Subscribe to RSS feeds Bulkowski Blog via RSS

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

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.
Bulkowski's Blog: ThePatternSite.com
Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 03/24/2017
20,597 -59.86 -0.3%
8,929 -7.37 -0.1%
706 3.20 0.5%
5,829 11.05 0.2%
2,344 -1.98 -0.1%
YTD
4.2%
-1.3%
7.0%
8.3%
4.7%
Tom's Targets    Overview: 03/14/2017
21,250 or 20,600 by 04/15/2017
9,500 or 8,700 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,425 or 2,325 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

July 2012 Headlines


Archives


Tuesday 7/31/12. Trading Tuesday: Dow

The index dropped by 0.0% or -2.65 points. Since 10/01/1928 the index made 1162 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 617 occasions.
     Average loss was -0.7% on 545 occasions.
Expect the index to close higher 53.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 29/45 or 64.4% of the time.
     The prediction of the index closing lower has been right 7/11 or 63.6% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

The chart has a double bottom at AB which confirmed when price closes above the red line. The index rises far enough to fulfill the measure rule prediction, which is a target based on the height of the double bottom added to the top of the pattern.

A larger pattern, a symmetrical triangle is outlined in blue. The breakout direction has not been decided yet. I read one source that said the side in which price hovers is the side that is most likely to breakout. That would be upward in this case and that would be in line with the above probabilities.

On the daily chart, the index shows a small range day probably because it is waiting for what the FED has to say. That happens on Wednesday. Looking at the candles, you'd think that they show a loss of momentum and that Tuesday will show a lower close, perhaps by a large drop, too. I distrust candles, so I'll vote with the probabilities and expect a higher close.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,212.74    
 Weekly S2  12,308.30  95.56   
 Monthly S1  12,642.87  334.58   
 Weekly S1  12,690.65  47.78   
 Monthly Pivot  12,880.31  189.65   
 Weekly Pivot  12,904.20  23.89   
 Daily S2  12,995.71  91.51   
 Daily S1  13,034.36  38.65   
 Low  13,042.85  8.49   Yes! The Low is close to the Daily S1.
 Close  13,073.01  30.16   
 Open  13,075.35  2.34   Yes! The Open is close to the Close.
 61.8% Down from Intraday High  13,075.62  0.27   Yes! The 61.8% Down from Intraday High is close to the Open.
 Daily Pivot  13,081.50  5.88   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  13,085.75  4.25   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  13,095.87  10.12   
 Daily R1  13,120.15  24.28   
 High  13,128.64  8.49   Yes! The High is close to the Daily R1.
 Daily R2  13,167.29  38.65   
 Weekly R1  13,286.55  119.26   
 Monthly R1  13,310.44  23.89   
 Weekly R2  13,500.10  189.65   
 Monthly R2  13,547.88  47.78   

Monday 7/30/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show a picture of the Dow utilities on the daily scale. Does this show the way for the other market indices? I think so.

The index broke out of an ascending triangle then threw back and broke out downward. Following that, the index climbed along with the other indices in the last few days to break out to a new high.

Notice the long march upward for the index since late January (far left).

Also notice that this move up appears nearly the same as the June rise out of congestion. Price moved sideways in May and finally pushed to higher ground. Based on that past performance, it appears that this up move will be short lived and that the index will move horizontally this week and probably for a month or so. That would take it into September, where the markets typically put in their worst performance of the year.

Top 

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 101.11 points.
Tuesday: Down 104.14 points.
Wednesday: Up 58.73 points.
Thursday: Up 211.88 points.
Friday: Up 187.73 points.

For the Week...

The Dow industrials were up 253.09 points or 2.0%.
The Nasdaq composite was up 32.79 points or 1.1%.
The S&P 500 index was up 23.31 points or 1.7%.

Year to Date...

Dow Industrials
     2.0% down from the high of 13,338.66 on 05/01/2012.
     8.6% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     5.6% down from the high of 3,134.17 on 03/27/2012.
     12.6% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     2.6% down from the high of 1,422.38 on 04/02/2012.
     10.1% up from the low of 1,258.86 on 01/03/2012.

Top

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
Personal income & consumption8:30 TC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 TC+Covers durables, non-durables, and services.
Chicago purchasing managers index9:45 TBMonitors regional manufacturing activity.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Construction spending10:00 WDCovers residential/non-residential/public spending on new construction.
Crude inventories10:30 W?My guess: Measures oil inventory.
Auto & truck sales2:00 WC-Monthly sales of domestically produced vehicles.
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.
Factory orders10:00 ThD+Durable/non-durable goods orders w/factory inventories.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

As of 07/27/2012, the CPI had:

1 bearish patterns,
49 bullish patterns,
170 patterns waiting for breakout.
The CPI signal is 98.0%, which is bullish (>= 65%).

The chart pattern indicator is bullish with 1 of 3 half triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,798  12,937  13,027  13,166  13,257 
Weekly  12,309  12,692  12,905  13,288  13,501 
Monthly  12,214  12,645  12,881  13,312  13,549 
S&P 500 (^GSPC): Daily  1,349  1,368  1,378  1,397  1,408 
Weekly  1,308  1,347  1,368  1,407  1,428 
Monthly  1,282  1,334  1,361  1,414  1,441 
Nasdaq (^IXIC): Daily  2,879  2,919  2,940  2,980  3,001 
Weekly  2,798  2,878  2,920  3,000  3,042 
Monthly  2,752  2,855  2,921  3,025  3,091 
  • 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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 3 weeks up 21.4%  Expect a reversal soon.
 2 months up 36.8%  The trend may continue.
 S & P 500 (^GSPC) 3 weeks up 20.7%  Expect a reversal soon.
 2 months up 39.4%  The trend may continue.
 Nasdaq composite (^IXIC) 2 weeks up 27.0%  The trend may continue.
 2 months up 38.8%  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: bullish.

Top

Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
17Head-and-shoulders bottom
16Triangle, symmetrical
16Channel
8Head-and-shoulders top
8Broadening bottom
7Rectangle bottom
7Pipe top
7Rectangle top
7Triangle, ascending
6Double Bottom, Adam and Adam

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

The 10 types of most frequently appearing chart patterns in the stocks, 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. Internet2. Computers and Peripherals
3. Biotechnology3. Biotechnology
4. Retail Building Supply4. Retail Store
5. Retail Store5. Cement and Aggregates
48. Semiconductor Cap Equip.48. Insurance (Life)
49. Petroleum (Producing)49. Furn/Home Furnishings
50. Semiconductor50. Semiconductor Cap Equip.
51. Furn/Home Furnishings51. Semiconductor

-- Thomas Bulkowski

Top


Thursday 7/26/12. Trading Thursday: Nasdaq

The index dropped by -0.3% or -8.75 points. Since 02/05/1971 the index made 426 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.1% on 220 occasions.
     Average loss was -0.9% on 206 occasions.
Expect the index to close higher 51.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 20/34 or 58.8% of the time.
     The prediction of the index closing lower has been right 13/25 or 52.0% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

Early in the day, a head-and-shoulders bottom formed. The right shoulder (RS) isn't well defined, meaning it should appear as a minor low (a distinct valley), but doesn't. That makes it hard to discern the pattern.

The afternoon shows a double top (AB) that confirms when the index closes below the red line. It worked well, meaning the index dropped far enough to exceed the measure rule target (the height of the pattern subtracted from the breakout price).

In the last hour of trading the index started to make a rounding bottom or a scallop. That suggests a higher open tomorrow, but it's rare that such predictions work. The open is dictated by overnight world events.

On the daily chart, the index has made a bearish head-and-shoulders top, suggesting a downward move and yet I get the sense of support here, perhaps by today's candle. I am still bullish, so I will expect a higher close in the composite on Thursday. Otherwise, this index could drop and perhaps make a strong move down, maybe driven by earnings disappointments.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,717.04    
 Monthly S1  2,785.64  68.60   
 Weekly S2  2,796.13  10.49   
 Daily S2  2,824.28  28.15   
 Weekly S1  2,825.19  0.91   Yes! The Weekly S1 is close to the Daily S2.
 Daily S1  2,839.26  14.07   
 Low  2,839.76  0.50   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  2,851.40  11.64   
 Close  2,854.24  2.84   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  2,854.74  0.50   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  2,854.99  0.25   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Open  2,856.78  1.79   Yes! The Open is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  2,858.58  1.80   Yes! The 38.2% Down from Intraday High is close to the Open.
 Daily R1  2,869.72  11.14   
 High  2,870.22  0.50   Yes! The High is close to the Daily R1.
 Daily R2  2,885.20  14.98   
 Monthly Pivot  2,886.79  1.59   Yes! The Monthly Pivot is close to the Daily R2.
 Weekly Pivot  2,900.70  13.91   
 Weekly R1  2,929.76  29.05   
 Monthly R1  2,955.39  25.63   
 Weekly R2  3,005.27  49.88   
 Monthly R2  3,056.54  51.27   

Tuesday 7/24/12. Trading Tuesday: Dow

The index dropped by -0.8% or -101.11 points. Since 10/01/1928 the index made 481 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 250 occasions.
     Average loss was -0.9% on 231 occasions.
Expect the index to close higher 52.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 29/44 or 65.9% of the time.
     The prediction of the index closing lower has been right 7/11 or 63.6% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

The large drop in the first five minutes of trading suggests that the day would be spent recovering. I'm not sure that idea has historical merit, but it might prove sound.

If true, the upward retrace would suggest that the triple top at ABC had little chance of making a good move down. That is said in hind-sight, of course. The pattern confirmed as valid when the index closed below the red line. Then price moved up. What does that say about tomorrow's close?

Could the recovery (upward retrace) continue? The above probabilities say yes and I think that's got a good chance of being correct. Europe is still scaring the markets and it looks like that will continue until October (just because the markets usually bottom then).

It's possible that the index will continue lower and that might put it outside the bottom channel line drawn from the June valley and connecting the two bottoms in July (not shown, daily chart). The earlier July bottom looks the same, a candle with a long lower shadow. Thus, I'm looking for a higher close on Tuesday.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,188.80    
 Weekly S2  12,448.71  259.91   
 Monthly S1  12,455.13  6.42   Yes! The Monthly S1 is close to the Weekly S2.
 Daily S2  12,471.40  16.27   Yes! The Daily S2 is close to the Monthly S1.
 Low  12,583.41  112.01   
 Weekly S1  12,585.08  1.67   Yes! The Weekly S1 is close to the Low.
 Daily S1  12,596.43  11.35   Yes! The Daily S1 is close to the Weekly S1.
 61.8% Down from Intraday High  12,673.96  77.53   
 50% Down from Intraday High  12,701.93  27.97   
 Daily Pivot  12,708.44  6.51   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Monthly Pivot  12,716.50  8.06   Yes! The Monthly Pivot is close to the Daily Pivot.
 Close  12,721.46  4.96   Yes! The Close is close to the Monthly Pivot.
 38.2% Down from Intraday High  12,729.90  8.44   Yes! The 38.2% Down from Intraday High is close to the Close.
 Weekly Pivot  12,781.48  51.58   
 Open  12,820.45  38.97   
 High  12,820.45  0.00   Yes! The High is close to the Open.
 Daily R1  12,833.47  13.02   Yes! The Daily R1 is close to the High.
 Weekly R1  12,917.85  84.38   
 Daily R2  12,945.48  27.63   
 Monthly R1  12,982.83  37.35   
 Weekly R2  13,114.25  131.42   
 Monthly R2  13,244.20  129.95   

Monday 7/23/12. Market Monday: The Week Ahead

My Prediction

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

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

What makes this picture interesting is the gap between A and B.

This reminds me of a partial rise in a channel. A partial rise occurs when the index (in this case) bounces off the bottom trendline and heads upward for the top trendline but fails to make it that far. The index drops and stages a downward breakout.

That is what is supposed to happen. It could be that the index will resume climbing to the channel top or even higher. Or it could continue down and bounce off the lower channel trendline. It could plunge down to the earth's core, of course.

Which will it do? I have no idea.

The stocks that I reviewed Friday suggest that the uptrend will resume. That's my guess, too.

Top 

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 49.88 points.
Tuesday: Up 78.33 points.
Wednesday: Up 103.16 points.
Thursday: Up 34.66 points.
Friday: Down 120.79 points.

For the Week...

The Dow industrials were up 45.48 points or 0.4%.
The Nasdaq composite was up 16.83 points or 0.6%.
The S&P 500 index was up 5.88 points or 0.4%.

Year to Date...

Dow Industrials
     3.9% down from the high of 13,338.66 on 05/01/2012.
     6.5% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     6.7% down from the high of 3,134.17 on 03/27/2012.
     11.3% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     4.2% down from the high of 1,422.38 on 04/02/2012.
     8.2% up from the low of 1,258.86 on 01/03/2012.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
New home sales10:00 WC+Shows sales of single-family homes.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Durable goods orders8:30 ThBMeasures orders, shipments of goods with lifespans >3 years.
Gross domestic product8:30 FBMeasures economic activity; GDP deflator measures inflation.
Michigan sentiment9:55 FB-Consumer sentiment: Measures strength of consumer spending.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

On 07/20/2012, the CPI had:

29 bearish patterns,
13 bullish patterns,
310 patterns waiting for breakout.
The CPI signal is 31.0%, which is bearish (<= 35%).

The chart pattern indicator is bearish with 1 of 3 half triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,726  12,774  12,859  12,907  12,991 
Weekly  12,482  12,652  12,815  12,985  13,148 
Monthly  12,223  12,523  12,750  13,050  13,278 
S&P 500 (^GSPC): Daily  1,353  1,358  1,367  1,372  1,381 
Weekly  1,327  1,345  1,363  1,380  1,398 
Monthly  1,280  1,321  1,351  1,392  1,422 
Nasdaq (^IXIC): Daily  2,904  2,915  2,936  2,946  2,968 
Weekly  2,820  2,873  2,924  2,977  3,029 
Monthly  2,741  2,833  2,910  3,003  3,080 
  • 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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 29.6%  The trend may continue.
 1 month down 20.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 2 weeks up 28.9%  The trend may continue.
 2 months up 39.4%  The trend may continue.
 Nasdaq composite (^IXIC) 1 week up 40.8%  Expect a random direction.
 1 month down 28.0%  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: bullish.

Top

Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
28Head-and-shoulders bottom
17Triangle, symmetrical
16Double Bottom, Adam and Adam
14Pipe bottom
13Channel
10Triangle, ascending
10Broadening bottom
9Rectangle bottom
9Rectangle top
6Triple bottom

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. Computers and Peripherals2. Computers and Peripherals
3. Biotechnology3. Biotechnology
4. Retail Store4. Retail Building Supply
5. Cement and Aggregates5. Medical Supplies
48. Insurance (Life)48. Furn/Home Furnishings
49. Furn/Home Furnishings49. Semiconductor
50. Semiconductor Cap Equip.50. Semiconductor Cap Equip.
51. Semiconductor51. Petroleum (Producing)

-- Thomas Bulkowski

Top


Thursday 7/19/12. Trading Thursday: Nasdaq

The index climbed by 1.1% or 32.56 points. Since 02/05/1971 the index made 155 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 100 occasions.
     Average loss was -1.1% on 55 occasions.
Expect the index to close higher 64.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 19/33 or 57.6% of the time.
     The prediction of the index closing lower has been right 13/25 or 52.0% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

Early in the session, a flag appeared (A). This flag did not live up to expectations when the index did not climb far enough to meet the measure rule predictions (the height of the flagpole added to the bottom of the flag).

Later in the session, a rounding top showed itself at B. This has yet to breakout upward which, oddly, it does most often (53% of the time).

That suggests a higher close tomorrow, which agrees with the above probabilities. That is my guess as well.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,725.41    
 Weekly S2  2,795.51  70.10   
 Monthly S1  2,834.01  38.49   
 Weekly S1  2,869.06  35.05   
 Daily S2  2,883.93  14.88   
 Low  2,902.95  19.02   
 Open  2,904.24  1.29   Yes! The Open is close to the Low.
 Monthly Pivot  2,910.97  6.73   
 Weekly Pivot  2,911.26  0.29   Yes! The Weekly Pivot is close to the Monthly Pivot.
 Daily S1  2,913.27  2.00   Yes! The Daily S1 is close to the Weekly Pivot.
 61.8% Down from Intraday High  2,921.42  8.15   
 50% Down from Intraday High  2,927.13  5.71   
 Daily Pivot  2,932.28  5.16   
 38.2% Down from Intraday High  2,932.83  0.55   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  2,942.60  9.77   
 High  2,951.30  8.70   
 Daily R1  2,961.62  10.32   
 Daily R2  2,980.63  19.02   
 Weekly R1  2,984.81  4.17   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  3,019.57  34.76   
 Weekly R2  3,027.01  7.45   
 Monthly R2  3,096.53  69.52   

Tuesday 7/17/12. Trading Tuesday: Dow

The index dropped by -0.4% or -49.88 points. Since 10/01/1928 the index made 846 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 425 occasions.
     Average loss was -0.7% on 421 occasions.
Expect the index to close higher 50.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 28/43 or 65.1% of the time.
     The prediction of the index closing lower has been right 7/11 or 63.6% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

Ignore the gap that occurred between 11:00 and noon. It appears that the index dropped at that time but the chart does not reflect it.

At C, the index made a v-shaped turn with an extension. This is a particularly good view of one.

At A and B, the index makes a double bottom that confirmed when the index closed above the horizontal red line. Unfortunately, the index did not reach the target setup by the height of the double bottom (but it was close). That has been happening often in the last several months. It tells me that the market is directionless, at least intraday. And that can make day trading difficult.

On the 10-day chart, 5 minute scale, the index looks as if it is making a head-and-shoulders bottom. That means the index will move higher in the coming days. So, I am inclined to predict a higher close on Tuesday, which also agrees with the above probabilities.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,132.84    
 Weekly S2  12,345.21  212.37   
 Monthly S1  12,430.03  84.82   
 Weekly S1  12,536.21  106.18   
 Daily S2  12,642.75  106.54   
 Weekly Pivot  12,683.25  40.50   
 Daily S1  12,684.98  1.73   Yes! The Daily S1 is close to the Weekly Pivot.
 Low  12,690.05  5.07   Yes! The Low is close to the Daily S1.
 Monthly Pivot  12,695.66  5.61   Yes! The Monthly Pivot is close to the Low.
 61.8% Down from Intraday High  12,724.25  28.59   
 Close  12,727.21  2.96   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  12,732.28  5.07   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  12,734.82  2.54   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  12,745.38  10.56   
 Daily R1  12,774.51  29.13   
 Open  12,776.33  1.82   Yes! The Open is close to the Daily R1.
 High  12,779.58  3.25   Yes! The High is close to the Open.
 Daily R2  12,821.81  42.23   
 Weekly R1  12,874.25  52.44   
 Monthly R1  12,992.85  118.60   
 Weekly R2  13,021.29  28.44   
 Monthly R2  13,258.48  237.19   

Monday 7/16/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I released a new version of patternz (version 4.1W) that corrects a bug.

The chart shows the Dow industrials on the daily scale.

The head-and-shoulders top has not completely formed yet. The right shoulder (RS) needs to come up a bit more, maybe another day's worth of advancing would do it.

Then the index has to close below the blue neckline. That would confirm the pattern as valid.

That scenario could play out as described, but my guess is the index will continue moving up. With quarterly earnings releases coming this week and a host of economic reports, perhaps the market will just move sideways.

Top 

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 36.18 points.
Tuesday: Down 83.17 points.
Wednesday: Down 48.59 points.
Thursday: Down 31.26 points.
Friday: Up 203.82 points.

For the Week...

The Dow industrials were up 4.62 points or 0.0%.
The Nasdaq composite was down 28.86 points or 1.0%.
The S&P 500 index was up 2.1 points or 0.2%.

Year to Date...

Dow Industrials
     4.2% down from the high of 13,338.66 on 05/01/2012.
     6.2% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     7.2% down from the high of 3,134.17 on 03/27/2012.
     10.7% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     4.6% down from the high of 1,422.38 on 04/02/2012.
     7.8% up from the low of 1,258.86 on 01/03/2012.

Top

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 MA-Reports total retail sales (not services). Are people spending?
Business inventories10:00 MC-Reports manufacturing, wholesale, retail inventories.
Consumer price index8:30 TB+Inflation report. Measures cost of goods and services.
Industrial production9:15 TB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 TB-Gauges economic activity, hints of inflation.
Housing starts8:30 WB-Number of homes beginning construction.
Building permits8:30 WB-Measures building permits for new construction.
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.
Existing home sales10:00 ThCCounts sales of used homes.
Leading indicators10:00 ThD-Summary of already known reports.

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).

Top

Swing and Position Traders: Chart Pattern Indicator

As of 07/13/2012, the CPI had:

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

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,500  12,639  12,712  12,850  12,923 
Weekly  12,362  12,569  12,700  12,908  13,038 
Monthly  12,149  12,463  12,712  13,026  13,275 
S&P 500 (^GSPC): Daily  1,327  1,342  1,350  1,365  1,373 
Weekly  1,312  1,334  1,348  1,370  1,384 
Monthly  1,278  1,317  1,346  1,386  1,414 
Nasdaq (^IXIC): Daily  2,858  2,883  2,898  2,923  2,938 
Weekly  2,784  2,846  2,900  2,962  3,016 
Monthly  2,714  2,811  2,900  2,997  3,085 
  • 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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.1%  Expect a random direction.
 1 month down 20.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 42.0%  Expect a random direction.
 1 month down 22.1%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week down 33.8%  The trend may continue.
 1 month down 28.0%  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: bullish.

Top

Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
29Head-and-shoulders bottom
23Triangle, symmetrical
17Double Bottom, Adam and Adam
13Pipe bottom
12Channel
11Broadening bottom
10Triangle, ascending
10Rectangle bottom
9Rectangle top
6Triple bottom

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. Computers and Peripherals2. Biotechnology
3. Biotechnology3. Computers and Peripherals
4. Retail Building Supply4. Retail Building Supply
5. Medical Supplies5. Chemical (Basic)
48. Furn/Home Furnishings48. Natural Gas (Diversified)
49. Semiconductor49. Furn/Home Furnishings
50. Semiconductor Cap Equip.50. Short ETFs
51. Petroleum (Producing)51. Petroleum (Producing)

-- Thomas Bulkowski

Top


Thursday 7/12/12. Trading Thursday: Nasdaq

The index dropped by -0.5% or -14.35 points. Since 02/05/1971 the index made 300 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 143 occasions.
     Average loss was -1.0% on 157 occasions.
Expect the index to close lower 52.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 19/33 or 57.6% of the time.
     The prediction of the index closing lower has been right 12/24 or 50.0% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

In the middle of the session, a triple top (shown here as ABC), is unusual because it does not act as a reversal of the upward price trend. Instead, this one is a continuation of the downward trend.

Toward the end of the session, a head-and-shoulders bottom confirms when the index closes above the horizontal red line (using the armpit high when the neckline slopes upward, as in this case). It suggests more up move tomorrow at the start but I've found that to be unreliable since world events shape the opening.

The index has touched an up-sloping trendline (daily chart) connecting the valleys since the June low. That should act as support. Thus, I look for a higher close tomorrow (Thursday), but the probabilities suggest a lower close. Take your pick.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,606.27    
 Monthly S1  2,747.13  140.85   
 Daily S2  2,847.69  100.57   
 Weekly S2  2,865.86  18.17   
 Low  2,866.53  0.67   Yes! The Low is close to the Weekly S2.
 Monthly Pivot  2,867.53  1.00   Yes! The Monthly Pivot is close to the Low.
 Daily S1  2,867.84  0.30   Yes! The Daily S1 is close to the Monthly Pivot.
 Weekly S1  2,876.92  9.08   
 61.8% Down from Intraday High  2,881.42  4.50   
 50% Down from Intraday High  2,886.02  4.60   
 Daily Pivot  2,886.67  0.65   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  2,887.98  1.31   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  2,890.62  2.64   Yes! The 38.2% Down from Intraday High is close to the Close.
 Open  2,898.77  8.15   
 High  2,905.51  6.74   
 Daily R1  2,906.82  1.31   Yes! The Daily R1 is close to the High.
 Daily R2  2,925.65  18.84   
 Weekly Pivot  2,932.43  6.78   
 Weekly R1  2,943.49  11.06   
 Weekly R2  2,999.00  55.51   
 Monthly R1  3,008.39  9.39   
 Monthly R2  3,128.79  120.41   

Tuesday 7/10/12. Trading Tuesday: Dow

The index dropped by -0.3% or -36.18 points. Since 10/01/1928 the index made 952 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 449 occasions.
     Average loss was -0.8% on 503 occasions.
Expect the index to close lower 52.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 28/43 or 65.1% of the time.
     The prediction of the index closing lower has been right 6/10 or 60.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

The index makes a large head-and-shoulders bottom chart pattern (LS = left shoulder, RS = right shoulder). The neckline is the red line that joins the two armpits.

The index has climbed far enough to fulfill the measure rule ( the height of the chart pattern from the head low to the neckline directly above then applied to the breakout price (A) ).

On the daily chart, making a channel like I did for yesterday's post, a trendline connecting the two valleys in June extended into the future suggests another day or two of downward movement (before the index hits the bottom trendline). Given that the above probabilities also agree with a downward close tomorrow (Tuesday), that is my guess as well.

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  11,651.35    
 Monthly S1  12,193.82  542.47   
 Weekly S2  12,541.88  348.06   
 Monthly Pivot  12,577.56  35.68   
 Weekly S1  12,639.09  61.53   
 Daily S2  12,646.18  7.09   Yes! The Daily S2 is close to the Weekly S1.
 Low  12,686.57  40.39   
 Daily S1  12,691.23  4.66   Yes! The Daily S1 is close to the Low.
 61.8% Down from Intraday High  12,719.21  27.98   
 50% Down from Intraday High  12,729.29  10.08   
 Daily Pivot  12,731.63  2.33   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  12,736.29  4.66   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  12,739.38  3.09   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  12,772.02  32.64   
 Open  12,772.02  0.00   Yes! The Open is close to the High.
 Daily R1  12,776.68  4.66   Yes! The Daily R1 is close to the Open.
 Weekly Pivot  12,800.19  23.51   
 Daily R2  12,817.08  16.88   
 Weekly R1  12,897.40  80.32   
 Weekly R2  13,058.50  161.11   
 Monthly R1  13,120.03  61.53   
 Monthly R2  13,503.77  383.74   

Monday 7/9/12. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq on the daily scale.

I show a picture of the Nasdaq composite on the daily scale.

I chose this index because of the channel unfolding on the chart. Following the red lines, price has moved higher, touching the top of the channel three times, and the bottom of it twice.

This price action I find intriguing because it tells where the is likely to find support. If you project the index continuing to drop and the bottom channel line continuing to rise, the intersection is about 2850. That is an eyeball's guess, but I would expect the index to reverse then. That would be in about three days or so, depending on the strength of the decline.

$ $ $

As to the below spider picture, although it may look fake, it's not.

Top 

A Brief Look Back

Picture of a spider 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 8.7 points.
Tuesday: Up 72.43 points.
Thursday: Down 47.15 points.
Friday: Down 124.2 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were down 107.62 points or 0.8%.
The Nasdaq composite was up 2.28 points or 0.1%.
The S&P 500 index was down 7.48 points or 0.5%.

Year to Date...

Dow Industrials
     4.2% down from the high of 13,338.66 on 05/01/2012.
     6.1% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     6.3% down from the high of 3,134.17 on 03/27/2012.
     11.8% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     4.8% down from the high of 1,422.38 on 04/02/2012.
     7.6% up from the low of 1,258.86 on 01/03/2012.

Top

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 MD-Measures auto, credit card and other debt.
Trade balance8:30 WC+Signals balance of exports & imports.
Wholesale inventories10:00 WD-Wholesale sales and inventory statistics.
Crude inventories10:30 W?My guess: Measures oil inventory.
FOMC Minutes2:00 W?Minutes of the prior Federal Reserve meeting.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
International trade8:30 ThC+Import/export prices, trade balance. US economy vs others.
Treasury budget2:00 ThDTracks budget deficit. Important in April (tax filing).
Producer price index8:30 FB-Measures wholesale goods cost. An indication of future inflation.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

As of 07/06/2012, the CPI had:

4 bearish patterns,
10 bullish patterns,
373 patterns waiting for breakout.
The CPI signal is 71.4%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,602  12,687  12,788  12,874  12,975 
Weekly  12,554  12,663  12,812  12,922  13,071 
Monthly  11,663  12,218  12,590  13,144  13,516 
S&P 500 (^GSPC): Daily  1,338  1,346  1,357  1,365  1,376 
Weekly  1,332  1,344  1,359  1,370  1,386 
Monthly  1,224  1,289  1,332  1,397  1,440 
Nasdaq (^IXIC): Daily  2,903  2,920  2,939  2,956  2,975 
Weekly  2,882  2,910  2,949  2,976  3,015 
Monthly  2,623  2,780  2,884  3,041  3,145 
  • 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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 30.6%  The trend may continue.
 1 month down 20.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week down 31.0%  The trend may continue.
 1 month down 22.1%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 5 weeks up 6.7%  Expect a reversal soon.
 2 months up 38.8%  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: bullish.

Top

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 5 days.

 Found Chart Pattern Name
60Head-and-shoulders bottom
21Triangle, symmetrical
19Double Bottom, Adam and Adam
15Pipe bottom
10Triangle, ascending
9Rectangle top
9Rectangle bottom
7Triple bottom
6Diamond bottom
6Channel

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. Biotechnology2. Biotechnology
3. Computers and Peripherals3. Computers and Peripherals
4. Retail Building Supply4. Chemical (Basic)
5. Chemical (Basic)5. Retail Building Supply
48. Natural Gas (Diversified)48. Shoe
49. Furn/Home Furnishings49. Petroleum (Producing)
50. Short ETFs50. Furn/Home Furnishings
51. Petroleum (Producing)51. Short ETFs
52. Coal52. Coal

-- Thomas Bulkowski

Top


Saturday 7/7/12. Request for Stories

Have you made or lost money in the securities markets (stock, futures, options, etc.) and want to share your story with the world? Here's your chance. The link describes what I'm looking for. This is for a new book that I'm working on.

If your story is included for publication, you'll get a free copy of the book.


Thursday 7/5/12. Trading Thursday: Nasdaq

The index climbed by 0.8% or 24.85 points. Since 02/05/1971 the index made 345 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 227 occasions.
     Average loss was -0.9% on 118 occasions.
Expect the index to close higher 65.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 18/32 or 56.3% of the time.
     The prediction of the index closing lower has been right 12/24 or 50.0% of the time.

NOT a picture of the Nasdaq composite on the 5 minute scale.

Obviously the picture on the right is not the Nasdaq on the 5 min scale. It's a zoom in of a flower from my back yard.

It's a holiday and I'm taking the day off.

You have the probability information above and the pivot points below. That should help you decide how the Nasdaq will close on Thursday. Good luck!

I rode my bicycle on my usual 14.66 mile loop around town but this time the winds were gusting to 23 mph with a sustained velocity of 16 mph. Fortunately, I only faced the wind for about 3 miles and yet my time was one of the slowest this season (an average of 18.2 mph).

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

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,666.08    
 Weekly S2  2,792.86  126.78   
 Monthly S1  2,821.08  28.22   
 Monthly Pivot  2,881.68  60.60   
 Weekly S1  2,884.47  2.79   
 Weekly Pivot  2,909.80  25.33   
 Daily S2  2,939.17  29.37   
 Low  2,948.40  9.23   
 Open  2,950.81  2.41   Yes! The Open is close to the Low.
 Daily S1  2,957.63  6.82   
 61.8% Down from Intraday High  2,958.97  1.35   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  2,962.24  3.27   
 38.2% Down from Intraday High  2,965.51  3.27   
 Daily Pivot  2,966.85  1.35   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  2,976.08  9.23   
 High  2,976.08  0.00   Yes! The High is close to the Close.
 Daily R1  2,985.31  9.23   
 Daily R2  2,994.53  9.23   
 Weekly R1  3,001.41  6.88   
 Weekly R2  3,026.74  25.33   
 Monthly R1  3,036.68  9.94   
 Monthly R2  3,097.28  60.60   

Tuesday 7/3/12. Trading Tuesday: Dow

The index dropped by -0.1% or -8.7 points. Since 10/01/1928 the index made 1204 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 622 occasions.
     Average loss was -0.8% on 582 occasions.
Expect the index to close higher 51.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 27/42 or 64.3% of the time.
     The prediction of the index closing lower has been right 6/10 or 60.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

A double bottom appears at A and B, confirmed as a valid chart pattern when the index closed above C. You can also consider this a complex head-and-shoulders bottom by including valleys D and E.

Research on holidays says that 46.9% of the time price closes higher the day before independence day (July 4) and higher 44% of the time a day later. In other words, expect a down day surrounding the U.S. holiday. However, the above probabilities suggest a higher close.

I'm not sure what to say. The daily charts show overhead resistance with a candle that shows slackening of upward momentum. Over the last 10 days, the index is riding above a support area, suggesting a higher close. I'll let you decide what is going to happen tomorrow (Tuesday).

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.

$ $ $

I was riding my bicycle today, trying to beat my best time. Came to a four-way stop with no one around so I thought I would just blow through it.

Just as I was about to turn, a motorcycle cop appeared. I signaled but it was too late to stop. Yes, he flashed his lights and caught up to me then told me that I needed to stop at the signs. Then he turned around and let me go.

I always signal and if the intersection is crowed, I wait my turn. He's right, so I'll have to get used to stopping at all stop sign, regardless of how crowed the intersection is. That's how I drive a car, and bicycles are considered vehicles in the eyes of the law.

-- Thomas Bulkowski

Top 

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  11,737.96    
 Weekly S2  12,303.76  565.81   
 Monthly S1  12,304.67  0.91   Yes! The Monthly S1 is close to the Weekly S2.
 Weekly S1  12,587.58  282.90   
 Monthly Pivot  12,601.81  14.23   
 Weekly Pivot  12,733.98  132.18   
 Daily S2  12,749.69  15.71   
 Low  12,795.48  45.79   
 Daily S1  12,810.54  15.06   
 61.8% Down from Intraday High  12,836.22  25.68   
 50% Down from Intraday High  12,848.80  12.58   
 Daily Pivot  12,856.33  7.53   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  12,861.38  5.05   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  12,871.39  10.01   Yes! The Close is close to the 38.2% Down from Intraday High.
 Open  12,879.71  8.32   Yes! The Open is close to the Close.
 High  12,902.12  22.41   
 Daily R1  12,917.18  15.06   
 Daily R2  12,962.97  45.79   
 Weekly R1  13,017.80  54.83   
 Weekly R2  13,164.20  146.41   
 Monthly R1  13,168.52  4.32   Yes! The Monthly R1 is close to the Weekly R2.
 Monthly R2  13,465.66  297.13   

Monday 7/2/12. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

I show the Nasdaq composite on the daily scale.

The gaps at A and B are breakaway gaps since they break away from congestion areas. At B, this is clear but not so at A.

Overhead resistance is at C setup by the peak there and also at D, a short congestion area and a valley in April.

Will the index hit that overhead resistance and need medical attention? Perhaps, but I think the index will continue higher anyway.

Another view comes from the prediction I made last year. It shows the Dow industrials making a slight move up at the start of July (now) and then tumbling to a low on the 20th of this month. Then it bounces in August and bottoms in a lower low (the lowest for the year), in October, before staging a recovery.

In other words, the index will either go up or down. Your choice. I vote for up this week.

Top 

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 138.12 points.
Tuesday: Up 32.01 points.
Wednesday: Up 92.34 points.
Thursday: Down 24.75 points.
Friday: Up 277.83 points.

For the Week...

The Dow industrials were up 239.31 points or 1.9%.
The Nasdaq composite was up 42.63 points or 1.5%.
The S&P 500 index was up 27.14 points or 2.0%.

Year to Date...

Dow Industrials
     3.4% down from the high of 13,338.66 on 05/01/2012.
     7.0% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     6.4% down from the high of 3,134.17 on 03/27/2012.
     11.7% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     4.2% down from the high of 1,422.38 on 04/02/2012.
     8.2% up from the low of 1,258.86 on 01/03/2012.

Top

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
Construction spending10:00 MDCovers residential/non-residential/public spending on new construction.
Factory orders10:00 TD+Durable/non-durable goods orders w/factory inventories.
Auto & truck sales2:00 TC-Monthly sales of domestically produced vehicles.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Crude inventories11:00 Th?My guess: Measures oil inventory.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

As of 06/29/2012, the CPI had:

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

The chart pattern indicator is bullish with 1 of 3 half triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles.

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  12,512  12,696  12,788  12,972  13,064 
Weekly  12,307  12,593  12,737  13,024  13,167 
Monthly  11,741  12,310  12,605  13,174  13,469 
S&P 500 (^GSPC): Daily  1,319  1,341  1,351  1,373  1,384 
Weekly  1,292  1,327  1,345  1,380  1,397 
Monthly  1,234  1,298  1,331  1,395  1,428 
Nasdaq (^IXIC): Daily  2,882  2,909  2,922  2,948  2,961 
Weekly  2,779  2,857  2,896  2,974  3,013 
Monthly  2,652  2,794  2,868  3,009  3,084 
  • 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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.2%  Expect a random direction.
 1 month up 52.0%  Expect a random direction.
 S & P 500 (^GSPC) 1 week up 42.2%  Expect a random direction.
 1 month up 53.3%  Expect a random direction.
 Nasdaq composite (^IXIC) 4 weeks up 14.1%  Expect a reversal soon.
 1 month up 47.4%  Expect a random direction.

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

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

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

Buy-and-Hold: 12-Month SMA

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

Top

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 12 days.

 Found Chart Pattern Name
44Head-and-shoulders bottom
26Double Bottom, Adam and Adam
20Pipe bottom
20Triangle, symmetrical
9Triangle, ascending
8Rectangle top
7Rectangle bottom
6Double Bottom, Eve and Adam
6Diamond bottom
5Broadening bottom

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. Biotechnology2. Biotechnology
3. Computers and Peripherals3. Computers and Peripherals
4. Chemical (Basic)4. Retail Building Supply
5. Retail Building Supply5. Chemical (Basic)
48. Shoe48. Natural Gas (Diversified)
49. Petroleum (Producing)49. Short ETFs
50. Furn/Home Furnishings50. Petroleum (Producing)
51. Short ETFs51. Furn/Home Furnishings
52. Coal52. Coal

-- Thomas Bulkowski

Top 

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.