg volatility: $2.04. Volatility stop (for downward breakout): $81.89 or 5.7% above the close.
Change YTD: 50.20%
Volume: 135,900 shares. 3 month avg: 146,032 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rising wedge reversal pattern from 11/14/2016 to 12/15/2016
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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Sherwin-Williams Co (SHW)
Industry: Chemical (Basic)
Industry RS rank: 31 out of 56
Stock RS rank: 539 out of 617
12/15/16 close: $267.72
1 Month avg volatility: $4.23. Volatility stop (for upward breakout): $258.01 or 3.6% below the close.
Change YTD: 3.13%
Volume: 952,600 shares. 3 month avg: 996,366 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/21/2016 to 12/15/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Summit Materials Inc (SUM)
Industry: Cement and Aggregates
Industry RS rank: 11 out of 56
Stock RS rank: 188 out of 617
12/15/16 close: $23.73
1 Month avg volatility: $0.73. Volatility stop (for upward breakout): $21.71 or 8.5% below the close.
Change YTD: 18.41%
Volume: 2,031,900 shares. 3 month avg: 1,774,975 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/14/2016 to 12/15/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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MSCI Brazil Index fund (EWZ)
Industry: Investment Co. (Foreign)
Industry RS rank: 38 out of 56
Stock RS rank: 180 out of 617
12/15/16 close: $31.87
1 Month avg volatility: $0.75. Volatility stop (for downward breakout): $33.49 or 5.1% above the close.
Change YTD: 54.11%
Volume: 26,859,600 shares. 3 month avg: 21,898,872 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, descending reversal pattern from 11/11/2016 to 12/15/2016
Breakout is downward 64% of the time.
Average decline: 16%.
Break-even failure rate: 16%.
Pullbacks occur 54% of the time.
Price hits measure rule target 54% of the time.

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MSCI South Korea Index (EWY)
Industry: Investment Co. (Foreign)
Industry RS rank: 38 out of 56
Stock RS rank: 342 out of 617
12/15/16 close: $54.19
1 Month avg volatility: $0.45. Volatility stop (for upward breakout): $53.22 or 1.8% below the close.
Change YTD: 9.10%
Volume: 3,271,300 shares. 3 month avg: 2,778,272 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Broadening wedge, descending reversal pattern from 10/19/2016 to 12/13/2016
Breakout is upward 79% of the time.
Average rise: 33%.
Break-even failure rate: 6%.
Throwbacks occur 53% of the time.
Price hits measure rule target 79% of the time.

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Nasdaq 100 long 2x Ultra QQQ ProShares (QLD)
Industry: Long ETFs
Industry RS rank: 28 out of 56
Stock RS rank: 140 out of 617
12/15/16 close: $88.47
1 Month avg volatility: $1.58. Volatility stop (for upward breakout): $84.89 or 4.1% below the close.
Change YTD: 12.90%
Volume: 1,298,700 shares. 3 month avg: 1,106,951 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pipe bottom reversal pattern from 11/28/2016 to 12/05/2016
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Thursday 12/15/16. Intraday Market Direction: Nasdaq

The index dropped by -0.5% or -27.16 points. Since 02/05/1971 the index made 326 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 155 occasions.
     Average loss was -1.0% on 171 occasions.
Expect the index to close lower 52.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 119/205 or 58.0% of the time.
     The prediction of the index closing lower has been right 40/78 or 51.3% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale.

I drew a trendline from the left, bottom, following price higher.

Notice that at A, the index has crossed below the trendline. Does that mean the index is going down?

No. It's been my experience that price can bobble up and down along the line without signaling a trend change. It's possible that the index will drop, but it's also possible that it will rise higher.

This is just a congestion area where price is trying to figure out a new direction. Note, however, that the above probabilities suggest a lower close on Thursday.

$ $ $

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Nasdaq composite, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  5,009.14    
 Weekly S2  5,204.88  195.73   
 Monthly S1  5,222.91  18.03   
 Weekly S1  5,320.77  97.87   
 Monthly Pivot  5,336.53  15.76   
 Weekly Pivot  5,385.47  48.93   
 Daily S2  5,395.70  10.23   
 Daily S1  5,416.18  20.49   
 Low  5,425.73  9.55   
 Close  5,436.67  10.94   
 61.8% Down from Intraday High  5,445.03  8.36   
 Daily Pivot  5,446.22  1.19   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  5,450.99  4.77   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  5,456.95  5.96   
 Open  5,465.69  8.74   
 Daily R1  5,466.70  1.01   Yes! The Daily R1 is close to the Open.
 High  5,476.25  9.55   
 Daily R2  5,496.74  20.49   
 Weekly R1  5,501.36  4.63   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  5,550.30  48.93   
 Weekly R2  5,566.06  15.76   
 Monthly R2  5,663.92  97.87   

Wednesday 12/14/16. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

The index keeps on climbing and has pushed the indicator up against its ceiling. Again.

Notice the slight upward curl in the last day, and yet the peak in December is below the prior one (November). That suggests bearish divergence.

It suggests but does not guarantee, that the index will follow the indicator lower. When that will occur, if it does, is unknown. But it's a warning signal. Think of it as a yellow caution light.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Monday, 16% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 18%.
The fewest was 14% on 12/09/2016.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 522 stocks in my database are down an average of 10% from their yearly high.
A week ago, the average was 12%.
The peak was 10% on 12/09/2016.
And the bottom was 32% on 02/11/2016.

Both lines made a strong push higher during the past week, as the chart shows.

I don't see anything that would suggest weakness in the market, according to this chart.

-- Thomas Bulkowski

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Tuesday 12/13/16. Intraday Market Direction: Dow

The index climbed by 0.2% or 39.58 points. Since 10/01/1928 the index made 1268 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 688 occasions.
     Average loss was -0.5% on 580 occasions.
Expect the index to close higher 54.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 128/214 or 59.8% of the time.
     The prediction of the index closing lower has been right 32/64 or 50.0% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Dow industrials on the 5 minute scale.

$ $ $

I show a picture of the Dow industrials on the 5-minute scale.

The up-sloping trend followed by a horizontal plateau reminds me of a chart pattern called a measured move up.

I show that highlighted in the chart with a red line. The horizontal line at A is the corrective phase.

The first leg is the sloping part of the red line. The second leg (another move higher, approximating the slope and length of the first leg) hasn't appeared yet, but I'm optimistic that it will carry price higher.

But it's rare that measured moves work. It's also possible that the horizontal move is as far up as we go. So it could be down tomorrow. The above probabilities, though, suggest a higher close.

$ $ $

I and others found more mistakes in patternz, so I'm up to version 5.13. If you're using an earlier version, then download the new version. I released two versions today...

$ $ $

I also broke my dishwasher, or rather it stopped working. A decade or two ago, the timer stopped working. I tore the machine apart and studied it. I sat on the kitchen floor for like six hours, trying to figure out what was wrong. The solution was to remove a metal contact, flip it upside down and reinstall it. That fixed the thing.

This time, the timer -- which controls the timing of wash and rinse cycles -- stops about 3/4 of the way through the wash.

I'll tear it apart and grease the mechanism. Maybe that'll help. It's certainly cheaper than buying a new dishwasher or even a new timer (if I could find one).

$ $ $

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Dow industrials, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  17,419.84    
 Monthly S1  18,608.13  1,188.30   
 Weekly S2  19,006.64  398.50   
 Monthly Pivot  19,182.94  176.30   
 Weekly S1  19,401.53  218.60   
 Weekly Pivot  19,579.64  178.10   
 Daily S2  19,712.74  133.10   
 Low  19,747.74  35.00   
 Daily S1  19,754.58  6.84   Yes! The Daily S1 is close to the Low.
 Open  19,770.20  15.62   
 61.8% Down from Intraday High  19,777.10  6.90   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  19,786.16  9.07   
 Daily Pivot  19,789.59  3.42   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  19,795.23  5.65   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  19,796.43  1.20   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  19,824.59  28.16   
 Daily R1  19,831.43  6.84   Yes! The Daily R1 is close to the High.
 Daily R2  19,866.44  35.00   
 Weekly R1  19,974.53  108.10   
 Weekly R2  20,152.64  178.10   
 Monthly R1  20,371.23  218.60   
 Monthly R2  20,946.04  574.80   

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

My Prediction

Picture of the Dow industrials on the daily scale.

I have made so much money in this market (on paper because I haven't sold), it's making me very nervous. Think preservation of capital.

I have a rule, except that it's really a guideline, which says, if I double my money, sell. That has allowed me to rack up impressive gains over time while building my net worth.

Many stocks I own are approaching that point.

I had one stock drop 10% today after earnings failed to meet expectations. That cut my profit by $7,000. It suggests that when earnings come out next month, the market is going to be disappointed. And the thrill of the Trump takeover will evaporate. And that means the market is going to drop in spectacular fashion.

Maybe not, but I'm going to take a closer look at my portfolio this weekend and see where the stops should go.

As to the chart, pattern A is a rare upward-sloping flag. The flagpole begins at B and rises to C.

The theory says that leg BA should approximate leg AC.

If that holds true, then we won't have much time before we top out and head lower.

$ $ $

I released version 5.11 of Patternz.

This is an important release because it fixes a number of serious bugs. I tuned the pattern recognition for chart patterns and candlesticks, too.

Let me know if you have problems with it.

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A Brief Look Back

Picture of a flower from my garden.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 45.82 points.
Tuesday: Up 35.54 points.
Wednesday: Up 297.84 points.
Thursday: Up 65.19 points.
Friday: Up 142.04 points.

For the Week...

The Dow industrials were up 586.43 points or 3.1%.
The Nasdaq composite was up 188.85 points or 3.6%.
The S&P 500 index was up 67.58 points or 3.1%.

Year to Date...

Dow Industrials
     0.0% down from the high of 19,757.74 on 12/09/2016.
     27.9% up from the low of 15,450.56 on 01/20/2016.
Nasdaq
     0.1% down from the high of 5,450.16 on 12/09/2016.
     29.3% up from the low of 4,209.76 on 02/11/2016.
S&P 500
     0.0% down from the high of 2,259.80 on 12/09/2016.
     24.8% up from the low of 1,810.10 on 02/11/2016.

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Options Expiration

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

Swing and Position Traders: Chart Pattern Indicator

As of 12/09/2016, the CPI had:

2 bearish patterns,
35 bullish patterns,
230 patterns waiting for breakout.
The CPI signal is 94.6%, which is bullish (>= 65%).

The chart pattern indicator is bullish 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  19,578  19,667  19,713  19,802  19,847 
Weekly  18,993  19,375  19,566  19,948  20,139 
Monthly  17,407  18,582  19,170  20,345  20,933 
S&P500 (^GSPC): Daily  2,246  2,253  2,256  2,263  2,267 
Weekly  2,180  2,220  2,240  2,280  2,300 
Monthly  2,047  2,153  2,207  2,313  2,366 
Nasdaq (^IXIC): Daily  5,418  5,431  5,441  5,454  5,464 
Weekly  5,207  5,326  5,388  5,507  5,569 
Monthly  5,012  5,228  5,339  5,556  5,667 
  • 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) 5 weeks up 10.9%   Expect a reversal soon. 
 2 months up 38.5%   The trend may continue. 
 S & P 500 (^GSPC) 1 week up 41.7%   Expect a random direction. 
 2 months up 41.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 44.5%   Expect a random direction. 
 2 months up 38.5%   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 indices, 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.

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
7Flag, high and tight
6Triangle, symmetrical
5Pipe top
4Triangle, ascending
4Dead-cat bounce
4Head-and-shoulders bottom
3Triangle, descending
3Broadening top, right-angled and descending
3Scallop, ascending and inverted
3Double Top, Adam and Adam

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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Securities Brokerage1. Securities Brokerage
2. Insurance (Life)2. Insurance (Life)
3. Semiconductor3. Semiconductor
4. Trucking/Transp. Leasing4. Trucking/Transp. Leasing
5. Retail (Special Lines)5. Semiconductor Cap Equip.
50. Drug50. E-Commerce
51. Medical Supplies51. Drug
52. Electric Utility (West)52. Information Services
53. Electric Utility (East)53. Electric Utility (East)
54. Biotechnology54. Household Products
55. Household Products55. Biotechnology
56. Toiletries/Cosmetics56. Toiletries/Cosmetics
57. Short ETFs57. Short ETFs

-- Thomas Bulkowski

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Friday 12/9/16. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 14 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 625 stocks searched, or 2.2%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

Excluding ETFs, there were 9 bullish chart patterns this week and 1 bearish ones with any remaining (1) being undecided. The ratio of bullish to bearish patterns suggests the market is bullish.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
ACXMScallop, ascending and inverted      11/04/201612/02/2016Computer Software and Svcs
CGIFlag, high and tight      11/08/201612/07/2016Trucking/Transp. Leasing
CBKFlag, high and tight      11/01/201612/05/2016Retail (Special Lines)
CSCScallop, ascending and inverted      11/04/201612/06/2016Computer Software and Svcs
CMTLDead-cat bounce      12/08/201612/08/2016Telecom. Equipment
HIGTriangle, ascending      11/14/201612/05/2016Insurance (Prop/Casualty)
IPIFlag, high and tight      10/14/201612/07/2016Chemical (Diversified)
LMTDouble Top, Adam and Adam      11/15/201612/05/2016Aerospace/Defense
PESFlag, high and tight      11/04/201612/05/2016Oilfield Svcs/Equipment
RCKYTriangle, ascending      10/20/201612/08/2016Shoe
TLRDFlag, high and tight      11/09/201612/08/2016Retail (Special Lines)
EISTriangle, ascending      11/03/201612/08/2016Investment Co. (Foreign)
EWIBroadening bottom      09/29/201612/07/2016Investment Co. (Foreign)
EWJTriangle, symmetrical      09/22/201612/05/2016Investment Co. (Foreign)

 

Weekly screen for chart patterns ending between 12/01/2016 and 12/08/2016. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Acxiom Corp (ACXM)
Industry: Computer Software and Svcs
Industry RS rank: 29 out of 56
Stock RS rank: 125 out of 617
12/8/16 close: $27.17
1 Month avg volatility: $0.69. Volatility stop (for upward breakout): $25.10 or 7.6% below the close.
Change YTD: 29.88%
Volume: 347,700 shares. 3 month avg: 336,125 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Scallop, ascending and inverted continuation pattern from 11/04/2016 to 12/02/2016
Breakout is upward 100% of the time.
Average rise: 43%.
Break-even failure rate: 4%.
Throwbacks occur 61% of the time.
Price hits measure rule target 61% of the time.

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Celadon Group Inc. (CGI)
Industry: Trucking/Transp. Leasing
Industry RS rank: 4 out of 56
Stock RS rank: 562 out of 617
12/8/16 close: $9.00
1 Month avg volatility: $0.59. Volatility stop (for upward breakout): $6.41 or 28.7% below the close.
Change YTD: -9.00%
Volume: 1,131,700 shares. 3 month avg: 445,465 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/08/2016 to 12/07/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Christopher and Banks Corp (CBK)
Industry: Retail (Special Lines)
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 7 out of 56
Stock RS rank: 247 out of 617
12/8/16 close: $2.24
1 Month avg volatility: $0.10. Volatility stop (for upward breakout): $2.00 or 10.5% below the close.
Change YTD: 35.76%
Volume: 191,700 shares. 3 month avg: 239,182 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/01/2016 to 12/05/2016
WARNING: A dead-cat bounce occurred on 08/30/2016. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 02/28/2017.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Computer Sciences Corp (CSC)
Industry: Computer Software and Svcs
Industry RS rank: 29 out of 56
Stock RS rank: 159 out of 617
12/8/16 close: $61.90
1 Month avg volatility: $1.45. Volatility stop (for upward breakout): $58.25 or 5.9% below the close.
Change YTD: 89.41%
Volume: 1,355,600 shares. 3 month avg: 1,942,660 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Scallop, ascending and inverted continuation pattern from 11/04/2016 to 12/06/2016
Breakout is upward 100% of the time.
Average rise: 43%.
Break-even failure rate: 4%.
Throwbacks occur 61% of the time.
Price hits measure rule target 61% of the time.

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Comtech Telecommunications Corp (CMTL)
Industry: Telecom. Equipment
Industry RS rank: 14 out of 56
Stock RS rank: 616 out of 617
12/8/16 close: $10.55
1 Month avg volatility: $0.48. Volatility stop (for downward breakout): $12.71 or 20.5% above the close.
Change YTD: -47.49%
Volume: 2,696,000 shares. 3 month avg: 328,146 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Dead-cat bounce continuation pattern from 12/08/2016 to 12/08/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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Hartford Financial Services Group Inc (HIG)
Industry: Insurance (Prop/Casualty)
Industry RS rank: 17 out of 56
Stock RS rank: 284 out of 617
12/8/16 close: $47.99
1 Month avg volatility: $0.71. Volatility stop (for upward breakout): $46.21 or 3.7% below the close.
Change YTD: 10.42%
Volume: 2,789,200 shares. 3 month avg: 2,854,089 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, ascending reversal pattern from 11/14/2016 to 12/05/2016
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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Intrepid Potash Inc (IPI)
Industry: Chemical (Diversified)
Industry RS rank: 38 out of 56
Stock RS rank: 14 out of 617
12/8/16 close: $2.39
1 Month avg volatility: $0.16. Volatility stop (for upward breakout): $1.78 or 25.6% below the close.
Change YTD: -18.98%
Volume: 6,215,500 shares. 3 month avg: 1,304,342 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Flag, high and tight continuation pattern from 10/14/2016 to 12/07/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Lockheed Martin Corp (LMT)
Industry: Aerospace/Defense
Industry RS rank: 21 out of 56
Stock RS rank: 282 out of 617
12/8/16 close: $259.25
1 Month avg volatility: $3.72. Volatility stop (for downward breakout): $273.81 or 5.6% above the close.
Change YTD: 19.39%
Volume: 2,765,900 shares. 3 month avg: 1,474,503 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Double Top, Adam and Adam reversal pattern from 11/15/2016 to 12/05/2016
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 8%.
Pullbacks occur 61% of the time.
Price hits measure rule target 72% of the time.

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Pioneer Energy Services (PES)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 27 out of 56
Stock RS rank: 67 out of 617
12/8/16 close: $5.90
1 Month avg volatility: $0.38. Volatility stop (for upward breakout): $5.00 or 15.3% below the close.
Change YTD: 171.89%
Volume: 2,847,500 shares. 3 month avg: 986,238 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/04/2016 to 12/05/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Rocky Brands Inc (RCKY)
Industry: Shoe
Industry RS rank: 22 out of 56
Stock RS rank: 430 out of 617
12/8/16 close: $11.23
1 Month avg volatility: $0.34. Volatility stop (for upward breakout): $10.33 or 8.0% below the close.
Change YTD: -2.85%
Volume: 20,300 shares. 3 month avg: 26,574 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, ascending reversal pattern from 10/20/2016 to 12/08/2016
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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Tailored Brands Inc (TLRD)
Industry: Retail (Special Lines)
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 7 out of 56
Stock RS rank: 10 out of 617
12/8/16 close: $26.44
1 Month avg volatility: $0.93. Volatility stop (for upward breakout): $22.45 or 15.1% below the close.
Change YTD: 80.11%
Volume: 12,505,900 shares. 3 month avg: 1,418,745 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Flag, high and tight continuation pattern from 11/09/2016 to 12/08/2016
WARNING: A dead-cat bounce occurred on 06/09/2016. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 12/08/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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MSCI Israel Cap Invest Mt Index (EIS)
Industry: Investment Co. (Foreign)
Industry RS rank: 42 out of 56
Stock RS rank: 460 out of 617
12/8/16 close: $46.85
1 Month avg volatility: $0.39. Volatility stop (for upward breakout): $45.96 or 1.9% below the close.
Change YTD: -4.76%
Volume: 59,900 shares. 3 month avg: 24,831 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, ascending reversal pattern from 11/03/2016 to 12/08/2016
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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MSCI Italy Index (EWI)
Industry: Investment Co. (Foreign)
Industry RS rank: 42 out of 56
Stock RS rank: 474 out of 617
12/8/16 close: $23.72
1 Month avg volatility: $0.30. Volatility stop (for upward breakout): $22.74 or 4.1% below the close.
Change YTD: -13.68%
Volume: 2,054,000 shares. 3 month avg: 1,522,745 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening bottom reversal pattern from 09/29/2016 to 12/07/2016
Breakout is upward 53% of the time.
Average rise: 27%.
Break-even failure rate: 10%.
Throwbacks occur 41% of the time.
Price hits measure rule target 59% of the time.

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MSCI Japan Index fund (EWJ)
Industry: Investment Co. (Foreign)
Industry RS rank: 42 out of 56
Stock RS rank: 303 out of 617
12/8/16 close: $51.10
1 Month avg volatility: $0.31. Volatility stop (for upward breakout): $50.32 or 1.5% below the close.
Change YTD: 5.40%
Volume: 8,607,200 shares. 3 month avg: 20,385,497 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/22/2016 to 12/05/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Thursday 12/8/16. Intraday Market Direction: Nasdaq

The index climbed by 1.1% or 60.76 points. Since 02/05/1971 the index made 171 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 109 occasions.
     Average loss was -1.0% on 62 occasions.
Expect the index to close higher 63.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 118/204 or 57.8% of the time.
     The prediction of the index closing lower has been right 40/78 or 51.3% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale.

I drew a red line connecting the right side of the chart with the left. It shows a chart pattern, too. Can you identify it?

The obvious pattern, but one you probably didn't guess, is overhead resistance. Price has bumped up against a ceiling three times, instead of heading lower as I expected it would do today (Wednesday).

However, the other pattern I was really thinking about, is a cup with handle.

If you're an O'Neil follower, you'll want to look for a 30% rise leading to the left cup lip. Regardless, the bowl shape from a week ago is clear. Could a handle form on Thursday?

Because the index has reached resistance, my guess is yes, it will pause for a time and form a handle. It will retrace, some in the process.

However, since I was wrong about today's activity, the index could just continue moving up. Or it could drop precipitously, beginning to take a breather. Take your pick.

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The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Nasdaq composite, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,907.89    
 Monthly S1  5,150.83  242.93   
 Weekly S2  5,179.63  28.80   
 Daily S2  5,275.71  96.09   
 Monthly Pivot  5,277.34  1.63   Yes! The Monthly Pivot is close to the Daily S2.
 Weekly S1  5,286.69  9.35   
 Low  5,307.31  20.62   
 Open  5,322.67  15.36   
 Daily S1  5,334.74  12.07   
 61.8% Down from Intraday High  5,341.93  7.19   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 Weekly Pivot  5,345.28  3.35   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  5,352.62  7.34   Yes! The 50% Down from Intraday High is close to the Weekly Pivot.
 38.2% Down from Intraday High  5,363.31  10.69   
 Daily Pivot  5,366.33  3.02   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  5,393.76  27.43   
 High  5,397.93  4.17   Yes! The High is close to the Close.
 Daily R1  5,425.36  27.43   
 Weekly R1  5,452.34  26.99   
 Daily R2  5,456.95  4.61   Yes! The Daily R2 is close to the Weekly R1.
 Weekly R2  5,510.93  53.97   
 Monthly R1  5,520.28  9.35   
 Monthly R2  5,646.79  126.52   

Wednesday 12/7/16. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

Much to my surprise, the indicator quickly recovered after its recent dip.

Notice, though, that it has rounded over and it's well below the prior peak.

What does this mean? I have no idea, but my guess is it's a sign of weakness underlying the market. This rally might be a bull trap.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Monday, 18% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 18%.
The fewest was 17% on 11/25/2016.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 522 stocks in my database are down an average of 12% from their yearly high.
A week ago, the average was 12%.
The peak was 11% on 11/25/2016.
And the bottom was 32% on 02/11/2016.

Both lines ticked up in the last day or two but as measured from the prior week, both are flat.

That's another concern. It could mean weakness or just a sign of momentum gathering for another push upward.

I'll let you figure which will happen.

-- Thomas Bulkowski

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Tuesday 12/6/16. Intraday Market Direction: Dow

The index climbed by 0.1% or 24.31 points. Since 10/01/1928 the index made 1301 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.5% on 670 occasions.
     Average loss was -0.6% on 631 occasions.
Expect the index to close higher 51.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 127/213 or 59.6% of the time.
     The prediction of the index closing lower has been right 32/64 or 50.0% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Dow industrials on the 5 minute scale.

$ $ $

I show a picture of the Dow industrials on the 5-minute scale.

I drew two red lines outlining the upward trend. These two lines form a chart pattern called a channel. Nothing new there. I've identified them often enough in this blog.

It appears as if the index has or will bounce off the bottom channel line. As I write this, the Dow futures are up a smidgen, about 15 points, so a more lasting direction isn't known yet.

$ $ $

Thanks to all of you that wrote in about my health problems (approaching diabetes). Your tips have been useful.

I found out that eating eggs is not a suicide attempt. Rather, according to research released in 2016, "Low to moderated egg consumption was not associated with an increased CVD (cardiovascular disease) risk in diabetic or non-diabetic individuals at high cardiovascular risk."

In another study published in Nov-Dec 2016, they write, "...recent reviews of the literature have suggested that dietary cholesterol is not a nutrient of concern. We conducted a meta-analysis of egg intake (a significant contributor to dietary cholesterol) and risk of coronary heart disease (CHD) and stroke. A comprehensive literature search was conducted through August 2015 to identify prospective cohort studies that reported risk estimates for egg consumption in association with CHD or stroke.

"Overall, summary associations indicate that intake of up to 1 egg daily may be associated with reduced risk of total stroke. Overall, summary associations show no clear association between egg intake and increased or decreased risk of CHD. Eggs are a relatively low-cost and nutrient-dense whole food that provides a valuable source of protein, essential fatty acids, antioxidants, choline, vitamins, and minerals."

Both of these studies were posted here, "PubMed comprises more than 26 million citations for biomedical literature from MEDLINE, life science journals, and online books." It's a repository of health studies run by the US government.

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I poked my fingers to draw blood more than 25 times this weekend but I learned a few tricks to control my blood sugar.

For breakfast, the 1/2 cup of oatmeal is high carb but if I take a heaping teaspoon of metamucil (fiber) in a glass of water, just before I eat the oats, I can reduce the glucose spike considerably, from 99/168 (immediately before eating having a glucose reading of 99 mg/dl to 168 one hour after I eat), a 70% rise) to 94/136 or 88/136 (a 45% and 55% rise -- two tests).

The second trick is to eat a bit of carb an hour before a meal. In this case, I ate a gala apple with about 2 tbsp of peanut butter. The rise changed from 84/145 (73%) to 103/112 (9%) and 107/120 (12%). That's a huge change. What you're doing is telling the body that it doesn't have to panic and flood your body with glucose when the full meal comes. Adding fiber to the meal (without the small carb warning pre-meal) didn't have any substantial effect for dinner. That was disappointing. Exercise helped to burn off some of the glucose, too but I haven't measured it specifically.

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The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Dow industrials, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  17,433.30    
 Monthly S1  18,324.77  891.47   
 Monthly Pivot  18,775.03  450.26   
 Weekly S2  19,004.85  229.82   
 Weekly S1  19,110.54  105.70   
 Daily S2  19,137.82  27.28   
 Weekly Pivot  19,167.92  30.10   
 Daily S1  19,177.03  9.11   
 Low  19,186.73  9.70   
 Close  19,216.24  29.51   
 61.8% Down from Intraday High  19,220.39  4.15   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  19,225.94  5.55   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  19,230.79  4.85   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  19,241.19  10.40   
 Open  19,244.35  3.16   Yes! The Open is close to the 38.2% Down from Intraday High.
 Daily R1  19,265.15  20.80   
 Weekly R1  19,273.61  8.46   Yes! The Weekly R1 is close to the Daily R1.
 High  19,274.85  1.24   Yes! The High is close to the Weekly R1.
 Daily R2  19,314.06  39.21   
 Weekly R2  19,330.99  16.93   
 Monthly R1  19,666.50  335.51   
 Monthly R2  20,116.76  450.26   

Monday 12/5/16. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

This is a picture of the Dow transports on the daily scale.

The first thing I noticed is the change in slope.

I show that with the red line at A. It has a modest slope, one you could tolerate for a few miles if you were a professional cyclist.

But look what happens to the index at B. The slope changes into a Cat 1 hill (a very steep one).

How long do you think this upward run will last?

I have found that the steeper the trendline the shorter it tends to be.

However, the trendline could break. The index would retrace for a time and then climb again, but at a more shallow slope.

That's my guess as to what will happen in the coming weeks and months.

$ $ $

Chart Patterns: After the Buy

This is a reminder to all of you that visit this free website and do business with Amazon.com. If you click on one of the pictures of my books, like those shown on the far left or the row of my books I show above, the link will take you to Amazon.com. If you purchase anything while there during that visit, I collect a small referral fee. That helps keep this website free and available to everyone.

Thank you!

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Back in March, I visited with my optometrist for my annual eye exam. She found two veins that had burst. What was the cause? She named several, including a spike in glucose (blood sugar).

A visit to my family doctor showed that my A1c (roughly, a three month weighted average of glucose) was near the high for being normal.

So I changed my diet to lower my carb intake (carbs get changed to glucose easily). I cut carbs by 23% and yet my A1c climbed another tenth of a percentage. Another similar climb and I'd be pre-diabetic -- on my way to becoming diabetic.

So I cut my carbs more (about 50% now) and I started testing myself today.

That means I bought a meter, test strips, and lances. Just before each meal, I stabbed myself to draw blood, and did the same an hour and two hours after each meal.

It's an interesting way to track how your body responds to eating.

Let me be clear. I'm not fat (5' 9" tall and 142 pounds). Plus I get plenty of exercise (summer bicycling and winter working on a treadmill and elliptical). You might think, as I did, that diabetes is a fat person's disease. It can be but not in my case.

Anyway, yes, it's painful to stick yourself with a lancet (as it's called). My first attempt, it took me three tries to draw something, and blood then flowed from two of the holes (the first one never touched my skin). I had to dial in how far the machine would stick the needle.

Anyway, my finger is still sore from those stabs. I've had better luck with my other fingers, completing ten sticks today.

What I learned is that the vegetable soup I made is just fine for lunch. Same with the smoothie (snack). My glucose rises but not much. Breakfast and dinner are problems, though.

I think I can lower the glucose spike by either adding peanuts to my oatmeal for breakfast (or removing the highly glycemic blueberries) and only have vegan sloppy Joes (the hamburger roll is the problem) for dinner occasionally.

Anyway, it's an interesting way to live, knowing you should never have a pizza or hot fudge sundae or even potato chips again. Ever. Doing so could, in my case, lead to blindness.

And I consider that a death sentence.

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A Brief Look Back

Picture of a flower from my garden.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Down 54.24 points.
Tuesday: Up 23.7 points.
Wednesday: Up 1.98 points.
Thursday: Up 68.35 points.
Friday: Holiday or other weird event!

For the Week...

The Dow industrials were up 39.79 points or 0.2%.
The Nasdaq composite was down 147.81 points or 2.7%.
The S&P 500 index was down 21.4001 points or 1.0%.

Year to Date...

Dow Industrials
     0.2% down from the high of 19,225.29 on 11/30/2016.
     24.2% up from the low of 15,450.56 on 01/20/2016.
Nasdaq
     2.8% down from the high of 5,403.86 on 11/29/2016.
     24.7% up from the low of 4,209.76 on 02/11/2016.
S&P 500
     1.0% down from the high of 2,214.10 on 11/30/2016.
     21.1% up from the low of 1,810.10 on 02/11/2016.

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Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 12/02/2016, the CPI had:

4 bearish patterns,
8 bullish patterns,
193 patterns waiting for breakout.
The CPI signal is 66.7%, which is bullish (>= 65%).

The chart pattern indicator is bullish 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  19,106  19,149  19,182  19,225  19,257 
Weekly  18,997  19,094  19,160  19,257  19,323 
Monthly  17,425  18,309  18,767  19,650  20,109 
S&P500 (^GSPC): Daily  2,183  2,188  2,193  2,197  2,202 
Weekly  2,171  2,182  2,198  2,208  2,224 
Monthly  2,033  2,112  2,163  2,243  2,294 
Nasdaq (^IXIC): Daily  5,184  5,217  5,272  5,306  5,360 
Weekly  5,132  5,192  5,298  5,357  5,463 
Monthly  4,860  5,056  5,230  5,425  5,599 
  • 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) 4 weeks up 17.0%   Expect a reversal soon. 
 2 months up 38.5%   The trend may continue. 
 S & P 500 (^GSPC) 1 week down 27.5%   The trend may continue. 
 1 month down 21.2%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 28.6%   The trend may continue. 
 1 month down 25.6%   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 indices, 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.

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
23Pipe bottom
12Head-and-shoulders bottom
10Triangle, symmetrical
5Dead-cat bounce
5Double Bottom, Adam and Adam
5Pipe top
3Head-and-shoulders top
3Double Top, Adam and Adam
3Triangle, descending
3Double Bottom, Adam 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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Securities Brokerage1. Semiconductor
2. Insurance (Life)2. Insurance (Life)
3. Semiconductor3. Securities Brokerage
4. Trucking/Transp. Leasing4. Semiconductor Cap Equip.
5. Semiconductor Cap Equip.5. Trucking/Transp. Leasing
50. E-Commerce50. Chemical (Diversified)
51. Drug51. Electric Utility (West)
52. Information Services52. Electric Utility (Central)
53. Electric Utility (East)53. Biotechnology
54. Household Products54. Toiletries/Cosmetics
55. Biotechnology55. Electric Utility (East)
56. Toiletries/Cosmetics56. Household Products
57. Short ETFs57. Short ETFs

-- Thomas Bulkowski

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Friday 12/2/16. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 15 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 625 stocks searched, or 2.4%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

Excluding ETFs, there were 6 bullish chart patterns this week and 2 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
AYITriangle, symmetrical      11/16/201612/01/2016Furn/Home Furnishings
BBBYTriangle, symmetrical      11/14/201612/01/2016Retail (Special Lines)
BARising wedge      10/26/201612/01/2016Aerospace/Defense
DODouble Bottom, Eve and Adam      11/11/201611/29/2016Oilfield Svcs/Equipment
FORMBroadening top      08/03/201612/01/2016Semiconductor
IIINFlag, high and tight      10/20/201611/25/2016Building Materials
NSHRectangle top      04/21/201612/01/2016Natural Gas (Distributor)
PPLTriangle, symmetrical      09/27/201612/01/2016Electric Utility (East)
RHTDouble Top, Adam and Adam      11/18/201611/29/2016Computer Software and Svcs
SHLMTriangle, symmetrical      11/16/201612/01/2016Chemical (Specialty)
IEOBroadening top      09/01/201611/29/2016Petroleum (Integrated)
EWATriangle, ascending      08/26/201612/01/2016Investment Co. (Foreign)
EWJTriangle, symmetrical      09/22/201612/01/2016Investment Co. (Foreign)
EWDTriangle, symmetrical      11/04/201612/01/2016Investment Co. (Foreign)
USOHead-and-shoulders bottom      11/04/201611/29/2016Petroleum (Producing)

 

Weekly screen for chart patterns ending between 11/24/2016 and 12/01/2016. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Acuity Brands, Inc (AYI)
Industry: Furn/Home Furnishings
Industry RS rank: 42 out of 56
Stock RS rank: 461 out of 617
12/1/16 close: $251.46
1 Month avg volatility: $6.27. Volatility stop (for upward breakout): $237.59 or 5.5% below the close.
Change YTD: 7.55%
Volume: 333,000 shares. 3 month avg: 466,808 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/16/2016 to 12/01/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Bed Bath and Beyond (BBBY)
Industry: Retail (Special Lines)
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 15 out of 56
Stock RS rank: 407 out of 617
12/1/16 close: $45.41
1 Month avg volatility: $1.25. Volatility stop (for upward breakout): $42.14 or 7.2% below the close.
Change YTD: -5.89%
Volume: 2,042,900 shares. 3 month avg: 2,230,098 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/14/2016 to 12/01/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Boeing Company, The (BA)
Industry: Aerospace/Defense
Industry RS rank: 11 out of 56
Stock RS rank: 132 out of 617
12/1/16 close: $152.39
1 Month avg volatility: $2.18. Volatility stop (for downward breakout): $157.05 or 3.1% above the close.
Change YTD: 5.39%
Volume: 2,825,500 shares. 3 month avg: 3,601,438 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rising wedge reversal pattern from 10/26/2016 to 12/01/2016
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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Diamond Offshore (DO)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 16 out of 56
Stock RS rank: 612 out of 617
12/1/16 close: $19.31
1 Month avg volatility: $0.79. Volatility stop (for upward breakout): $16.91 or 12.5% below the close.
Change YTD: -8.48%
Volume: 5,525,700 shares. 3 month avg: 3,901,792 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Double Bottom, Eve and Adam reversal pattern from 11/11/2016 to 11/29/2016
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 4%.
Throwbacks occur 57% of the time.
Price hits measure rule target 66% of the time.

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FormFactor Inc. (FORM)
Industry: Semiconductor
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 19 out of 617
12/1/16 close: $10.35
1 Month avg volatility: $0.49. Volatility stop (for downward breakout): $12.43 or 20.1% above the close.
Change YTD: 15.00%
Volume: 488,800 shares. 3 month avg: 417,006 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Broadening top reversal pattern from 08/03/2016 to 12/01/2016
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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Insteel Industries Inc (IIIN)
Industry: Building Materials
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 13 out of 56
Stock RS rank: 30 out of 617
12/1/16 close: $39.77
1 Month avg volatility: $1.46. Volatility stop (for upward breakout): $36.14 or 9.1% below the close.
Change YTD: 90.11%
Volume: 368,700 shares. 3 month avg: 331,248 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Flag, high and tight continuation pattern from 10/20/2016 to 11/25/2016
WARNING: A dead-cat bounce occurred on 10/20/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 01/19/2017 and a 38% chance by 04/20/2017.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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NuStar GP Holdings (NSH)
Industry: Natural Gas (Distributor)
Industry RS rank: 18 out of 56
Stock RS rank: 452 out of 617
12/1/16 close: $26.40
1 Month avg volatility: $0.86. Volatility stop (for upward breakout): $23.86 or 9.6% below the close.
Change YTD: 24.82%
Volume: 91,800 shares. 3 month avg: 59,895 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rectangle top continuation pattern from 04/21/2016 to 12/01/2016
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

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PPL Corporation (PPL)
Industry: Electric Utility (East)
Industry RS rank: 52 out of 56
Stock RS rank: 550 out of 617
12/1/16 close: $33.10
1 Month avg volatility: $0.60. Volatility stop (for upward breakout): $31.57 or 4.6% below the close.
Change YTD: -3.02%
Volume: 4,619,000 shares. 3 month avg: 4,977,234 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/27/2016 to 12/01/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Red Hat, Inc (RHT)
Industry: Computer Software and Svcs
Industry RS rank: 24 out of 56
Stock RS rank: 359 out of 617
12/1/16 close: $75.19
1 Month avg volatility: $1.60. Volatility stop (for downward breakout): $82.69 or 10.0% above the close.
Change YTD: -9.20%
Volume: 1,550,600 shares. 3 month avg: 1,513,811 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Double Top, Adam and Adam reversal pattern from 11/18/2016 to 11/29/2016
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 8%.
Pullbacks occur 61% of the time.
Price hits measure rule target 72% of the time.

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Schulman, A. (SHLM)
Industry: Chemical (Specialty)
Industry RS rank: 14 out of 56
Stock RS rank: 59 out of 617
12/1/16 close: $33.10
1 Month avg volatility: $1.13. Volatility stop (for upward breakout): $30.50 or 7.9% below the close.
Change YTD: 8.03%
Volume: 226,300 shares. 3 month avg: 250,603 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/16/2016 to 12/01/2016
WARNING: A dead-cat bounce occurred on 08/11/2016. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 02/09/2017.
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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DJ US Oil and Gas (IEO)
Industry: Petroleum (Integrated)
Industry RS rank: 20 out of 56
Stock RS rank: 289 out of 617
12/1/16 close: $65.87
1 Month avg volatility: $1.43. Volatility stop (for downward breakout): $70.18 or 6.6% above the close.
Change YTD: 24.40%
Volume: 210,300 shares. 3 month avg: 107,972 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Broadening top reversal pattern from 09/01/2016 to 11/29/2016
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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MSCI Australia Index fund (EWA)
Industry: Investment Co. (Foreign)
Industry RS rank: 37 out of 56
Stock RS rank: 278 out of 617
12/1/16 close: $20.66
1 Month avg volatility: $0.18. Volatility stop (for upward breakout): $20.20 or 2.2% below the close.
Change YTD: 8.97%
Volume: 2,729,500 shares. 3 month avg: 2,100,129 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, ascending reversal pattern from 08/26/2016 to 12/01/2016
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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MSCI Japan Index fund (EWJ)
Industry: Investment Co. (Foreign)
Industry RS rank: 37 out of 56
Stock RS rank: 294 out of 617
12/1/16 close: $49.47
1 Month avg volatility: $0.31. Volatility stop (for upward breakout): $48.78 or 1.4% below the close.
Change YTD: 2.04%
Volume: 6,530,700 shares. 3 month avg: 22,298,551 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/22/2016 to 12/01/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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MSCI Sweden Index (EWD)
Industry: Investment Co. (Foreign)
Industry RS rank: 37 out of 56
Stock RS rank: 511 out of 617
12/1/16 close: $27.42
1 Month avg volatility: $0.26. Volatility stop (for upward breakout): $26.81 or 2.2% below the close.
Change YTD: -6.03%
Volume: 141,700 shares. 3 month avg: 222,649 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 11/04/2016 to 12/01/2016
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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United States Oil (USO)
Industry: Petroleum (Producing)
Industry RS rank: 9 out of 56
Stock RS rank: 571 out of 617
12/1/16 close: $11.33
1 Month avg volatility: $0.29. Volatility stop (for upward breakout): $10.67 or 5.8% below the close.
Change YTD: 3.00%
Volume: 90,497,300 shares. 3 month avg: 46,684,312 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Head-and-shoulders bottom reversal pattern from 11/04/2016 to 11/29/2016
Breakout is upward 100% of the time.
Average rise: 38%.
Break-even failure rate: 3%.
Throwbacks occur 45% of the time.
Price hits measure rule target 74% of the time.

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Thursday 12/1/16. Intraday Market Direction: Nasdaq

The index climbed by 0.2% or 11.11 points. Since 02/05/1971 the index made 636 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 368 occasions.
     Average loss was -0.8% on 268 occasions.
Expect the index to close higher 57.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 118/203 or 58.1% of the time.
     The prediction of the index closing lower has been right 40/78 or 51.3% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale.

On the daily charts, I swapped directions on all of the indices. I think over the next two weeks, we're going to see a retrace.

This chart suggests it's already begun. The red line shows the uptrend following the line. The green line shows the index dropping.

Intraday, I'm not sure it's as bleak as the longer-term picture. The above probabilities suggests the index will close higher tomorrow (Thursday).

$ $ $

On 11/1/2013, I bought a Phillips Sonicare electric toothbrush for $99. Add in the cost of the brushes (about $10 a pop for 3 months of use, if you buy theirs, according to their recommendation, too) and it was an expensive investment. But it worked great, especially for reaching behind the wisdom teeth, until a few days ago.

If I registered the toothbrush with the company, which I did, then they would extend the 2 year warranty by 6 months. The extended warranty expired this past May.

A few days ago, the $%%^ thing just started running without me touching it. It woke me up that night every 1.5 hours until I buried it in the garage (I tried the office but it still woke me). The thing would start and run for 15 seconds, then shut off. Another 1.5 hours later, it would cycle again. And yes, I could stop and start it manually, so it wasn't a stuck on/off switch.

I called the company and asked about this. "It's broke" they replied. No kidding. But they gave me a 15% coupon which didn't work either. Go figure.

Buying an exact replacement toothbrush would have set me back $150. Jeepers. That's as bad as Mylan raising the price of their Epi pens.

I think it's curious that it breaks just after the extended warranty expires. For the first year, I only used it once a day. Hmm. It's as if they timed it well. The brush commits suicide as soon as the warranty expires.

At least it wasn't made by Samsung. It would have caught fire by now.

$ $ $

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, calculated on the Nasdaq composite, 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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,906.57    
 Monthly S1  5,143.25  236.67   
 Monthly Pivot  5,271.08  127.84   
 Weekly S2  5,306.24  35.16   
 Daily S2  5,338.15  31.91   
 Weekly S1  5,343.08  4.93   
 Daily S1  5,359.03  15.95   
 Low  5,360.56  1.53   Yes! The Low is close to the Daily S1.
 Open  5,370.98  10.42   
 Weekly Pivot  5,371.00  0.02   Yes! The Weekly Pivot is close to the Open.
 61.8% Down from Intraday High  5,377.10  6.10   
 Close  5,379.92  2.82   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  5,381.45  1.53   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  5,382.21  0.76   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  5,387.32  5.11   
 Daily R1  5,402.33  15.01   
 High  5,403.86  1.53   Yes! The High is close to the Daily R1.
 Weekly R1  5,407.84  3.98   Yes! The Weekly R1 is close to the High.
 Daily R2  5,424.75  16.91   
 Weekly R2  5,435.76  11.01   
 Monthly R1  5,507.76  72.00   
 Monthly R2  5,635.59  127.84   

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