Written and copyright © 2012-2013 by Thomas N. Bulkowski. All rights reserved.

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Tuesday 1/31/12. Trading Tuesday: Dow

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

Early in the session, the index formed a V-bottom chart pattern (blue lines). How do you trade those? I have no idea.

Later in the session, a double bottom appeared with bottoms at A and B. This was not a reversal commonly associated with double bottoms, but it acted as a continuation pattern. I don't much care for those, but when price closed above the top line and confirmed it, money could be made. Take a position and sell at the measure rule target (briefly, measure the height, add it to the top of the pattern for a target).

For tomorrow (Tuesday), I think the index will close lower. Why? If you look from Thursday on, you'll see a measured move down chart pattern. When price finishes those, it often retraces to the corrective phase, which the index has. Thus, I look for the downward move to resume. The numbers above say I'm wrong, that the index will close higher tomorrow. It's been right two out of three times, so keep that in mind.

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

-- Thomas Bulkowski

Monday 1/30/12. Market Monday: The Week Ahead

• My Prediction
• A Brief Look Back
• Economic Reports
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Buy-and-Hold: 12-Month SMA
• Earnings, Chart Patterns & Industries

My Prediction

I am still looking for the indices to turn down. The chart shows the Nasdaq composite on the weekly scale.

I drew two horizontal red lines connecting peaks and continuing to the right. They represent overhead resistance.

I expect that when the composite rises to meet those lines, it will turn down. It could sail right through them, of course or it could pause for a few weeks and then resume the uphill run. That is a distinct possibility.

I drew a green line down from the prior peak around this time and you can see how the index dropped for several weeks. I expect that to happen this time, too.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Personal income & consumption	8:30 M	C+	Measures sources of income to predict future demand.
Chicago purchasing managers index	9:45 T	B	Monitors regional manufacturing activity.
Consumer confidence	10:00 T	B-	Surveys 5,000 households for trends.
Construction spending	10:00 W	D	Covers residential/non-residential/public spending on new construction.
Crude inventories	10:30 W	?	My guess: Measures oil inventory.
Auto & truck sales	2:00 W	C-	Monthly sales of domestically produced vehicles.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Productivity & costs	8:30 Th	D+	Cost of producing a unit of output.
4 Employment reports	8:30 F	A	Nonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Factory orders	10:00 F	D+	Durable/non-durable goods orders w/factory inventories.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 01/27/2012, the CPI had:

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.

• 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:

Consecutive Price Trends

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

Earnings, Chart Patterns & Industries

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

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.

-- Thomas Bulkowski

Thursday 1/26/12. Trading Thursday: Nasdaq

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

A double bottom (AB) appears early in the session, soon enough to take advantage of. The pattern confirmed when the index closed above the top of the chart pattern (at C, above the horizontal red line). The measure rule, which is often so effective when determining when to take profits in day trades, was too conservative as the index soared.

Looking forward, I expect the index to close higher tomorrow despite my expecting a retrace longer term.

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

-- Thomas Bulkowski

Tuesday 1/24/12. Trading Tuesday: Dow

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

The chart shows what I call an ugly double bottom, geared to day traders, at AB. That is a double bottom except that the right bottom is higher than the left. For daily price data, I require at least a 5% difference but for intraday data, unequal bottoms is fine.

The pattern confirms when price closes above the top at C. A throwback took price back down further than I expected but it recovered by day's end.

Looking ahead, the numbers above do not provide a rousing endorsement. Looking longer term, I think the indices will retrace their gains so I flipped most of my targets. The Dow, I think, will head down as well. Look for a lower close but recognize the numbers say it will close higher. One of us will be wrong.

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

-- Thomas Bulkowski

Monday 1/23/12. Market Monday: The Week Ahead

• My Prediction
• A Brief Look Back
• Economic Reports
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Buy-and-Hold: 12-Month SMA
• Earnings, Chart Patterns & Industries

My Prediction

I show the Dow industrials on the daily scale.

The index has made a rising wedge chart pattern (AB), but price has broken out upward from it. Usually, the breakout is downward 69% of the time.

It is one of the worst performing chart patterns, so even if price were to reverse, it would be doubtful that it would hit the measure rule target. In this case, that means the bottom of the chart pattern.

Perhaps that is disingenuous because the rising wedge tends to be tall compared to many other types of chart patterns.

What does this pattern say about the future?

Looking at the longer term chart, the index it bumping up against overhead resistance at 12,800. Since price has been trending for weeks now, my guess is that the index will begin a retrace, perhaps dropping back to 12,200 (support setup by peaks starting in late October, shown as a blue line at C).

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Crude inventories	10:30 W	?	My guess: Measures oil inventory.
FOMC Rate decision	12:30 W	?	The Federal Reserves reports on interest rate changes.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Durable goods orders	8:30 Th	B	Measures orders, shipments of goods with lifespans >3 years.
New home sales	10:00 Th	C+	Shows sales of single-family homes.
Leading indicators	10:00 Th	D-	Summary of already known reports.
Gross domestic product	8:30 F	B	Measures economic activity; GDP deflator measures inflation.
Michigan sentiment	9:55 F	B-	Consumer sentiment: Measures strength of consumer spending.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 01/20/2012, the CPI had:

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.

• 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:

Consecutive Price Trends

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

Earnings, Chart Patterns & Industries

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

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.

-- Thomas Bulkowski

Thursday 1/19/12. Trading Thursday: Nasdaq

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

A rectangle top (A) appears early enough in the session to be a money maker for those that saw it.

One unique aspect of this rectangle is how the velocity ($/time) leading to the chart pattern is the same or nearly so on the exit (the slope of trendline B versus C). I see this from time to time. In fact, I studied it and found that it is true, even if the trend reverses (from up to down or down to up). Thus, you can look for a steep move into a chart pattern and expect a steep one after.

What will happen tomorrow, Thursday? The slope of the trend is slow enough that I think it has legs, meaning I expect a higher close tomorrow. The longer term trend over the last 10 days also shows the price moving up following a trendline with slope that is just right (not too steep or shallow).

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

-- Thomas Bulkowski

Tuesday 1/17/12. Market Monday on Tuesday: The Week Ahead

• My Prediction
• A Brief Look Back
• Economic Reports
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Buy-and-Hold: 12-Month SMA
• Earnings, Chart Patterns & Industries

My Prediction

I show a symmetrical triangle on the daily chart of the Nasdaq composite.

Notice that the apex of the triangle lines up with Friday's price bar. I show that as a green line that overwrites the bar. Sorry about that.

What is important is that when price aligns with the apex like that shown, there is a 60% chance that the index has hit a minor high. Thus, I expect that the Nasdaq will retrace this week.

How far will it drop? Probably 38% of the rise since the December low, but it could drop further.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Producer price index	8:30 W	B-	Measures wholesale goods cost. An indication of future inflation.
Industrial production	9:15 W	B-	Production of utilities, mines, and manufacturers.
Capacity utilization	9:15 W	B-	Gauges economic activity, hints of inflation.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Consumer price index	8:30 Th	B+	Inflation report. Measures cost of goods and services.
Housing starts	8:30 Th	B-	Number of homes beginning construction.
Building permits	8:30 Th	B-	Measures building permits for new construction.
Crude inventories	11:00 Th	?	My guess: Measures oil inventory.
Existing home sales	10:00 F	C	Counts sales of used homes.

Options Expiration

The following is courtesy of the Options Industry Council.

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).

Swing and Position Traders: Chart Pattern Indicator

On 01/13/2012, the chart pattern indicator (CPI) had:

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.

• 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:

Consecutive Price Trends

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

Earnings, Chart Patterns & Industries

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

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.

-- Thomas Bulkowski

Thursday 1/12/12. Trading Thursday: Nasdaq

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

A symmetrical triangle appears early in the afternoon. At A it closes above the top trendline, staging an upward breakout. At B, the index throws back, which happens about half the time and then the index resumes the upward move.

This triangle would make for a good trade providing you could ride out the throwback and exited when price peaked about 3:20.

The index is trending higher following a trendline, so my guess is this trend will continue. I expect the index to close higher tomorrow. The 9-day trend (upward) seems to confirm this, too.

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

-- Thomas Bulkowski

Tuesday 1/10/12. Trading Tuesday: Dow

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

A measured move down chart pattern appeared just before noon (the move from A to B) and this predicted a bounce back to the corrective phase, C, which happened.

One could also argue that a weird looking cup with handle appears spanning A to D with the handle at E. The pattern confirms with a breakout (close) above D, but the index went nowhere except slightly down after that. Does that mean a resumption of the upward move tomorrow?

Maybe.

On the daily scale, we are seeing a shark-32 pattern. Think of this as a double inside day, where the price range is inside yesterday's range which is inside the prior day's range. And that narrowing volatility suggests higher volatility ahead. In other words, a big move is coming.

I'll stick my neck out and say that we will close 200 points higher tomorrow (Tuesday). I doubt that we will, but it's the new year, so why not throw caution to the wind?

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

-- Thomas Bulkowski

Monday 1/9/12. Market Monday: The Week Ahead

• My Prediction
• A Brief Look Back
• Economic Reports
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Buy-and-Hold: 12-Month SMA
• Earnings, Chart Patterns & Industries

My Prediction

I show the Dow transports on the daily scale.

This is the only one that shows anything interesting this week. The figure highlights in red a rising wedge chart pattern.

A rising wedge is one in which price makes higher highs and higher lows, following two converging, but up-sloping trendlines. Most often, the breakout is downward 69% of the time.

Do I think that this will breakout downward?

No. I think the economy is improving enough to send the index higher, out the top of the chart pattern.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Consumer credit	3:00 M	D-	Measures auto, credit card and other debt.
Wholesale inventories	10:00 T	D-	Wholesale sales and inventory statistics.
Crude inventories	10:30 W	?	My guess: Measures oil inventory.
FEDs Beige book	2:00 W	?	Reports on economic conditions.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Retail sales	8:30 Th	A-	Reports total retail sales (not services). Are people spending?
Business inventories	10:00 Th	C-	Reports manufacturing, wholesale, retail inventories.
Treasury budget	2:00 Th	D	Tracks budget deficit. Important in April (tax filing).
Trade balance	8:30 F	C+	Signals balance of exports & imports.
International trade	8:30 F	C+	Import/export prices, trade balance. US economy vs others.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 01/06/2012, the CPI had:

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.

• 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:

Consecutive Price Trends

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

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 5 days.

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.

-- Thomas Bulkowski

Thursday 1/5/12. Trading Thursday: Nasdaq

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

The index formed a rectangle top from noon to almost 3:00 before it staged an upward breakout at A. The following move did not amount to much, so it was a waste of time, at least so far.

The rectangle does provide price with a modest support area, which should help the index move higher and close higher tomorrow (Thursday).

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

-- Thomas Bulkowski

Tuesday 1/3/12. Market Monday on Tuesday: The Week Ahead

• My Prediction
• A Brief Look Back
• Economic Reports
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Buy-and-Hold: 12-Month SMA
• Earnings, Chart Patterns & Industries

My Prediction

I show the Nasdaq composite on the daily chart. The index is forming a symmetrical triangle. The breakout direction is nearly random, so that is little help in determine what will happen.

Nevertheless, I believe the index will follow the green line. It will show an upward breakout followed by a retrace going into the middle of this month.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Construction spending	10:00 T	D	Covers residential/non-residential/public spending on new construction.
FOMC Minutes	2:00 T	?	Minutes of the prior Federal Reserve meeting.
Factory orders	10:00 W	D+	Durable/non-durable goods orders w/factory inventories.
Auto & truck sales	2:00 W	C-	Monthly sales of domestically produced vehicles.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Crude inventories	11:00 Th	?	My guess: Measures oil inventory.
4 Employment reports	8:30 F	A	Nonfarm payrolls, unemployment rate, avg workweek, hourly earnings.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 12/30/2011, the CPI had:

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.

• 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:

Consecutive Price Trends

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

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).

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.

-- Thomas Bulkowski

Written and copyright © 2012-2013 by Thomas N. Bulkowski. All rights reserved.