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

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

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February 2013 Headlines


Archives


Thursday 2/28/13. Trading Thursday: IIIN

The index climbed by 1.0% or 32.61 points. Since 02/05/1971 the index made 193 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 131 occasions.
     Average loss was -1.0% on 62 occasions.
Expect the index to close higher 67.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 32/55 or 58.2% of the time.
     The prediction of the index closing lower has been right 19/34 or 55.9% of the time.

Picture of IIIN on the daily scale.

Instead of talking about the Nasdaq tomorrow, let me discuss a trade I closed out today. It's pictured on the daily scale.

In December, I was flush with cash (as I am now, but I was doing tax loss selling) and wanted to put the money back into the market. I used a limit order at $12 and it filled in two pieces spread over two days (A on the chart). That happens sometimes and it fattens the broker's purse with double commissions. The second part triggered the next day (Dec 12-13).

The buy reason was a large symmetrical triangle that started in May 2011 to December 2012, weekly scale (not shown). At the time, the industry relative strength was 5, meaning the stocks in the industry were moving higher faster than most of the 54 industries I follow.

Yesterday (Tuesday), I was looking at the chart and saw that uphill runs like that shown moving higher toward B formed a V-top. The decline after the top is a quick run down.

Today was a write-off. Until noon, I was busy with a man quoting work on my house's foundation. About 5 minutes before the close, I logged in and saw that the market was up big time and yet the stock hadn't moved. That told me it was ripe to fall in the coming days when the market calmed down. So, I sold my position. That started an avalanche and the price tumbled, not far, but the drop was surprising. I sold it in 9 partial fills and the average sell price was something like 15.82. The stock closed at 15.73, down 8 cents on a day the Dow was up 175.

I think my stock trades this year will single-handedly solve the deficit problem by handing over to the US treasury a boatload of money. I guess that's better than taking a loss.

On the trade, I made about 32% and that does not include the dividend I collected.

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

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,069.85    
 Weekly S2  3,069.85  0.00   Yes! The Weekly S2 is close to the Monthly S2.
 Daily S2  3,105.25  35.40   
 Monthly S1  3,116.05  10.81   
 Weekly S1  3,116.05  0.00   Yes! The Weekly S1 is close to the Monthly S1.
 Low  3,127.27  11.22   
 Open  3,129.72  2.45   Yes! The Open is close to the Low.
 Daily S1  3,133.75  4.03   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  3,146.57  12.82   
 50% Down from Intraday High  3,152.53  5.96   
 Daily Pivot  3,155.78  3.24   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,158.50  2.72   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  3,162.26  3.76   Yes! The Close is close to the 38.2% Down from Intraday High.
 Weekly Pivot  3,164.83  2.57   Yes! The Weekly Pivot is close to the Close.
 Monthly Pivot  3,164.83  0.00   Yes! The Monthly Pivot is close to the Weekly Pivot.
 High  3,177.80  12.97   
 Daily R1  3,184.28  6.48   
 Daily R2  3,206.31  22.02   
 Weekly R1  3,211.03  4.73   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  3,211.03  0.00   Yes! The Monthly R1 is close to the Weekly R1.
 Monthly R2  3,259.81  48.77   
 Weekly R2  3,259.81  0.00   Yes! The Weekly R2 is close to the Monthly R2.

Tuesday 2/26/13. Trading Tuesday: Dow

The index dropped by -1.5% or -216.4 points. Since 10/01/1928 the index made 163 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 76 occasions.
     Average loss was -0.9% on 87 occasions.
Expect the index to close lower 53.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 40/63 or 63.5% of the time.
     The prediction of the index closing lower has been right 13/21 or 61.9% of the time.

Picture of the Dow industrials on the 5 minute scale.

Since I post this entry the night before, be sure to check how the futures are trading before the market opens. Large plus or minus numbers in the futures often sets the opening direction up or down, respectively.

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

No good trading patterns appear on the chart. The numbers 1, 2, and 3 show a pattern called three falling peaks. The pattern confirms when the index closes below the blue line, which marks the lowest low in the pattern.

As soon as that pattern confirmed, the index moved into a rectangle bottom, highlighted by the two red lines. After that broke out downward, the index plunged. I was as surprised as anyone by the size of the decline. I was expecting a resumption of the move up. The above probabilities say the index will close lower tomorrow and based on this chart's downward momentum, I have to agree. The daily chart also shows weakness but once Europe settles down, the index will recover. I hope.

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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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  13,322.16    
 Monthly S1  13,553.17  231.00   
 Daily S2  13,585.68  32.52   
 Weekly S2  13,673.15  87.47   
 Daily S1  13,684.93  11.78   Yes! The Daily S1 is close to the Weekly S2.
 Weekly S1  13,728.66  43.73   
 Low  13,784.01  55.35   
 Close  13,784.17  0.16   Yes! The Close is close to the Low.
 Monthly Pivot  13,804.78  20.61   Yes! The Monthly Pivot is close to the Close.
 Daily Pivot  13,883.25  78.47   
 Weekly Pivot  13,892.53  9.28   Yes! The Weekly Pivot is close to the Daily Pivot.
 61.8% Down from Intraday High  13,897.68  5.15   Yes! The 61.8% Down from Intraday High is close to the Weekly Pivot.
 50% Down from Intraday High  13,932.79  35.11   
 Weekly R1  13,948.04  15.25   Yes! The Weekly R1 is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  13,967.91  19.87   Yes! The 38.2% Down from Intraday High is close to the Weekly R1.
 Daily R1  13,982.50  14.59   Yes! The Daily R1 is close to the 38.2% Down from Intraday High.
 Open  14,000.57  18.07   Yes! The Open is close to the Daily R1.
 Monthly R1  14,035.79  35.22   
 High  14,081.58  45.79   
 Weekly R2  14,111.91  30.33   
 Daily R2  14,180.82  68.91   
 Monthly R2  14,287.40  106.58   

Monday 2/25/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utilities on the daily chart because of the two red lines. The other indices don't show this type of pattern. Can you guess what it is?

The chart pattern belongs to the broadening variety since the two red line diverge. This one is called a broadening formation, right-angled and ascending chart pattern.

The bottom of the pattern shows a horizontal line or near horizontal one. The top trendline slopes upward.

The last two days have made a partial decline. A partial decline occurs after the pattern is valid (has enough trendline touches) and price touches the top trendline, drops but does not touch or come too close to the bottom trendline before staging an immediate upward breakout. That's what I expect. So, if you own a utility stock, look for daylight above.

The breakout is upward just 34% of the time, but that could be due to few samples. Still it's a caution flag.

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A Brief Look Back

Picture of two ducks.

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

Tuesday: Up 53.91 points.
Wednesday: Down 108.13 points.
Thursday: Down 46.92 points.
Friday: Up 119.95 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 18.81 points or 0.1%.
The Nasdaq composite was down 30.21 points or 0.9%.
The S&P 500 index was down 4.19 points or 0.3%.

Year to Date...

Dow Industrials
     0.4% down from the high of 14,056.40 on 02/20/2013.
     6.8% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     1.6% down from the high of 3,213.60 on 02/19/2013.
     2.8% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     1.0% down from the high of 1,530.94 on 02/19/2013.
     6.3% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
New home sales10:00 TC+Shows sales of single-family homes.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Durable goods orders8:30 WBMeasures orders, shipments of goods with lifespans >3 years.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Gross domestic product8:30 ThBMeasures economic activity; GDP deflator measures inflation.
Chicago purchasing managers index9:45 ThBMonitors regional manufacturing activity.
Personal income & consumption8:30 FC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 FC+Covers durables, non-durables, and services.
Michigan sentiment9:55 FB-Consumer sentiment: Measures strength of consumer spending.
Construction spending10:00 FDCovers residential/non-residential/public spending on new construction.
Auto & truck sales2:00 FC-Monthly sales of domestically produced vehicles.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

On 02/22/2013, the CPI had:

2 bearish patterns,
10 bullish patterns,
169 patterns waiting for breakout.
The CPI signal is 83.3%, which is bullish (>= 65%).

The chart pattern indicator is bullish 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  13,840  13,920  13,961  14,041  14,081 
Weekly  13,745  13,873  13,965  14,092  14,184 
Monthly  13,394  13,697  13,877  14,180  14,360 
S&P 500 (^GSPC): Daily  1,498  1,507  1,511  1,520  1,524 
Weekly  1,481  1,498  1,515  1,532  1,548 
Monthly  1,452  1,484  1,507  1,539  1,563 
Nasdaq (^IXIC): Daily  3,132  3,147  3,154  3,169  3,177 
Weekly  3,070  3,116  3,165  3,211  3,260 
Monthly  3,070  3,116  3,165  3,211  3,260 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.6%  Expect a random direction.
 3 months up 24.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week down 28.1%  The trend may continue.
 4 months up 25.5%  The trend may continue.
 Nasdaq composite (^IXIC) 2 weeks down 19.6%  Expect a reversal soon.
 4 months up 18.9%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
33Channel
23Triangle, symmetrical
14Rising wedge
12Rectangle top
11Head-and-shoulders top
9Triangle, ascending
7Broadening top
6Pipe top
5Scallop, ascending
5Dead-cat bounce

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

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

 

 

 

 

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

This WeekLast Week
1. Securities Brokerage1. Securities Brokerage
2. Cement and Aggregates2. Cement and Aggregates
3. Human Resources3. Homebuilding
4. Building Materials4. Building Materials
5. Precision Instrument5. Human Resources
48. Metals and Mining (Div.)48. Telecom. Equipment
49. Telecom. Equipment49. Electric Utility (West)
50. Shoe50. Electric Utility (Central)
51. Electric Utility (East)51. Retail Store
52. Retail (Special Lines)52. Electric Utility (East)
53. Short ETFs53. Computers and Peripherals
54. Computers and Peripherals54. Short ETFs

-- Thomas Bulkowski

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Thursday 2/21/13. Trading Thursday: The BKH Trade

The index dropped by -1.5% or -49.19 points. Since 02/05/1971 the index made 90 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.2% on 39 occasions.
     Average loss was -1.4% on 51 occasions.
Expect the index to close lower 56.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 32/55 or 58.2% of the time.
     The prediction of the index closing lower has been right 18/33 or 54.5% of the time.

Addendum: Mike Broudy was kind enough to tell me that the SEC has changed the stop order rule. As of 3/4/2013 (unless extended), 'stop orders' and 'stop limit' orders will be triggered on the last sale, not on the bid price. Yippee! See http://www.finra.org/Industry/Regulation/Notices/2012/P196810. Thanks, Mike.

What I describe below is from a broker that terms their stop orders as 'stop limit' and 'stop market.' I used the stop market order, which is not subject to the above regulation.

Picture of Black Hills Corp on the daily scale.

Pictured is Black Hills Corp on the daily scale.

This is one of those trades that just pissed me off. Let me tell you about it. It's a story I've told before and one of those lessons I should have learned.

Back in the summer of 2011, I was flush with cash and utility stocks were cheap. I found BKH and bought 400 shares at 30.20 in July after the breakout from a small symmetrical triangle.

A month later, the stock looked to be making a double bottom, so I picked up another 400 shares at 28.25, giving me a 5% dividend rate. If you have a money market account or a savings account, a 5% dividend is well above what those other accounts pay. It turns out the buy was too soon. The market didn't like the earnings report and the stock dropped to a low of 25.83.

The stock recovered and started making a straight-line run up. That made me nervous. I placed a stop order at 39.79, well below the $41 price the stock was trading.

When I checked my email yesterday, I saw the confirmation order from my broker. The stop had triggered. Either the company suffered a nuclear meltdown or the bid slipped below the stop price, triggering the order. I show the price at A on the chart.

As you probably guessed, I couldn't find any news to explain the behaviour of the stock. So, I called my broker and talked to him about the trade. He said that the stock opened at 40.94 and then buy orders disappeared. The bid price dropped and 32 seconds later, it dropped below my stop price. Since stops are not triggered on the last sale, but on the bid price, my order executed at the market, which had dropped to 39.65. The stock closed at 41.22 and is now trading at 41.50.

That means I gave up over $1,000 in profit by using a stop order, was cashed out of a stock that continues to move higher, and pays a 5% dividend rate (priced as of the day I bought).

On the first trade, I made 40% and made 49% on the second, including dividends.

$ $ $

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

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,041.75    
 Monthly S1  3,103.08  61.33   
 Daily S2  3,131.24  28.16   
 Daily S1  3,147.82  16.59   
 Monthly Pivot  3,154.65  6.83   
 Weekly S2  3,160.24  5.59   
 Weekly S1  3,162.33  2.08   Yes! The Weekly S1 is close to the Weekly S2.
 Low  3,163.95  1.62   Yes! The Low is close to the Weekly S1.
 Close  3,164.41  0.46   Yes! The Close is close to the Low.
 Daily Pivot  3,180.54  16.13   
 61.8% Down from Intraday High  3,182.78  2.25   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 Weekly Pivot  3,184.27  1.49   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 Weekly R1  3,186.36  2.08   Yes! The Weekly R1 is close to the Weekly Pivot.
 50% Down from Intraday High  3,188.60  2.24   Yes! The 50% Down from Intraday High is close to the Weekly R1.
 38.2% Down from Intraday High  3,194.42  5.82   
 Daily R1  3,197.12  2.71   Yes! The Daily R1 is close to the 38.2% Down from Intraday High.
 Weekly R2  3,208.30  11.18   
 Open  3,211.99  3.69   Yes! The Open is close to the Weekly R2.
 High  3,213.25  1.26   Yes! The High is close to the Open.
 Monthly R1  3,215.98  2.73   Yes! The Monthly R1 is close to the High.
 Daily R2  3,229.84  13.86   
 Monthly R2  3,267.55  37.71   

Tuesday 2/19/13. Trading Tuesday: Dow

The index climbed by 0.1% or 8.37 points. Since 10/01/1928 the index made 1219 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 624 occasions.
     Average loss was -0.7% on 595 occasions.
Expect the index to close higher 51.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 39/62 or 62.9% of the time.
     The prediction of the index closing lower has been right 13/21 or 61.9% of the time.

Picture of the Dow industrials on the 5 minute scale.

Since I post this entry the night before, be sure to check how the futures are trading before the market opens. Large plus or minus numbers in the futures often sets the opening direction up or down, respectively.

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

This picture is unusual since the double top occurred early in the session. Most of the time, chart patterns, intraday, appear in the afternoon. This double top confirms as a valid pattern when the index closed below the red line.

The height of the pattern from the taller of the two peaks to the red line subtracted from the red line gives a target. The index reached that target and more.

On the daily chart, it looks as if the Dow is rounding over and ready to tumble. But the probabilities say it will close higher on Tuesday. Since I'm optimistic, I'll agree and look for a higher close.

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

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  13,221.23    
 Monthly S1  13,601.50  380.26   
 Monthly Pivot  13,820.23  218.74   
 Weekly S2  13,845.42  25.19   
 Daily S2  13,871.31  25.89   
 Low  13,908.11  36.80   
 Weekly S1  13,913.59  5.48   Yes! The Weekly S1 is close to the Low.
 Daily S1  13,926.54  12.95   
 61.8% Down from Intraday High  13,943.26  16.73   
 50% Down from Intraday High  13,954.12  10.86   
 Daily Pivot  13,963.33  9.21   
 38.2% Down from Intraday High  13,964.98  1.65   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Open  13,973.39  8.41   Yes! The Open is close to the 38.2% Down from Intraday High.
 Weekly Pivot  13,976.28  2.89   Yes! The Weekly Pivot is close to the Open.
 Close  13,981.76  5.48   Yes! The Close is close to the Weekly Pivot.
 High  14,000.13  18.37   
 Daily R1  14,018.56  18.43   
 Weekly R1  14,044.45  25.89   
 Daily R2  14,055.35  10.90   
 Weekly R2  14,107.14  51.79   
 Monthly R1  14,200.50  93.36   
 Monthly R2  14,419.23  218.74   

Thursday 2/14/13. Trading Thursday: Nasdaq

The index climbed by 0.3% or 10.39 points. Since 02/05/1971 the index made 557 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 308 occasions.
     Average loss was -0.7% on 249 occasions.
Expect the index to close higher 55.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 31/54 or 57.4% of the time.
     The prediction of the index closing lower has been right 18/33 or 54.5% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

Since I post this entry the night before, be sure to check how the futures are trading before the market opens. Large plus or minus numbers in the futures often sets the opening direction up or down, respectively.

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

Here's a question for those of you familiar with chart patterns. Is the twin bottom at A and B a double bottom?

The answer is no. Why? Because the index has not closed above C, which is the highest peak between the two bottoms. Until that happens, you're looking at squiggles on a price chart.

As for tomorrow (Thursday's) close, the above probabilities say it'll close higher. On the daily chart, it looks as if the index is getting tired. The move upward lacks enthusiasm, shown by the formation of a doji. Of course, the doji candle means indecision as to the direction of price. So, I'll go with the probabilities and look for a higher close. My gut says that it'll close lower. Maybe both will be true. What do you think?

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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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,036.50    
 Weekly S2  3,108.46  71.96   
 Monthly S1  3,116.69  8.23   
 Weekly S1  3,152.67  35.98   
 Monthly Pivot  3,156.79  4.12   
 Weekly Pivot  3,174.78  17.99   
 Daily S2  3,178.03  3.25   
 Low  3,187.06  9.03   
 Daily S1  3,187.45  0.39   Yes! The Daily S1 is close to the Low.
 61.8% Down from Intraday High  3,194.11  6.66   
 Open  3,195.34  1.23   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,196.29  0.95   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  3,196.49  0.20   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  3,196.88  0.39   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  3,198.47  1.59   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  3,205.52  7.05   
 Daily R1  3,205.91  0.39   Yes! The Daily R1 is close to the High.
 Daily R2  3,214.95  9.03   
 Weekly R1  3,218.99  4.04   
 Monthly R1  3,236.98  17.99   
 Weekly R2  3,241.10  4.12   
 Monthly R2  3,277.08  35.98   

Tuesday 2/12/13. Trading Tuesday: Dow

The index dropped by -0.2% or -21.73 points. Since 10/01/1928 the index made 1104 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 548 occasions.
     Average loss was -0.7% on 556 occasions.
Expect the index to close lower 50.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 39/62 or 62.9% of the time.
     The prediction of the index closing lower has been right 13/20 or 65.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

Since I post this entry the night before, be sure to check how the futures are trading before the market opens. Large plus or minus numbers in the futures often sets the opening direction up or down, respectively.

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

This is an example of why I dislike symmetrical triangles. They tend to double bust.

Highlighted in red is a symmetrical triangle. This one, if you draw the trendlines carefully and look closely, broke out upward (a close above the top trendline). Then the index reversed and closed below the bottom trendline busting the upward breakout. Then it reversed again, forming a double busted symmetrical triangle when the price shot out of the triangle and headed up. As I recall from my research on busted patterns, symmetrical triangles were the worst offenders of the patterns I studied. They busted a lot.

Looking to the close on Tuesday, the probabilities say a lower close is coming. I think that's correct. After the swift, straight-line run up from the late December low, the Dow needs a rest. It's getting that now. Sooner or later, it'll break out. My guess is that will be upward but until then, look for the index to drift sideways to down.

$ $ $

I wrote an article on the Gap2H pattern. I tested it with a 7% target and 7% stop, so you can view those results, too. I'm going to rework the other small patterns to provide that kind of analysis. I think it's helpful to traders looking to see how much they can make (or lose).

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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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  13,034.73    
 Monthly S1  13,502.99  468.25   
 Monthly Pivot  13,761.38  258.40   
 Weekly S2  13,781.07  19.68   
 Weekly S1  13,876.15  95.09   
 Daily S2  13,915.65  39.49   
 Low  13,940.41  24.76   
 Daily S1  13,943.44  3.03   Yes! The Daily S1 is close to the Low.
 Weekly Pivot  13,947.29  3.84   Yes! The Weekly Pivot is close to the Daily S1.
 61.8% Down from Intraday High  13,960.49  13.20   
 50% Down from Intraday High  13,966.69  6.20   
 Daily Pivot  13,968.21  1.52   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  13,971.24  3.03   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  13,972.89  1.65   Yes! The 38.2% Down from Intraday High is close to the Close.
 Open  13,992.97  20.08   
 High  13,992.97  0.00   Yes! The High is close to the Open.
 Daily R1  13,996.00  3.03   Yes! The Daily R1 is close to the High.
 Daily R2  14,020.77  24.76   
 Weekly R1  14,042.37  21.61   
 Weekly R2  14,113.51  71.13   
 Monthly R1  14,229.64  116.13   
 Monthly R2  14,488.03  258.40   

Monday 2/11/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

I show a picture of the Dow Transports on the daily chart because I think it represents what will happen to the other indices.

After breaking out of a sideways move highlighted by the red lines, the index soared. The red lines outline a broadening formation, right angled and descending chart pattern. The breakout direction from those patterns is upward, but only 51% of the time. That's random, but in this case, it panned out.

I am hoping that the other indices will see the sky beckoning and will then soar to the clouds like the transports have.

 

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A Brief Look Back

Picture of a flower from my garden.

I already found aphids, like those pictured, on my day lilies.

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

Monday: Down 129.71 points.
Tuesday: Up 99.22 points.
Wednesday: Up 7.22 points.
Thursday: Down 42.47 points.
Friday: Up 48.92 points.

For the Week...

The Dow industrials were down 16.82 points or 0.1%.
The Nasdaq composite was up 14.77 points or 0.5%.
The S&P 500 index was up 4.76 points or 0.3%.

Year to Date...

Dow Industrials
     0.2% down from the high of 14,019.78 on 02/01/2013.
*
     6.8% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.1% down from the high of 3,196.89 on 02/08/2013.
     3.8% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.0% down from the high of 1,518.31 on 02/08/2013.
     6.4% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Treasury budget2:00 TDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 WA-Reports total retail sales (not services). Are people spending?
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Business inventories10:00 WC-Reports manufacturing, wholesale, retail inventories.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Industrial production9:15 FB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 FB-Gauges economic activity, hints of inflation.

Options Expiration

The following is courtesy of the Options Industry Council.

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

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

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Swing and Position Traders: Chart Pattern Indicator

As of 02/08/2013, the CPI had:

3 bearish patterns,
37 bullish patterns,
364 patterns waiting for breakout.
The CPI signal is 92.5%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  13,911  13,952  13,985  14,026  14,060 
Weekly  13,788  13,891  13,955  14,057  14,121 
Monthly  13,042  13,517  13,769  14,244  14,495 
S&P 500 (^GSPC): Daily  1,506  1,512  1,515  1,521  1,524 
Weekly  1,487  1,503  1,510  1,526  1,534 
Monthly  1,429  1,474  1,496  1,540  1,563 
Nasdaq (^IXIC): Daily  3,170  3,182  3,189  3,201  3,209 
Weekly  3,107  3,151  3,174  3,217  3,240 
Monthly  3,035  3,115  3,156  3,235  3,276 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 29.2%  The trend may continue.
 3 months up 24.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 6 weeks up 4.4%  Expect a reversal soon.
 4 months up 25.5%  The trend may continue.
 Nasdaq composite (^IXIC) 6 weeks up 5.9%  Expect a reversal soon.
 4 months up 18.9%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
17Triangle, symmetrical
13Rising wedge
11Channel
5Triangle, ascending
5Broadening top
5Diamond top
4Scallop, ascending
4Pipe bottom
4Head-and-shoulders bottom
3Flag

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

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

 

 

 

 

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

This WeekLast Week
1. Securities Brokerage1. Securities Brokerage
2. Cement and Aggregates2. Homebuilding
3. Homebuilding3. Cement and Aggregates
4. Building Materials4. Human Resources
5. Human Resources5. Building Materials
48. Telecom. Equipment48. Retail Store
49. Electric Utility (West)49. Electric Utility (Central)
50. Electric Utility (Central)50. Household Products
51. Retail Store51. Electric Utility (West)
52. Electric Utility (East)52. Electric Utility (East)
53. Computers and Peripherals53. Computers and Peripherals
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 2/7/13. Trading Thursday: Nasdaq

The index dropped by -0.1% or -3.1 points. Since 02/05/1971 the index made 501 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 272 occasions.
     Average loss was -1.0% on 229 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 31/53 or 58.5% of the time.
     The prediction of the index closing lower has been right 18/33 or 54.5% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

Since I post this entry the night before, be sure to check how the futures are trading before the market opens. Large plus or minus numbers in the futures often sets the opening direction up or down, respectively.

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

This is the kind of chart pattern I love to see. Peaks at A and B confirm as a double top at C when the index closed below the red line, called the confirmation line.

That's not what is exciting with this pattern. I like the straight-line run up from D. That suggests that once the double top breaks out downward, it will return to just above the launch price of D. In this example, E is below D, so it overshot. Also, just because you see a straight-line run up from D to A is no reason to believe there will be a similar run down to E. But it happens. You can use that kind of knowledge to make money (just bet on the bottom resting above the value of D).

The probabilities say to look for a higher close. On the daily chart, the Nasdaq is approaching overhead resistance. Any upward move I think is going to be muted until it pushes through that resistance. I look for the index to move sideways but I don't have any valid reason for thinking that. Clearly the other indices, after making a swift rise, will want to regroup. But the Nasdaq has been moving up in a channel. Thus, I'll side with the probabilities and look for a higher close on Thursday.

$ $ $

I also released two new pages on the weekly reversal chart patterns. You can find the links here.

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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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,872.09    
 Monthly S1  3,020.29  148.19   
 Monthly Pivot  3,101.71  81.43   
 Weekly S2  3,111.55  9.83   
 Weekly S1  3,140.01  28.47   
 Daily S2  3,149.40  9.39   
 Low  3,157.34  7.94   
 Daily S1  3,158.94  1.60   Yes! The Daily S1 is close to the Low.
 Open  3,159.38  0.44   Yes! The Open is close to the Daily S1.
 Weekly Pivot  3,161.58  2.20   
 61.8% Down from Intraday High  3,164.02  2.44   
 50% Down from Intraday High  3,166.08  2.06   
 Daily Pivot  3,166.88  0.80   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,168.14  1.26   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  3,168.48  0.34   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  3,174.82  6.34   
 Daily R1  3,176.42  1.60   Yes! The Daily R1 is close to the High.
 Daily R2  3,184.36  7.94   
 Weekly R1  3,190.04  5.68   
 Weekly R2  3,211.61  21.56   
 Monthly R1  3,249.91  38.30   
 Monthly R2  3,331.33  81.43   

Tuesday 2/5/13. Trading Tuesday: Dow

The index dropped by -0.9% or -129.71 points. Since 10/01/1928 the index made 399 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 187 occasions.
     Average loss was -0.8% on 212 occasions.
Expect the index to close lower 53.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 39/62 or 62.9% of the time.
     The prediction of the index closing lower has been right 13/19 or 68.4% of the time.

Picture of the Dow industrials on the 5 minute scale.

Since I post this entry the night before, be sure to check how the futures are trading before the market opens. Large plus or minus numbers in the futures often sets the opening direction up or down, respectively.

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

Today's damage occurred in the opening five minutes of trading, as the chart shows. After that, the index moved lower until finding a bottom, then another bottom to complete a double bottom.

Unfortunately, the index never bounced far enough to make the move reach the profit potential suggested by the measure rule (the height of the double bottom added to the top of it).

Toward the end of the session, a third bottom appeared. This is not a triple bottom because the index has not closed above the top of the peak between the three bottoms. That is, it hasn't confirmed as a valid chart pattern.

The probabilities suggest a lower close tomorrow and I'm not going to stand in it's way. Look for a lower close on Tuesday.

$ $ $

If you know of any large groups of investors that meet monthly, have one of their officers email me or please share their email address with me. I'm working with my publisher (John Wiley & Sons) to get the word out about my four new books. If they qualify, we'd like to send one or two free copies of my books to be used as raffle items at their meetings.

Here's my email address (it's an image so you can't copy it):

My email address.

I would appreciate any help you can give me in trying to spread the word about my books. They are pictured above, by the way.

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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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,458.69    
 Monthly S1  13,169.39  710.69   
 Monthly Pivot  13,594.58  425.20   
 Weekly S2  13,760.95  166.36   
 Daily S2  13,775.94  14.99   
 Weekly S1  13,820.51  44.57   
 Daily S1  13,828.01  7.50   Yes! The Daily S1 is close to the Weekly S1.
 Low  13,866.83  38.82   
 Close  13,880.08  13.25   Yes! The Close is close to the Low.
 Daily Pivot  13,918.90  38.82   
 Weekly Pivot  13,920.15  1.25   Yes! The Weekly Pivot is close to the Daily Pivot.
 61.8% Down from Intraday High  13,921.44  1.29   Yes! The 61.8% Down from Intraday High is close to the Weekly Pivot.
 50% Down from Intraday High  13,938.31  16.87   
 38.2% Down from Intraday High  13,955.18  16.87   
 Daily R1  13,970.97  15.79   
 Weekly R1  13,979.71  8.74   Yes! The Weekly R1 is close to the Daily R1.
 Open  14,009.79  30.08   
 High  14,009.79  0.00   Yes! The High is close to the Open.
 Daily R2  14,061.86  52.07   
 Weekly R2  14,079.35  17.49   
 Monthly R1  14,305.28  225.93   
 Monthly R2  14,730.47  425.20   

Monday 2/4/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show the Dow industrials on the daily scale. This picture interests me.

Chart patterns tend to appear in the middle of trends. Thus, we can use their location to estimate how far the trend will move. In this case, the start of the trend is at A and it ends at B. B is the approximate middle of the broadening top pattern outlined in blue.

If A is at, eyeballing it, 12,471 and B is at 13241, that's a difference of 770 points. Add that to B to get a target trend end of 14,011. That's right where we are at today.

Does this mean the tend is over? No. Elliott wave says the primary wave is a move of 5, three up waves and two retraces, so we have more left to go.

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A Brief Look Back

Picture of a lizard from my garden.

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

Monday: Down 14.05 points.
Tuesday: Up 72.49 points.
Wednesday: Down 44 points.
Thursday: Down 49.84 points.
Friday: Up 149.21 points.

For the Week...

The Dow industrials were up 113.81 points or 0.8%.
The Nasdaq composite was up 29.39 points or 0.9%.
The S&P 500 index was up 10.21 points or 0.7%.

Year to Date...

Dow Industrials
     0.1% down from the high of 14,019.78 on 02/01/2013.
     6.9% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.1% down from the high of 3,183.14 on 02/01/2013.
     3.3% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.1% down from the high of 1,514.41 on 02/01/2013.
     6.1% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Factory orders10:00 MD+Durable/non-durable goods orders w/factory inventories.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Productivity & costs8:30 ThD+Cost of producing a unit of output.
Consumer credit3:00 ThD-Measures auto, credit card and other debt.
Trade balance8:30 FC+Signals balance of exports & imports.
Wholesale inventories10:00 FD-Wholesale sales and inventory statistics.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 02/01/2013, the CPI had:

3 bearish patterns,
50 bullish patterns,
235 patterns waiting for breakout.
The CPI signal is 94.3%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  13,804  13,907  13,963  14,066  14,123 
Weekly  13,804  13,907  13,963  14,066  14,123 
Monthly  12,502  13,256  13,638  14,392  14,774 
S&P 500 (^GSPC): Daily  1,492  1,503  1,509  1,519  1,525 
Weekly  1,490  1,502  1,508  1,520  1,526 
Monthly  1,359  1,436  1,475  1,552  1,592 
Nasdaq (^IXIC): Daily  3,144  3,162  3,172  3,190  3,201 
Weekly  3,115  3,147  3,165  3,197  3,215 
Monthly  2,876  3,027  3,105  3,257  3,335 
  • 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 8.2%  Expect a reversal soon.
 3 months up 24.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 5 weeks up 8.9%  Expect a reversal soon.
 4 months up 25.5%  The trend may continue.
 Nasdaq composite (^IXIC) 5 weeks up 7.0%  Expect a reversal soon.
 4 months up 18.9%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
14Triangle, symmetrical
13Broadening top
11Channel
10Rising wedge
5Triangle, ascending
5Target price
4Pipe bottom
3Diamond top
3Rectangle top
3Pipe top

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

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

 

 

 

 

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

This WeekLast Week
1. Securities Brokerage1. Homebuilding
2. Homebuilding2. Cement and Aggregates
3. Cement and Aggregates3. Securities Brokerage
4. Human Resources4. Human Resources
5. Building Materials5. Building Materials
48. Retail Store48. Retail Store
49. Electric Utility (Central)49. Household Products
50. Household Products50. Electric Utility (Central)
51. Electric Utility (West)51. Electric Utility (West)
52. Electric Utility (East)52. Electric Utility (East)
53. Computers and Peripherals53. Computers and Peripherals
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Friday 2/1/13. Dog Rescue.

This evening, I heard a dog barking and it sounded as if I left one of my windows open -- it was that clear. So I checked to make sure my windows were closed and in the process, I looked out to my back yard. There was this cute pug (a dog) staring at me.

I figured it was my neighbor's dog so I grabbed a flashlight, caught the dog and put her into a carrying case and towed her to the neighbors.

It wasn't their dog.

I packed the dog into my car, rode to the adjacent street and caught the man living there leaving his house. Nope. Not his dog either.

I believed that the house behind me didn't have a pug either, so I checked the house next to that one. Bingo. The woman that answered wasn't even sure it was her dog but the son knew.

Cute thing...the dog, not the woman. Friendly, too...the dog, not the woman.

-- Thomas Bulkowski

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