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

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Tuesday 7/31/12. Trading Tuesday: Dow

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

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

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

My Prediction

I 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.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Personal income & consumption	8:30 T	C+	Measures sources of income to predict future demand.
Personal consumption expenditures	8:30 T	C+	Covers durables, non-durables, and services.
Chicago purchasing managers index	9:45 T	B	Monitors regional manufacturing activity.
Consumer confidence	10:00 T	B-	Surveys 5,000 households for trends.
Construction spending	10:00 W	D	Covers residential/non-residential/public spending on new construction.
Crude inventories	10:30 W	?	My guess: Measures oil inventory.
Auto & truck sales	2:00 W	C-	Monthly sales of domestically produced vehicles.
FOMC Rate decision	2:15 W	?	The Federal Reserves reports on interest rate changes.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Factory orders	10:00 Th	D+	Durable/non-durable goods orders w/factory inventories.
4 Employment reports	8:30 F	A	Nonfarm payrolls, unemployment rate, avg workweek, hourly earnings.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

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

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.

• Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
• S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
• If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
• In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
• A move outside of daily R1 or S1 usually does not mean a breakout.
• The odds suggest that the entire week's price action will remain between weekly R2 and S2.
• Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
• Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
• Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Consecutive Price Trends

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

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

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

Buy-and-Hold: 12-Month SMA

Earnings, Chart Patterns & Industries

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

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

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

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

-- Thomas Bulkowski

Thursday 7/26/12. Trading Thursday: Nasdaq

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

Tuesday 7/24/12. Trading Tuesday: Dow

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

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

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

My Prediction

I show the 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.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

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

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

On 07/20/2012, the CPI had:

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.

• Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
• S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
• If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
• In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
• A move outside of daily R1 or S1 usually does not mean a breakout.
• The odds suggest that the entire week's price action will remain between weekly R2 and S2.
• Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
• Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
• Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Consecutive Price Trends

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

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

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

Buy-and-Hold: 12-Month SMA

Earnings, Chart Patterns & Industries

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

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

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

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

-- Thomas Bulkowski

Thursday 7/19/12. Trading Thursday: Nasdaq

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

Tuesday 7/17/12. Trading Tuesday: Dow

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

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

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

My Prediction

I 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.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Retail sales	8:30 M	A-	Reports total retail sales (not services). Are people spending?
Business inventories	10:00 M	C-	Reports manufacturing, wholesale, retail inventories.
Consumer price index	8:30 T	B+	Inflation report. Measures cost of goods and services.
Industrial production	9:15 T	B-	Production of utilities, mines, and manufacturers.
Capacity utilization	9:15 T	B-	Gauges economic activity, hints of inflation.
Housing starts	8:30 W	B-	Number of homes beginning construction.
Building permits	8:30 W	B-	Measures building permits for new construction.
Crude inventories	10:30 W	?	My guess: Measures oil inventory.
FEDs Beige book	2:00 W	?	Reports on economic conditions.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
Existing home sales	10:00 Th	C	Counts sales of used homes.
Leading indicators	10:00 Th	D-	Summary of already known reports.

Options Expiration

The following is courtesy of the Options Industry Council.

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

Swing and Position Traders: Chart Pattern Indicator

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

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.

• Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
• S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
• If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
• In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
• A move outside of daily R1 or S1 usually does not mean a breakout.
• The odds suggest that the entire week's price action will remain between weekly R2 and S2.
• Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
• Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
• Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Consecutive Price Trends

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

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

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

Buy-and-Hold: 12-Month SMA

Earnings, Chart Patterns & Industries

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

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

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

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

-- Thomas Bulkowski

Thursday 7/12/12. Trading Thursday: Nasdaq

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

Tuesday 7/10/12. Trading Tuesday: Dow

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

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

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

My Prediction

I show 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.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

Report	Time	A-F Rating	Description
Consumer credit	3:00 M	D-	Measures auto, credit card and other debt.
Trade balance	8:30 W	C+	Signals balance of exports & imports.
Wholesale inventories	10:00 W	D-	Wholesale sales and inventory statistics.
Crude inventories	10:30 W	?	My guess: Measures oil inventory.
FOMC Minutes	2:00 W	?	Minutes of the prior Federal Reserve meeting.
Initial jobless claims	8:30 Th	C+	Counts people filing for state unemployment benefits.
International trade	8:30 Th	C+	Import/export prices, trade balance. US economy vs others.
Treasury budget	2:00 Th	D	Tracks budget deficit. Important in April (tax filing).
Producer price index	8:30 F	B-	Measures wholesale goods cost. An indication of future inflation.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

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

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.

• Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
• S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
• If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
• In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
• A move outside of daily R1 or S1 usually does not mean a breakout.
• The odds suggest that the entire week's price action will remain between weekly R2 and S2.
• Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
• Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
• Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Consecutive Price Trends

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

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

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

Buy-and-Hold: 12-Month SMA

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 5 days.

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

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

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

-- Thomas Bulkowski

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

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

Tuesday 7/3/12. Trading Tuesday: Dow

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

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

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

My Prediction

I show the 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.

A Brief Look Back

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

For the Week...

Year to Date...

Economic Reports

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

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

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

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

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.

• Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
• S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
• If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
• In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
• A move outside of daily R1 or S1 usually does not mean a breakout.
• The odds suggest that the entire week's price action will remain between weekly R2 and S2.
• Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
• Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
• Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Consecutive Price Trends

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

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

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

Buy-and-Hold: 12-Month SMA

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 12 days.

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

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

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

-- Thomas Bulkowski

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