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

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Busted
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 12/10/2018
24,423 34.31 0.1%
9,877 -74.62 -0.7%
755 1.98 0.3%
7,021 51.27 0.7%
2,638 4.64 0.2%
YTD
-1.2%
-6.9%
4.4%
1.7%
-1.3%
Tom's Targets    Overview: 11/28/2018
25,350 or 23,650 by 12/15/2018
10,600 or 9,650 by 12/15/2018
765 or 730 by 12/15/2018
7,350 or 6,750 by 12/15/2018
2,750 or 2,580 by 12/15/2018

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

December 2018 Headlines


Archives


Tuesday 12/11/18. Intraday Market Direction: Dow

The index climbed by 0.1% or 34.31 points. Since 10/01/1928 the index made 1336 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.5% on 690 occasions.
     Average loss was -0.6% on 646 occasions.
Expect the index to close higher 51.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 176/294 or 59.9% of the time.
     The prediction of the index closing lower has been right 36/71 or 50.7% 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.

This is a chart of the future, but you might not recognize it as such. So let's dream a bit.

At point A, the index hit bottom and bounced. Notice that the index has pierced the down-sloping trendline, but not by much. Also notice how the rise from A is curving to the right, as if upward momentum is slowing.

Now look at what happened in the past. At B, the index hit a low and bounced. It climbed, hit the trendline and dropped to C. (To be fair, the trendline wouldn't have been drawn there, but a bit lower, with a steeper slope, making it also pierce a down-sloping trendline). The index kept on going down to A.

As we look to the future, I expect the index to round over and form a second bottom, near where A is now. Whether it bounces upward or continues lower, I'll leave to market sentiment.

$ $ $

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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© 2018 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  22,945.50    
 Weekly S2  23,143.91  198.41   
 Daily S2  23,649.04  505.13   
 Monthly S1  23,684.38  35.34   Yes! The Monthly S1 is close to the Daily S2.
 Weekly S1  23,783.58  99.20   
 Low  23,881.37  97.79   
 Daily S1  24,036.15  154.78   
 61.8% Down from Intraday High  24,118.00  81.85   
 50% Down from Intraday High  24,191.09  73.09   
 38.2% Down from Intraday High  24,264.18  73.09   
 Daily Pivot  24,268.48  4.30   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Open  24,360.95  92.47   
 Close  24,423.26  62.31   
 High  24,500.81  77.55   
 Daily R1  24,655.59  154.78   
 Weekly Pivot  24,881.90  226.31   
 Daily R2  24,887.92  6.02   Yes! The Daily R2 is close to the Weekly Pivot.
 Monthly Pivot  24,981.10  93.18   
 Weekly R1  25,521.57  540.47   
 Monthly R1  25,719.98  198.41   
 Weekly R2  26,619.89  899.91   
 Monthly R2  27,016.70  396.81   

Monday 12/10/18. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the weekly scale.

I show the Nasdaq composite on the weekly scale, so I could capture the longer view.

...Not sure it's helped, but you decide.

I drew a horizontal red line where support is. However, I'm not sure the index will actually find support there.

Then I mirrored the horizontal move earlier in the year, flipped it horizontally and pasted it to the right of the blue line.

These price mirrors can help predict what will happen in the future by looking at the past.

So we see the index rebounding in the coming weeks only to sink again and eventually move horizontally. The entire picture looks like a complex head-and-shoulders top.

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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 287.97 points.
Tuesday: Down 799.36 points.
Thursday: Down 79.4 points.
Friday: Down 558.72 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were down 1149.51 points or 4.5%.
The Nasdaq composite was down 361.29 points or 4.9%.
The S&P 500 index was down 127.09 points or 4.6%.

Year to Date...

Dow Industrials
     9.5% down from the high of 26,951.81 on 10/03/2018.
     4.5% up from the low of 23,344.52 on 04/02/2018.
Nasdaq
     14.3% down from the high of 8,133.30 on 08/30/2018.
     5.1% up from the low of 6,630.67 on 02/09/2018.
S&P 500
     10.5% down from the high of 2,940.91 on 09/21/2018.
     4.0% up from the low of 2,532.69 on 02/09/2018.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 12/07/2018, the CPI had:

22 bearish patterns,
0 bullish patterns,
87 patterns waiting for breakout.
The CPI signal is 0.0%, which is bearish (<= 35%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  23,779  24,084  24,590  24,895  25,401 
Weekly  23,132  23,761  24,870  25,499  26,608 
Monthly  22,934  23,662  24,970  25,697  27,005 
S&P500 (^GSPC): Daily  2,570  2,601  2,655  2,687  2,740 
Weekly  2,506  2,570  2,685  2,748  2,864 
Monthly  2,496  2,565  2,690  2,758  2,884 
Nasdaq (^IXIC): Daily  6,780  6,875  7,040  7,135  7,300 
Weekly  6,592  6,781  7,134  7,322  7,675 
Monthly  6,382  6,676  7,124  7,418  7,866 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 28.7%   The trend may continue. 
 1 month down 21.2%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week down 27.0%   The trend may continue. 
 1 month down 21.8%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 28.5%   The trend may continue. 
 1 month down 26.3%   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
13Double Top, Adam and Adam
11Pipe bottom
11Triangle, symmetrical
7Double Bottom, Adam and Adam
6Dead-cat bounce
6Double Top, Eve and Adam
6Broadening top
6Head-and-shoulders top
4Double Bottom, Eve and Adam
4Triple 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. Electric Utility (Central)1. Healthcare Information
2. Electric Utility (East)2. Household Products
3. Household Products3. Precision Instrument
4. Short ETFs4. Food Processing
5. Electric Utility (West)5. Electric Utility (Central)

-- Thomas Bulkowski

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Friday 12/7/18. 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 20 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 600 stocks searched, or 3.3%. 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 5 bullish chart patterns this week and 8 bearish ones with any remaining (9) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bearish (down) 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
AYIDouble Top, Adam and Adam      11/07/201812/03/2018Furn/Home Furnishings
CEBroadening top      11/12/201812/03/2018Chemical (Basic)
CELGPipe bottom      11/19/201811/26/2018Biotechnology
CENXTriangle, symmetrical      10/09/201812/04/2018Metals and Mining (Div.)
CGNXTriangle, ascending      10/16/201812/06/2018Precision Instrument
CYRising wedge      10/24/201812/04/2018Semiconductor
DOVHead-and-shoulders top      11/08/201812/03/2018Machinery
ETFCDouble Top, Adam and Adam      11/08/201812/03/2018Securities Brokerage
EMRDouble Top, Adam and Adam      11/16/201812/03/2018Computers and Peripherals
EVHDouble Top, Adam and Adam      11/08/201811/30/2018Healthcare Information
FFGDouble Top, Eve and Adam      11/14/201812/04/2018Insurance (Life)
FOEDouble Top, Eve and Adam      11/14/201812/03/2018Chemical (Specialty)
MAPipe bottom      11/19/201811/26/2018Financial Services
NETriangle, symmetrical      11/19/201812/04/2018Oilfield Svcs/Equipment
NUSDouble Top, Adam and Adam      11/16/201812/04/2018Toiletries/Cosmetics
POLDouble Top, Adam and Adam      11/07/201812/03/2018Chemical (Specialty)
RGADouble Top, Eve and Eve      11/14/201812/03/2018Insurance (Life)
SHWBroadening top      11/14/201812/06/2018Chemical (Basic)
AMTDBroadening top      10/31/201812/06/2018Securities Brokerage
TXTTriple top      11/08/201812/03/2018Diversified Co.
VMIDouble Top, Adam and Adam      11/08/201812/03/2018Metal Fabricating
WATBroadening top      11/08/201812/06/2018Precision Instrument

 

Weekly screen for chart patterns ending between 11/29/2018 and 12/06/2018. 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: 30 out of 58
Stock RS rank: 203 out of 593
12/6/18 close: $120.44
1 Month avg volatility: $4.39. Volatility stop (for downward breakout): $129.45 or 7.5% above the close.
Change YTD: -31.57%
Volume: 888,400 shares. 3 month avg: 670,414 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: Double Top, Adam and Adam reversal pattern from 11/07/2018 to 12/03/2018
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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Celanese Corp (CE)
Industry: Chemical (Basic)
Industry RS rank: 40 out of 58
Stock RS rank: 460 out of 593
12/6/18 close: $94.66
1 Month avg volatility: $2.71. Volatility stop (for downward breakout): $100.23 or 5.9% above the close.
Change YTD: -11.60%
Volume: 1,384,400 shares. 3 month avg: 691,697 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 top reversal pattern from 11/12/2018 to 12/03/2018
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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Celgene Corp (CELG)
Industry: Biotechnology
Industry RS rank: 12 out of 58
Stock RS rank: 289 out of 593
12/6/18 close: $72.80
1 Month avg volatility: $1.89. Volatility stop (for upward breakout): $67.24 or 7.6% below the close.
Change YTD: -30.24%
Volume: 6,694,100 shares. 3 month avg: 7,439,311 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: Pipe bottom reversal pattern from 11/19/2018 to 11/26/2018
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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Century Aluminum Co. (CENX)
Industry: Metals and Mining (Div.)
Industry RS rank: 53 out of 58
Stock RS rank: 584 out of 593
12/6/18 close: $8.65
1 Month avg volatility: $0.53. Volatility stop (for upward breakout): $7.36 or 14.9% below the close.
Change YTD: -55.96%
Volume: 1,697,500 shares. 3 month avg: 2,285,742 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, symmetrical continuation pattern from 10/09/2018 to 12/04/2018
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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Cognex (CGNX)
Industry: Precision Instrument
Industry RS rank: 4 out of 58
Stock RS rank: 272 out of 593
12/6/18 close: $43.92
1 Month avg volatility: $1.67. Volatility stop (for upward breakout): $39.06 or 11.1% below the close.
Change YTD: -28.19%
Volume: 1,752,200 shares. 3 month avg: 1,157,365 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 10/16/2018 to 12/06/2018
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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Cypress Semiconductor (CY)
Industry: Semiconductor
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 56 out of 58
Stock RS rank: 479 out of 593
12/6/18 close: $13.37
1 Month avg volatility: $0.42. Volatility stop (for downward breakout): $14.33 or 7.2% above the close.
Change YTD: -12.27%
Volume: 7,035,800 shares. 3 month avg: 5,847,760 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: Rising wedge reversal pattern from 10/24/2018 to 12/04/2018
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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Dover Corp (DOV)
Industry: Machinery
Industry RS rank: 32 out of 58
Stock RS rank: 149 out of 593
12/6/18 close: $81.84
1 Month avg volatility: $1.66. Volatility stop (for downward breakout): $85.82 or 4.9% above the close.
Change YTD: -18.96%
Volume: 2,574,700 shares. 3 month avg: 1,038,811 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: Head-and-shoulders top reversal pattern from 11/08/2018 to 12/03/2018
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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E-Trade Financial Corp (ETFC)
Industry: Securities Brokerage
Industry RS rank: 55 out of 58
Stock RS rank: 522 out of 593
12/6/18 close: $47.40
1 Month avg volatility: $1.48. Volatility stop (for downward breakout): $50.51 or 6.6% above the close.
Change YTD: -4.38%
Volume: 6,738,100 shares. 3 month avg: 2,308,982 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 11/08/2018 to 12/03/2018
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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Emerson Electric (EMR)
Industry: Computers and Peripherals
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 26 out of 58
Stock RS rank: 366 out of 593
12/6/18 close: $63.79
1 Month avg volatility: $1.84. Volatility stop (for downward breakout): $68.02 or 6.6% above the close.
Change YTD: -8.47%
Volume: 7,599,700 shares. 3 month avg: 3,509,922 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 11/16/2018 to 12/03/2018
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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Evolent Health, Inc (EVH)
Industry: Healthcare Information
Industry RS rank: 8 out of 58
Stock RS rank: 244 out of 593
12/6/18 close: $20.80
1 Month avg volatility: $1.33. Volatility stop (for downward breakout): $24.58 or 18.2% above the close.
Change YTD: 61.87%
Volume: 1,635,700 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 11/08/2018 to 11/30/2018
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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FBL Financial Group (FFG)
Industry: Insurance (Life)
Industry RS rank: 38 out of 58
Stock RS rank: 428 out of 593
12/6/18 close: $67.65
1 Month avg volatility: $1.39. Volatility stop (for downward breakout): $71.98 or 6.4% above the close.
Change YTD: -2.87%
Volume: 28,100 shares. 3 month avg: 18,072 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: Double Top, Eve and Adam reversal pattern from 11/14/2018 to 12/04/2018
Breakout is downward 100% of the time.
Average decline: 15%.
Break-even failure rate: 13%.
Pullbacks occur 64% of the time.
Price hits measure rule target 72% of the time.

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Ferro Corp (FOE)
Industry: Chemical (Specialty)
Industry RS rank: 17 out of 58
Stock RS rank: 396 out of 593
12/6/18 close: $17.87
1 Month avg volatility: $0.79. Volatility stop (for downward breakout): $19.58 or 9.5% above the close.
Change YTD: -24.25%
Volume: 512,600 shares. 3 month avg: 594,032 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: Double Top, Eve and Adam reversal pattern from 11/14/2018 to 12/03/2018
Breakout is downward 100% of the time.
Average decline: 15%.
Break-even failure rate: 13%.
Pullbacks occur 64% of the time.
Price hits measure rule target 72% of the time.

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Mastercard Inc (MA)
Industry: Financial Services
Industry RS rank: 18 out of 58
Stock RS rank: 195 out of 593
12/6/18 close: $202.99
1 Month avg volatility: $6.19. Volatility stop (for upward breakout): $181.84 or 10.4% below the close.
Change YTD: 34.11%
Volume: 6,459,000 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 bottom reversal pattern from 11/19/2018 to 11/26/2018
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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Noble Corporation (NE)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 58 out of 58
Stock RS rank: 547 out of 593
12/6/18 close: $3.86
1 Month avg volatility: $0.26. Volatility stop (for upward breakout): $3.22 or 16.6% below the close.
Change YTD: -13.26%
Volume: 8,716,300 shares. 3 month avg: 7,535,162 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 11/19/2018 to 12/04/2018
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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Nu Skin Enterprises, Inc (NUS)
Industry: Toiletries/Cosmetics
Industry RS rank: 7 out of 58
Stock RS rank: 495 out of 593
12/6/18 close: $63.79
1 Month avg volatility: $2.32. Volatility stop (for downward breakout): $68.77 or 7.8% above the close.
Change YTD: -6.51%
Volume: 356,900 shares. 3 month avg: 417,486 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: Double Top, Adam and Adam reversal pattern from 11/16/2018 to 12/04/2018
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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Polyone Corp (POL)
Industry: Chemical (Specialty)
Industry RS rank: 17 out of 58
Stock RS rank: 523 out of 593
12/6/18 close: $31.69
1 Month avg volatility: $0.98. Volatility stop (for downward breakout): $33.73 or 6.4% above the close.
Change YTD: -27.15%
Volume: 392,500 shares. 3 month avg: 446,563 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: Double Top, Adam and Adam reversal pattern from 11/07/2018 to 12/03/2018
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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Reinsurance Group of America (RGA)
Industry: Insurance (Life)
Industry RS rank: 38 out of 58
Stock RS rank: 258 out of 593
12/6/18 close: $143.72
1 Month avg volatility: $3.41. Volatility stop (for downward breakout): $150.70 or 4.9% above the close.
Change YTD: -7.83%
Volume: 669,000 shares. 3 month avg: 326,800 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: Double Top, Eve and Eve reversal pattern from 11/14/2018 to 12/03/2018
Breakout is downward 100% of the time.
Average decline: 18%.
Break-even failure rate: 11%.
Pullbacks occur 59% of the time.
Price hits measure rule target 73% of the time.

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Sherwin-Williams Co (SHW)
Industry: Chemical (Basic)
Industry RS rank: 40 out of 58
Stock RS rank: 178 out of 593
12/6/18 close: $401.03
1 Month avg volatility: $10.79. Volatility stop (for downward breakout): $426.54 or 6.4% above the close.
Change YTD: -2.20%
Volume: 1,288,200 shares. 3 month avg: 564,294 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: Broadening top reversal pattern from 11/14/2018 to 12/06/2018
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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TD AmeriTrade Holding A (AMTD)
Industry: Securities Brokerage
Industry RS rank: 55 out of 58
Stock RS rank: 435 out of 593
12/6/18 close: $51.35
1 Month avg volatility: $1.33. Volatility stop (for downward breakout): $54.16 or 5.5% above the close.
Change YTD: 0.43%
Volume: 3,486,600 shares. 3 month avg: 2,043,012 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 top reversal pattern from 10/31/2018 to 12/06/2018
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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Textron Inc (TXT)
Industry: Diversified Co.
Industry RS rank: 29 out of 58
Stock RS rank: 498 out of 593
12/6/18 close: $53.01
1 Month avg volatility: $1.35. Volatility stop (for downward breakout): $56.14 or 5.9% above the close.
Change YTD: -6.33%
Volume: 2,920,100 shares. 3 month avg: 1,461,508 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: Triple top reversal pattern from 11/08/2018 to 12/03/2018
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 10%.
Pullbacks occur 61% of the time.
Price hits measure rule target 40% of the time.

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Valmont Industries Inc. (VMI)
Industry: Metal Fabricating
Industry RS rank: 45 out of 58
Stock RS rank: 461 out of 593
12/6/18 close: $120.87
1 Month avg volatility: $3.81. Volatility stop (for downward breakout): $130.48 or 8.0% above the close.
Change YTD: -27.12%
Volume: 202,000 shares. 3 month avg: 117,540 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 11/08/2018 to 12/03/2018
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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Waters Corp (WAT)
Industry: Precision Instrument
Industry RS rank: 4 out of 58
Stock RS rank: 242 out of 593
12/6/18 close: $193.88
1 Month avg volatility: $3.74. Volatility stop (for downward breakout): $202.40 or 4.4% above the close.
Change YTD: 0.36%
Volume: 794,600 shares. 3 month avg: 474,158 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: Broadening top reversal pattern from 11/08/2018 to 12/06/2018
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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Thursday 12/6/18. Intraday Market Direction: Nasdaq

The index dropped by -3.8% or -283.08 points. Since 02/05/1971 the index made 8 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.9% on 2 occasions.
     Average loss was -0.9% on 6 occasions.
Expect the index to close lower 75.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 154/281 or 54.8% of the time.
     The prediction of the index closing lower has been right 48/96 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 Nasdaq composite on the 5 minute scale.

$ $ $

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

From the opening bell, the index dropped, eventually bouncing when it reached the horizontal blue line.

I would not have thought the index would find support there.

The index bounced and then made a lower low to end the session at the red line.

The line appears to rest on thin air on the left side. So that leads me to believe the index will open down tomorrow (Thursday).

Of course, support isn't a point or a line. Rather, it's an area. The red line hovers just above Wednesday's peak, so maybe it'll find enough support there to prevent a further drop.

$ $ $

I updated the performance statistics for pipe tops.

$ $ $

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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© 2018 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  6,445.20    
 Monthly S1  6,801.82  356.61   
 Weekly S2  6,835.11  33.29   
 Daily S2  6,972.22  137.11   
 Weekly S1  6,996.77  24.55   Yes! The Weekly S1 is close to the Daily S2.
 Daily S1  7,065.32  68.55   
 Low  7,150.11  84.79   
 Close  7,158.43  8.32   Yes! The Close is close to the Low.
 Weekly Pivot  7,164.78  6.35   Yes! The Weekly Pivot is close to the Close.
 Monthly Pivot  7,187.37  22.59   Yes! The Monthly Pivot is close to the Weekly Pivot.
 Daily Pivot  7,243.22  55.84   
 61.8% Down from Intraday High  7,253.63  10.42   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  7,285.61  31.98   
 38.2% Down from Intraday High  7,317.59  31.98   
 Weekly R1  7,326.44  8.85   Yes! The Weekly R1 is close to the 38.2% Down from Intraday High.
 Daily R1  7,336.32  9.88   Yes! The Daily R1 is close to the Weekly R1.
 Open  7,407.95  71.63   
 High  7,421.11  13.16   Yes! The High is close to the Open.
 Weekly R2  7,494.45  73.34   
 Daily R2  7,514.22  19.77   Yes! The Daily R2 is close to the Weekly R2.
 Monthly R1  7,543.99  29.77   
 Monthly R2  7,929.54  385.56   

Tuesday 12/4/18. Intraday Market Direction: Dow

The index climbed by 1.1% or 287.97 points. Since 10/01/1928 the index made 361 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 208 occasions.
     Average loss was -0.8% on 153 occasions.
Expect the index to close higher 57.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 176/293 or 60.1% of the time.
     The prediction of the index closing lower has been right 36/71 or 50.7% 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.

On Friday (when I wrote Monday's blog post), I predicted that the Dow would rise 800 points if news came out of an agreement with China, settling the trade war.

At A, the index climbed only 500 points. Why? Because nothing has really changed. Trump says they'll work out their differences over the next 90 days while the Chinese says there is no such time limit.

No wonder the index retraced back down to B.

Still, a gain is a gain, so I'll take it and my portfolio balance thanks, you, too. Just get it done and settle the dispute.

$ $ $

I updated the performance statistics for pipe bottoms.

$ $ $

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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© 2018 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  23,253.24    
 Weekly S2  23,933.99  680.75   
 Monthly S1  24,539.83  605.84   
 Weekly S1  24,880.21  340.38   
 Weekly Pivot  25,214.96  334.75   
 Monthly Pivot  25,408.83  193.87   
 Daily S2  25,516.02  107.19   
 Low  25,670.51  154.49   
 Daily S1  25,671.22  0.71   Yes! The Daily S1 is close to the Low.
 Open  25,779.57  108.35   
 61.8% Down from Intraday High  25,788.81  9.24   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  25,825.36  36.54   
 Daily Pivot  25,825.72  0.36   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  25,826.43  0.71   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  25,861.90  35.47   
 High  25,980.21  118.31   
 Daily R1  25,980.92  0.71   Yes! The Daily R1 is close to the High.
 Daily R2  26,135.42  154.49   
 Weekly R1  26,161.18  25.76   Yes! The Weekly R1 is close to the Daily R2.
 Weekly R2  26,495.93  334.75   
 Monthly R1  26,695.42  199.49   
 Monthly R2  27,564.42  868.99   

Monday 12/3/18. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show the Dow industrials on the daily chart.

I believe the Dow will take one of two paths this week. The first, the optimistic one, will happen when the US (meaning Trump) comes to some sort of resolution to the trade war with China at the G20 meeting.

I show that move with a red, upward arrow. This move will be several hundred points, but 800 comes to mind (for no specific reason. It's just a number I pulled out of thin air. I didn't look for any overhead resistance).

If a deal falls through, the market will take a hit, following the blue line lower. That move will erase the gains and take it back down to 24300, but probably much lower. Maybe 800 down.

Again, I didn't look back for support, but know or believe that the climb up from 24,300 will be erased. But that's just a 250 point drop, so the damage will be far worse than that.

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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 354.29 points.
Tuesday: Up 108.49 points.
Wednesday: Up 617.7 points.
Thursday: Down 27.59 points.
Friday: Up 199.62 points.

For the Week...

The Dow industrials were up 1252.51 points or 5.2%.
The Nasdaq composite was up 391.56 points or 5.6%.
The S&P 500 index was up 127.61 points or 4.8%.

Year to Date...

Dow Industrials
     5.2% down from the high of 26,951.81 on 10/03/2018.
     9.4% up from the low of 23,344.52 on 04/02/2018.
Nasdaq
     9.9% down from the high of 8,133.30 on 08/30/2018.
     10.6% up from the low of 6,630.67 on 02/09/2018.
S&P 500
     6.1% down from the high of 2,940.91 on 09/21/2018.
     9.0% up from the low of 2,532.69 on 02/09/2018.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 11/30/2018, the CPI had:

14 bearish patterns,
44 bullish patterns,
388 patterns waiting for breakout.
The CPI signal is 75.9%, which is bullish (>= 65%).

The chart pattern indicator is bullish with 2 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  25,148  25,343  25,446  25,642  25,745 
Weekly  23,838  24,688  25,119  25,969  26,400 
Monthly  23,157  24,348  25,313  26,503  27,468 
S&P500 (^GSPC): Daily  2,723  2,742  2,751  2,770  2,779 
Weekly  2,613  2,686  2,724  2,797  2,835 
Monthly  2,515  2,637  2,726  2,849  2,938 
Nasdaq (^IXIC): Daily  7,229  7,280  7,306  7,357  7,383 
Weekly  6,892  7,112  7,222  7,441  7,552 
Monthly  6,503  6,917  7,245  7,659  7,987 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 44.9%   Expect a random direction. 
 1 month up 55.0%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week up 45.4%   Expect a random direction. 
 1 month up 55.6%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 46.5%   Expect a random direction. 
 1 month up 47.9%   Expect a random direction. 

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the 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 either underway or should be starting soon. The sessions could be more volatile.

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

I found 57 pipe bottoms last week, which is very bullish! Large numbers of pipe bottoms often signal the start of a short to intermediate-term move up before price drops back down, forming an unconfirmed double bottom.

 Found Chart Pattern Name
13Dead-cat bounce
9Triangle, symmetrical
8Double Bottom, Adam and Adam
6Double Bottom, Eve and Adam
6Pipe top
5Double Top, Adam and Adam
5Head-and-shoulders bottom
4Double Bottom, Eve and Eve
4Triple bottom
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. Healthcare Information1. Household Products
2. Household Products2. Food Processing
3. Precision Instrument3. Electric Utility (Central)
4. Food Processing4. Healthcare Information
5. Electric Utility (Central)5. Medical Services

-- Thomas Bulkowski

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Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.