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

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January 2013 Headlines


Archives


Thursday 1/31/13. Trading Thursday: Nasdaq

The index dropped by -0.4% or -11.35 points. Since 02/05/1971 the index made 377 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 185 occasions.
     Average loss was -1.1% on 192 occasions.
Expect the index to close lower 50.9% 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 17/32 or 53.1% 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.

The index shows support giving way and leading to a swift decline in the afternoon. Those of you versed in chart patterns will recognize a descending triangle. I show the pattern highlighted in red. The support line is at A.

The probabilities say the Nasdaq will close lower tomorrow and I am inclined to agree. The chart pattern indicator has turned bearish too, but that could change easily enough. I expect a lower close on Thursday.

$ $ $

I released reviews of two chart patterns today, the inside day and the outside day. Those two join the shark-32 pattern I released a week or so ago. If you read one, then you've read all three. I shared the same text and changed the performance statistics for each pattern.

$ $ $

I have been trying to get the word out about my four new books and did an internet search on large trading groups. The idea was to send two free books to them as raffle items. I found a website that facilities meetings and joined it because they had many investment groups featured. I sent three emails and was blocked on the fourth. The next day, they disabled my account, saying I broke the rules. I asked them to reconsider, told them that I was trying to contract the groups to give away my books. They even sponsor a 'perk' feature where people can do just that. No dice. They said that they had received complaints and I was permanently blocked. Go figure.

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  2,874.78    
 Monthly S1  3,008.55  133.76   
 Monthly Pivot  3,084.80  76.26   
 Weekly S2  3,102.12  17.31   
 Daily S2  3,119.16  17.04   
 Weekly S1  3,122.21  3.06   
 Daily S1  3,130.73  8.52   
 Low  3,135.82  5.09   
 Weekly Pivot  3,141.64  5.82   
 Close  3,142.31  0.67   Yes! The Close is close to the Weekly Pivot.
 61.8% Down from Intraday High  3,146.61  4.30   
 Daily Pivot  3,147.40  0.79   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,149.94  2.54   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  3,153.27  3.33   
 Open  3,157.43  4.16   
 Daily R1  3,158.97  1.54   Yes! The Daily R1 is close to the Open.
 Weekly R1  3,161.73  2.76   Yes! The Weekly R1 is close to the Daily R1.
 High  3,164.06  2.33   Yes! The High is close to the Weekly R1.
 Daily R2  3,175.64  11.58   
 Weekly R2  3,181.16  5.52   
 Monthly R1  3,218.57  37.41   
 Monthly R2  3,294.82  76.26   

Tuesday 1/29/13. Trading Tuesday: Dow

The index dropped by -0.1% or -14.05 points. Since 10/01/1928 the index made 1214 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 629 occasions.
     Average loss was -0.8% on 585 occasions.
Expect the index to close higher 51.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 38/61 or 62.3% 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.

A well-shaped descending triangle appears mid session. The height of this triangle allowed plenty of profit opportunity. As you can see, the index climbed far enough after the breakout to reach the measure rule price target. That's the height of the triangle at the start of it, projected upward from the breakout.

The above probabilities say that Tuesday the Dow will close higher. When I look at the daily chart, I see momentum fading. The index may close lower on Tuesday or maybe it'll take another day, but I think the straight-line run of the last three weeks is coming to an end. I'm looking for a lower close on Tuesday.

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  12,541.84    
 Monthly S1  13,211.89  670.04   
 Weekly S2  13,532.40  320.52   
 Monthly Pivot  13,553.93  21.53   
 Weekly S1  13,707.17  153.23   
 Weekly Pivot  13,801.57  94.41   
 Daily S2  13,833.59  32.02   
 Daily S1  13,857.76  24.17   
 Low  13,862.57  4.81   Yes! The Low is close to the Daily S1.
 Close  13,881.93  19.36   
 61.8% Down from Intraday High  13,882.87  0.94   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  13,886.74  3.87   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  13,889.14  2.40   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  13,895.42  6.27   
 Open  13,895.98  0.56   Yes! The Open is close to the 38.2% Down from Intraday High.
 Daily R1  13,910.91  14.93   
 High  13,915.72  4.81   Yes! The High is close to the Daily R1.
 Daily R2  13,939.89  24.17   
 Weekly R1  13,976.34  36.45   
 Weekly R2  14,070.74  94.41   
 Monthly R1  14,223.98  153.23   
 Monthly R2  14,566.02  342.05   

Monday 1/28/13. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq on the daily scale.

I show a picture of the Nasdaq composite index on the daily scale. Why? Because it's not trending like all of the other indices.

The index is moving up following a channel, shown here highlighted in red.

The other indices are making straight-line runs higher, not meandering like the Nasdaq. I find that unusual since the Nasdaq was the best performing index last year and it has been known to trend further that the other indices. I don't say that because I measured it. I say that only by glancing at charts.

Overhead resistance setup by prior peaks I show highlighted by blue lines on the chart. That could cause the index to stall in the coming days or weeks. It's possible that the sluggish nature of the climb is due to Apple going rotten. If that's the case and Apple continues to drop, then the index will suffer due to the weighting of Apple as a component.

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A Brief Look Back

Picture of a flower from my garden.

This picture is for Donna. This is my version of a hibiscus...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.

Tuesday: Up 62.51 points.
Wednesday: Up 67.12 points.
Thursday: Up 46 points.
Friday: Up 70.65 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 246.28 points or 1.8%.
The Nasdaq composite was up 15 points or 0.5%.
The S&P 500 index was up 16.98 points or 1.1%.

Year to Date...

Dow Industrials
     0.0% down from the high of 13,895.98 on 01/25/2013.
     6.0% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.4% down from the high of 3,161.06 on 01/23/2013.
     2.4% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.0% down from the high of 1,503.26 on 01/25/2013.
     5.4% 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
Durable goods orders8:30 MBMeasures orders, shipments of goods with lifespans >3 years.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Gross domestic product8:30 WBMeasures economic activity; GDP deflator measures inflation.
Crude inventories10:30 W?My guess: Measures oil inventory.
FOMC Rate decision2:15 W?The Federal Reserves reports on interest rate changes.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Personal income & consumption8:30 ThC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 ThC+Covers durables, non-durables, and services.
Chicago purchasing managers index9:45 ThBMonitors regional manufacturing activity.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
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

As of 01/25/2013, the CPI had:

3 bearish patterns,
35 bullish patterns,
175 patterns waiting for breakout.
The CPI signal is 92.1%, 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  13,802  13,849  13,872  13,920  13,943 
Weekly  13,537  13,717  13,806  13,986  14,075 
Monthly  12,547  13,221  13,559  14,233  14,571 
S&P 500 (^GSPC): Daily  1,492  1,497  1,500  1,506  1,509 
Weekly  1,474  1,488  1,496  1,510  1,518 
Monthly  1,363  1,433  1,468  1,538  1,573 
Nasdaq (^IXIC): Daily  3,127  3,138  3,147  3,159  3,168 
Weekly  3,105  3,127  3,144  3,167  3,184 
Monthly  2,877  3,013  3,087  3,224  3,297 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 4 weeks up 14.8%  Expect a reversal soon.
 2 months up 36.5%  The trend may continue.
 S & P 500 (^GSPC) 4 weeks up 16.5%  Expect a reversal soon.
 3 months up 32.2%  The trend may continue.
 Nasdaq composite (^IXIC) 4 weeks up 16.5%  Expect a reversal soon.
 3 months up 28.2%  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 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: bearish.

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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
18Triangle, symmetrical
13Broadening top
12Rising wedge
12Pipe bottom
6Head-and-shoulders bottom
5Double Bottom, Adam and Adam
5Channel
5Rectangle top
5Target price
4Cup with handle

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. Homebuilding1. Homebuilding
2. Cement and Aggregates2. Cement and Aggregates
3. Securities Brokerage3. Securities Brokerage
4. Human Resources4. Machinery
5. Building Materials5. Human Resources
48. Retail Store48. Retail Store
49. Household Products49. Electric Utility (Central)
50. Electric Utility (Central)50. Household Products
51. Electric Utility (West)51. Electric Utility (West)
52. Electric Utility (East)52. Computers and Peripherals
53. Computers and Peripherals53. Electric Utility (East)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Sunday 1/27/13. Another Book Arrives

The pictured book, Swing and Day Trading: Evolution of a Trader is now available on Amazon.com. Below is a brief table of contents. If you do purchase the book and like what you read, then please post a review of it at your favorite e-tailer, such as Amazon.com or bn.com. For a detailed table of contents, you can find it on the My Books page.

Swing and Day Trading Table of Contents

Chapter 1: Introduction to Swing Trading
Chapter 2: Swinging Techniques
Chapter 3: Swinging Chart Patterns
Chapter 4: Swing Selling
Chapter 5: Event Pattern Setups
Chapter 6: Swinging Tools and Setups
Chapter 7: Introduction to Day Trading
Chapter 8: Day Trading Basics
Chapter 9: Opening Gap Setup
Chapter 10: Day Trading Chart Patterns
Chapter 11: Opening Range Breakout
Chapter 12: Ten Horror Stories
Chapter 13: Closing Position
Chapter 14: What We Learned

-- Thomas Bulkowski

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Saturday 1/26/13. Saturday Supplement

Picture of a flower from my garden.

I released a new chart pattern called a shark-32. It's not really a 'new' pattern but one I have not discussed on this website before. The review was prompted by an email from a man wanting to substitute a chart pattern for a flag or pennant in Patternz. I told him the shark-32 is the closest thing, providing it's found on a flagpole. Patternz does not find flags or pennants.

I decided to sort performance by decades since 1990 and found that patterns trended 30% further in the 1990s than in the 2010s. If you are having a problem making as much money as you used to or are having more difficulty making any money, then shorter trends may be the reason.

$ $ $

When the weather was warmer on Thursday (80s), I decided to give my dog a bath. I skipped it in January since it was so cold and all she does is shiver and run around the house, trying to warm up, and rubbing her wet fur on anything drier than her.

She was shedding fur like I've never seen before. I used a comb to scoop it up before the fur balls washed down the drain and clogged it up.

She only bit me three times, so it was a success.

-- Thomas Bulkowski

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Thursday 1/24/13. Trading Thursday: Nasdaq

The index climbed by 0.3% or 10.49 points. Since 02/05/1971 the index made 556 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 248 occasions.
Expect the index to close higher 55.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 31/52 or 59.6% of the time.
     The prediction of the index closing lower has been right 17/32 or 53.1% 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.

A triple bottom appears at 1, 2, 3. This confirms late in the session when the index closes above the horizontal red line. The index fails to climb far enough to make a significant profit.

If you trade bottoms 2 and 3 as a double bottom then that results in more profit. This pattern fulfills the measure rule target (the height of the pattern added to the top of the pattern) and then some.

Looking to the close on Thursday, the probabilities suggest a higher close. I don't have a good feel for this. Today the index gapped up and that suggests strength but the index was trending down late in the session, suggesting weakness. I'll vote 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 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  2,889.91    
 Monthly S1  3,021.79  131.88   
 Weekly S2  3,079.62  57.83   
 Monthly Pivot  3,082.92  3.30   
 Weekly S1  3,116.64  33.72   
 Weekly Pivot  3,130.35  13.70   
 Daily S2  3,143.50  13.16   
 Daily S1  3,148.59  5.08   
 Low  3,149.74  1.15   
 Close  3,153.67  3.93   
 61.8% Down from Intraday High  3,154.06  0.39   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  3,154.82  0.76   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,155.40  0.58   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Open  3,155.82  0.42   Yes! The Open is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,156.74  0.92   Yes! The 38.2% Down from Intraday High is close to the Open.
 Daily R1  3,159.91  3.17   
 High  3,161.06  1.15   
 Daily R2  3,166.14  5.08   
 Weekly R1  3,167.37  1.23   
 Weekly R2  3,181.08  13.70   
 Monthly R1  3,214.80  33.72   
 Monthly R2  3,275.93  61.13   

Tuesday 1/22/13. Trading Tuesday: Dow

The index climbed by 0.4% or 53.68 points. Since 10/01/1928 the index made 1000 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 530 occasions.
     Average loss was -0.6% on 470 occasions.
Expect the index to close higher 53.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 37/60 or 61.7% 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 (I completed this the prior Friday this time), 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.

A triple bottom appears at ABC. This confirms as a valid chart pattern when the index closes above the red line. That line represents the top of the chart pattern.

The index exceeds the price target shown by the pattern. That's the pattern's height added to the value of the red line.

The swift upward run toward the end of the session makes me suspicious that a continued rise will occur after the weekend. Research on holidays suggests the index will close higher on Tuesday. That agrees with the probabilities and that's my feeling as well. Have a good holiday.

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  12,628.52    
 Monthly S1  13,139.11  510.59   
 Weekly S2  13,379.99  240.88   
 Monthly Pivot  13,394.48  14.49   
 Weekly S1  13,514.84  120.36   
 Daily S2  13,548.37  33.53   
 Low  13,573.78  25.41   
 Weekly Pivot  13,582.35  8.57   
 Open  13,596.02  13.67   
 Daily S1  13,599.04  3.02   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  13,602.84  3.80   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  13,611.82  8.98   
 38.2% Down from Intraday High  13,620.79  8.98   
 Daily Pivot  13,624.44  3.65   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  13,649.70  25.26   
 High  13,649.85  0.15   Yes! The High is close to the Close.
 Daily R1  13,675.11  25.26   
 Daily R2  13,700.51  25.41   
 Weekly R1  13,717.20  16.69   
 Weekly R2  13,784.71  67.50   
 Monthly R1  13,905.07  120.36   
 Monthly R2  14,160.44  255.37   

Thursday 1/17/13. Trading Thursday: Nasdaq

The index climbed by 0.2% or 6.76 points. Since 02/05/1971 the index made 586 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 347 occasions.
     Average loss was -0.9% on 239 occasions.
Expect the index to close higher 59.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 30/51 or 58.8% of the time.
     The prediction of the index closing lower has been right 17/32 or 53.1% 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.

The peaks at CE and the long candle at D show promise as a head-and-shoulders top but the pattern didn't confirm because the index failed to close below the blue neckline before it closed above the head, E.

Pattern AB is a double top chart pattern. This one confirms as valid when it closes below the red line at F. Since this pattern wasn't very tall, it easily met the measure rule target (height of the pattern subtracted from the value of the red line).

Looking to tomorrow (Thursday's close), the daily charts offer no help. We could be forming a head-and-shoulders top. I'll go with the probabilities this time and vote 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 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  2,888.75    
 Monthly S1  3,003.15  114.39   
 Weekly S2  3,056.17  53.02   
 Monthly Pivot  3,065.43  9.27   
 Weekly S1  3,086.85  21.42   
 Daily S2  3,098.47  11.61   
 Low  3,106.79  8.32   
 Weekly Pivot  3,107.29  0.50   Yes! The Weekly Pivot is close to the Low.
 Daily S1  3,108.00  0.72   Yes! The Daily S1 is close to the Weekly Pivot.
 Open  3,110.72  2.72   
 61.8% Down from Intraday High  3,113.61  2.89   
 50% Down from Intraday High  3,115.72  2.11   
 Daily Pivot  3,116.33  0.61   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  3,117.54  1.21   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  3,117.83  0.29   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  3,124.65  6.82   
 Daily R1  3,125.86  1.21   Yes! The Daily R1 is close to the High.
 Daily R2  3,134.19  8.32   
 Weekly R1  3,137.97  3.79   
 Weekly R2  3,158.41  20.43   
 Monthly R1  3,179.83  21.42   
 Monthly R2  3,242.11  62.29   

Tuesday 1/15/13. Trading Tuesday: Dow

The index climbed by 0.1% or 18.89 points. Since 10/01/1928 the index made 1217 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 623 occasions.
     Average loss was -0.7% on 594 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 36/59 or 61.0% 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.

A double bottom appears at AB. This confirms as a valid double bottom when the index closes above the red line. That leaves enough time for the index to hit the price target, which it does. The price target is the height of the pattern added to the value of the red line.

An ascending triangle appears at C. The breakout from this is upward and the index also hits its target after the breakout.

I adjusted the targets for the indices (top of page). I expect the indices to continue moving higher. However, the Nasdaq could be forming the right shoulder of a head-and-shoulders top.

The Dow could turn down tomorrow since it's closed higher four days in a row. Thus, I expect the index to close lower on Tuesday. The probabilities says it'll close higher. Go figure.

# # #

I'll be on the Gabriel Wisdom radio show on Tuesday touting my Trading Basics book. Wish me luck. Then go out and buy the book. Sales won't make it a best seller at this rate.

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  12,683.17    
 Monthly S1  13,095.25  412.07   
 Weekly S2  13,228.83  133.58   
 Monthly Pivot  13,295.96  67.14   
 Weekly S1  13,368.07  72.11   
 Weekly Pivot  13,432.38  64.30   
 Daily S2  13,436.43  4.06   Yes! The Daily S2 is close to the Weekly Pivot.
 Low  13,460.47  24.04   
 Daily S1  13,471.88  11.41   
 61.8% Down from Intraday High  13,483.19  11.31   
 Open  13,488.43  5.24   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  13,490.21  1.78   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  13,495.91  5.70   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  13,497.23  1.32   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  13,507.32  10.09   
 High  13,519.95  12.63   
 Daily R1  13,531.36  11.41   
 Daily R2  13,555.39  24.04   
 Weekly R1  13,571.62  16.23   
 Weekly R2  13,635.93  64.30   
 Monthly R1  13,708.04  72.11   
 Monthly R2  13,908.75  200.72   

Monday 1/14/13. Market Monday: The Week Ahead

My Prediction

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

I show the S&P 500 index on the daily chart.

Most of the indices look like this one with some form of a broadening top. I show that outlined here in red.

This one has two touches of the bottom trendline and three on the top. What's interesting is the partial decline at A.

A partial decline occurs after the pattern is established (enough trendline touches) when price dips toward the bottom trendline but fails to touch it or come close. Price often curls upward and stages an immediate upward breakout. That's what happened here.

My gut says that partial declines used to work more often years ago than they do now. Still, I expect the indices to move upward just as this one has.

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Down 50.92 points.
Tuesday: Down 55.44 points.
Wednesday: Up 61.66 points.
Thursday: Up 80.71 points.
Friday: Up 17.21 points.

For the Week...

The Dow industrials were up 53.22 points or 0.4%.
The Nasdaq composite was up 23.97 points or 0.8%.
The S&P 500 index was up 5.58 points or 0.4%.

Year to Date...

Dow Industrials
     0.1% down from the high of 13,496.68 on 01/11/2013.
     2.9% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.1% down from the high of 3,127.72 on 01/10/2013.
     1.6% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.0% down from the high of 1,472.75 on 01/11/2013.
     3.2% 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
Retail sales8:30 TA-Reports total retail sales (not services). Are people spending?
Producer price index8:30 TB-Measures wholesale goods cost. An indication of future inflation.
Business inventories10:00 TC-Reports manufacturing, wholesale, retail inventories.
Consumer price index8:30 WB+Inflation report. Measures cost of goods and services.
Industrial production9:15 WB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 WB-Gauges economic activity, hints of inflation.
Crude inventories10:30 W?My guess: Measures oil inventory.
FEDs Beige book2:00 W?Reports on economic conditions.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Housing starts8:30 ThB-Number of homes beginning construction.
Building permits8:30 ThB-Measures building permits for new construction.

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 01/11/2013, the CPI had:

6 bearish patterns,
47 bullish patterns,
480 patterns waiting for breakout.
The CPI signal is 88.7%, 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  13,418  13,453  13,475  13,510  13,532 
Weekly  13,223  13,355  13,426  13,559  13,630 
Monthly  12,677  13,083  13,290  13,695  13,902 
S&P 500 (^GSPC): Daily  1,466  1,469  1,471  1,474  1,476 
Weekly  1,444  1,458  1,465  1,479  1,487 
Monthly  1,373  1,423  1,448  1,497  1,522 
Nasdaq (^IXIC): Daily  3,110  3,118  3,122  3,130  3,135 
Weekly  3,059  3,092  3,110  3,143  3,161 
Monthly  2,891  3,009  3,068  3,185  3,245 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 29.4%  The trend may continue.
 2 months up 36.5%  The trend may continue.
 S & P 500 (^GSPC) 2 weeks up 29.2%  The trend may continue.
 3 months up 32.2%  The trend may continue.
 Nasdaq composite (^IXIC) 2 weeks up 27.5%  The trend may continue.
 3 months up 28.2%  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 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: bearish.

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Earnings, Chart Patterns & Industries

Earnings season will be starting in about 2 days.

 Found Chart Pattern Name
15Triangle, symmetrical
14Broadening top
14Target price
11Rising wedge
10Pipe bottom
7Head-and-shoulders bottom
6Double Bottom, Adam and Adam
6Rectangle top
5Head-and-shoulders top
5Channel

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. Homebuilding1. Cement and Aggregates
2. Cement and Aggregates2. Homebuilding
3. Securities Brokerage3. Securities Brokerage
4. Machinery4. Furn/Home Furnishings
5. Human Resources5. Human Resources
48. Retail Store48. Medical Supplies
49. Electric Utility (Central)49. Electric Utility (West)
50. Household Products50. Household Products
51. Electric Utility (West)51. Trucking/Transp. Leasing
52. Computers and Peripherals52. Electric Utility (East)
53. Electric Utility (East)53. Computers and Peripherals
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 1/10/13. Trading Thursday: Nasdaq

The index climbed by 0.5% or 14 points. Since 02/05/1971 the index made 490 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 344 occasions.
     Average loss was -0.9% on 146 occasions.
Expect the index to close higher 70.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 29/50 or 58.0% of the time.
     The prediction of the index closing lower has been right 17/32 or 53.1% 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.

Depending on how you look at it, a triple top or a three falling peaks chart pattern appears early in the session (ABC). It confirms as a valid chart pattern when the index closes below the red line. Of course, if you waited for that to happen, there was almost no profit left.

If you had an order to short the index at the red line, then you almost reached the predicted target of the pattern's height subtracted from the red line.

Looking to Thursday's close, the probabilities say it will close higher. That suggests the bottoms near 1:00 and 3:00 will confirm as a double bottom. And that should lead to a good move up.

I prefer to look at the daily scale for hints about direction. Over the last week, the index has formed a flag. That suggests an upward breakout as well. It might not happen on Thursday, however.

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  2,891.20    
 Weekly S2  2,894.51  3.31   
 Monthly S1  2,998.51  104.00   
 Weekly S1  3,000.16  1.65   
 Monthly Pivot  3,058.34  58.18   
 Weekly Pivot  3,059.17  0.83   Yes! The Weekly Pivot is close to the Monthly Pivot.
 Daily S2  3,089.58  30.41   
 Low  3,096.34  6.76   
 Daily S1  3,097.69  1.35   Yes! The Daily S1 is close to the Low.
 Open  3,099.64  1.95   
 61.8% Down from Intraday High  3,102.02  2.38   
 50% Down from Intraday High  3,103.78  1.76   
 Daily Pivot  3,104.46  0.68   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,105.54  1.08   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  3,105.81  0.27   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  3,111.22  5.41   
 Daily R1  3,112.57  1.35   Yes! The Daily R1 is close to the High.
 Daily R2  3,119.34  6.76   
 Weekly R1  3,164.82  45.48   
 Monthly R1  3,165.65  0.83   Yes! The Monthly R1 is close to the Weekly R1.
 Weekly R2  3,223.83  58.18   
 Monthly R2  3,225.48  1.65   

Tuesday 1/8/13. Trading Tuesday: Dow

The index dropped by -0.4% or -50.92 points. Since 10/01/1928 the index made 851 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 429 occasions.
     Average loss was -0.7% on 422 occasions.
Expect the index to close higher 50.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 36/58 or 62.1% of the time.
     The prediction of the index closing lower has been right 13/19 or 68.4% of the time.

Picture of Dow industrials forecast on the weekly 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.

Instead of showing the Dow, I'm going to discuss the future price action. The chart shows the prediction for 2013 and beyond based on historical performance. The link provides other views in case you're interested.

Notice how the line dips from now until about March 2013. Then it's off to the races (upward). This behavior should dovetail with the struggles with congress about our deficits and what not.

Be advised that the prediction for 2012 was off by a mile. It shows the index falling but the actual performance was much better with the index closing near its high. So, the chart could be wrong...or right. If it's right, then that means the index is going down for three months. That would represent a buying opportunity, so save up and protect profits.

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  12,675.21    
 Weekly S2  12,675.21  0.00   Yes! The Weekly S2 is close to the Monthly S2.
 Weekly S1  13,029.75  354.54   
 Monthly S1  13,029.75  0.00   Yes! The Monthly S1 is close to the Weekly S1.
 Monthly Pivot  13,238.43  208.68   
 Weekly Pivot  13,238.43  0.00   Yes! The Weekly Pivot is close to the Monthly Pivot.
 Daily S2  13,295.10  56.67   
 Daily S1  13,339.70  44.59   
 Low  13,343.32  3.62   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  13,378.77  35.45   
 Close  13,384.29  5.52   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  13,387.91  3.62   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  13,389.72  1.81   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  13,400.68  10.95   
 Daily R1  13,432.51  31.83   
 Open  13,436.13  3.62   Yes! The Open is close to the Daily R1.
 High  13,436.13  0.00   Yes! The High is close to the Open.
 Daily R2  13,480.72  44.59   
 Weekly R1  13,592.97  112.25   
 Monthly R1  13,592.97  0.00   Yes! The Monthly R1 is close to the Weekly R1.
 Monthly R2  13,801.65  208.68   
 Weekly R2  13,801.65  0.00   Yes! The Weekly R2 is close to the Monthly R2.

Monday 1/7/13. 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.

What interests me about this picture is the broadening top chart pattern. Notice how the index has touched the top red line and stopped for the last three days. That means there's overhead resistance at the trendline. It may not be strong but it has repulsed the upward move twice before.

Compare or contrast the image with the Dow transports (not shown). It's a moon shot. The transports have formed a straight line run that's unsustainable. You see more overlap in Friday's trading. The index will likely pause this week. And that suggests the industrials will falter, too.

My guess is that the Dow will turn down this week. If I'm wrong, then there's more overhead resistance setup by the loose congestion region in September and October.

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 166.03 points.
Wednesday: Up 308.41 points.
Thursday: Down 21.19 points.
Friday: Up 43.85 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 497.1 points or 3.8%.
The Nasdaq composite was up 141.35 points or 4.8%.
The S&P 500 index was up 64.04 points or 4.6%.

Year to Date...

Dow Industrials
     0.1% down from the high of 13,447.11 on 01/04/2013.
     2.5% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.5% down from the high of 3,118.18 on 01/03/2013.
     0.6% up from the low of 3,083.40 on 01/02/2013.
S&P 500
     0.1% down from the high of 1,467.94 on 01/04/2013.
     2.8% 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
Consumer credit3:00 TD-Measures auto, credit card and other debt.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Wholesale inventories10:00 ThD-Wholesale sales and inventory statistics.
Trade balance8:30 FC+Signals balance of exports & imports.
International trade8:30 FC+Import/export prices, trade balance. US economy vs others.
Treasury budget2:00 FDTracks budget deficit. Important in April (tax filing).

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 01/04/2013, the CPI had:

0 bearish patterns,
41 bullish patterns,
216 patterns waiting for breakout.
The CPI signal is 100.0%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  13,349  13,392  13,420  13,463  13,490 
Weekly  12,692  13,064  13,255  13,627  13,819 
Monthly  12,692  13,064  13,255  13,627  13,819 
S&P 500 (^GSPC): Daily  1,456  1,461  1,464  1,470  1,473 
Weekly  1,374  1,420  1,444  1,490  1,514 
Monthly  1,374  1,420  1,444  1,490  1,514 
Nasdaq (^IXIC): Daily  3,083  3,092  3,100  3,110  3,118 
Weekly  2,893  2,997  3,058  3,162  3,222 
Monthly  2,890  2,996  3,057  3,163  3,224 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.2%  Expect a random direction.
 2 months up 36.5%  The trend may continue.
 S & P 500 (^GSPC) 1 week up 43.0%  Expect a random direction.
 3 months up 32.2%  The trend may continue.
 Nasdaq composite (^IXIC) 1 week up 42.1%  Expect a random direction.
 3 months up 28.2%  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 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: bearish.

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Earnings, Chart Patterns & Industries

Earnings season will be starting in about 9 days.

 Found Chart Pattern Name
15Triangle, symmetrical
13Rising wedge
12Target price
9Head-and-shoulders bottom
7Triangle, ascending
7Broadening top
5Rectangle top
4Flag
4Double Bottom, Adam and Adam
4Channel

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. Cement and Aggregates1. Cement and Aggregates
2. Homebuilding2. Homebuilding
3. Securities Brokerage3. Furn/Home Furnishings
4. Furn/Home Furnishings4. Human Resources
5. Human Resources5. Securities Brokerage
48. Medical Supplies48. Electric Utility (Central)
49. Electric Utility (West)49. Household Products
50. Household Products50. Computers and Peripherals
51. Trucking/Transp. Leasing51. Trucking/Transp. Leasing
52. Electric Utility (East)52. Electric Utility (West)
53. Computers and Peripherals53. Electric Utility (East)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Saturday 1/5/13. Saturday Supplement

Picture of a toad.

I was watching the movie My Best Friend's Wedding and was about 15 minutes into the tape when my TV screen said "no signal." That often means the tape broke. Not this time.

I tried another prerecorded tape and had the same result (no picture, no sound). I hit setup and in the background the sound from the Wedding tape played. Weird.

I put in one of my home-brew tapes, the one I recorded off the airwaves. It played just fine.

I thought the difference between the two was the slow play versus the higher speed rate of the pre-recorded tape. The pisser about all of this is the VCR/DVD player is just 1 year and 2 weeks old. That means the warranty expired 2 weeks ago. Sigh.

I unplugged the unit and plugged it in again. I read the instruction manual and tried their trouble shooting tips. Nothing worked.

The next day, I tried the pre-recorded tape again, just for fun. Guess what? It played just fine. So I loaded the wedding tape and played it to the damaged portion of the tape. Bam! It kicked the unit off line again.

Then I figured out what it was. Somehow, the bad tape sends the head way off tracking. If I keep pushing the tracking button, it'll eventually show a fuzzy signal and then allow me to tune it in.

When I rewound my home-brew tape, the recorder broke it. That can happen with old tapes and aggressive rewind. I spent about half an hour fixing it. There's an orange tab on the take up spool that you pry upward, then slip a 1/8 inch piece of tape into the slot and reinsert the plastic retainer. It takes a bit to keep the retainer from scrunching the tape, but I got it to work. I used to use cellophane tape to just stick the tape to the spool. That's a short-term fix since the adhesive will eventually wear off or become brittle. But now I know I can remove the retainer, I can fix any future breaks.

Yes, it's an exciting time at the Bulkowski household.

-- Thomas Bulkowski


Thursday 1/3/13. Trading Thursday: Nasdaq

The index climbed by 3.1% or 92.75 points. Since 02/05/1971 the index made 14 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.1% on 13 occasions.
     Average loss was -5.5% on 1 occasions.
Expect the index to close higher 92.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 29/49 or 59.2% of the time.
     The prediction of the index closing lower has been right 17/32 or 53.1% 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.

Two chart patterns caught my attention today in the index: a triple bottom and a rounded bottom.

The triple bottom (1, 2, 3) confirms as a valid chart pattern when the index closes above the red line. The rounded bottom could be a cup with handle (A, B), too. Since a cup with handle demands a 30% rise leading to A, I prefer the rounded bottom interpretation.

The above probabilities say that the index will close higher on Thursday. The sample counts are few, as you might imagine. I think we will retrace today's gains and close lower, but who knows?

$ $ $

Ben Lelievre I tried three times to send you an email today but it was returned undelivered. Fix your internet. There's only a few thousand miles between us to check...

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  2,910.71    
 Weekly S2  2,959.71  48.99   
 Monthly S1  3,011.49  51.78   
 Weekly Pivot  3,027.32  15.83   
 Weekly S1  3,035.98  8.67   
 Monthly Pivot  3,036.65  0.67   Yes! The Monthly Pivot is close to the Weekly S1.
 Daily S2  3,073.52  36.87   
 Low  3,083.40  9.88   
 Open  3,091.33  7.93   
 Daily S1  3,092.89  1.56   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  3,094.57  1.68   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 Weekly R2  3,094.93  0.35   Yes! The Weekly R2 is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,098.02  3.10   
 38.2% Down from Intraday High  3,101.48  3.45   
 Daily Pivot  3,102.77  1.29   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Weekly R1  3,103.59  0.82   Yes! The Weekly R1 is close to the Daily Pivot.
 Close  3,112.26  8.67   
 High  3,112.65  0.39   Yes! The High is close to the Close.
 Daily R1  3,122.14  9.49   
 Daily R2  3,132.02  9.88   
 Monthly R1  3,137.43  5.41   
 Monthly R2  3,162.59  25.17   

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