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

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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
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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 09/20/2017
22,413 41.79 0.2%
9,654 147.29 1.5%
732 -5.08 -0.7%
6,456 -5.28 -0.1%
2,508 1.59 0.1%
YTD
13.4%
6.8%
10.9%
19.9%
12.0%
Tom's Targets    Overview: 09/14/2017
22,450 or 21,500 by 10/01/2017
9,750 or 9,200 by 10/01/2017
775 or 730 by 10/01/2017
6,650 or 6,200 by 10/01/2017
2,600 or 2,425 by 10/01/2017

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 2013 Headlines


Archives


Tuesday 7/30/13. Trading Tuesday: Dow

The index dropped by -0.2% or -36.86 points. Since 10/01/1928 the index made 1110 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 553 occasions.
     Average loss was -0.7% on 557 occasions.
Expect the index to close lower 50.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 55/82 or 67.1% of the time.
     The prediction of the index closing lower has been right 13/24 or 54.2% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

The index shows a large head-and-shoulders bottom. It confirmed as a valid chart pattern when the index closed above the red neckline at A.

Unfortunately, with such a large pattern, the height of it from the head low to the neckline directly above, means it was a useless exercise to expect such a large move intraday. By that I mean you add the pattern's height to the breakout price at A to get a target price. If the height of the pattern encompasses too much of the average daily price range, then don't hold out hope for price to reach the predicted target that day.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,172.87    
 Monthly S1  14,847.42  674.55   
 Monthly Pivot  15,225.82  378.40   
 Weekly S2  15,311.39  85.57   
 Weekly S1  15,416.68  105.29   
 Daily S2  15,445.59  28.91   
 Low  15,482.27  36.68   
 Daily S1  15,483.78  1.51   Yes! The Daily S1 is close to the Low.
 Weekly Pivot  15,510.45  26.67   
 61.8% Down from Intraday High  15,510.87  0.42   Yes! The 61.8% Down from Intraday High is close to the Weekly Pivot.
 50% Down from Intraday High  15,519.71  8.83   
 Daily Pivot  15,520.46  0.75   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  15,521.97  1.51   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  15,528.54  6.57   Yes! The 38.2% Down from Intraday High is close to the Close.
 Open  15,557.14  28.60   
 High  15,557.14  0.00   Yes! The High is close to the Open.
 Daily R1  15,558.65  1.51   Yes! The Daily R1 is close to the High.
 Daily R2  15,595.33  36.68   
 Weekly R1  15,615.74  20.41   
 Weekly R2  15,709.51  93.77   
 Monthly R1  15,900.37  190.86   
 Monthly R2  16,278.77  378.40   

Monday 7/29/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utility index on the daily scale. Why? Because this chart seems to indicate the dilemma I struggle with when trying to decide which direction the indices will take.

In mid July, the index bumped up against overhead resistance. I predicted the index (indices as a group, too) would decline and they have but I could be wrong now.

The drop lasted all of a day and the index might be on the rebound now. The pattern could form into a measured move up. The sideways movement we are seeing now is the corrective phrase of the measured move that began in early July.

Although I expected a more significant retrace of the rise from the July low, we could see a resumption of the upward move. If that happens and price climbs into the red lines, then I'll swap Tom's Targets (see top of page).

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 1.81 points.
Tuesday: Up 22.19 points.
Wednesday: Down 25.5 points.
Thursday: Up 13.37 points.
Friday: Up 3.22 points.

For the Week...

The Dow industrials were up 15.09 points or 0.1%.
The Nasdaq composite was up 25.55 points or 0.7%.
The S&P 500 index was down 0.44 points or 0.0%.

Year to Date...

Dow Industrials
     0.3% down from the high of 15,604.22 on 07/23/2013.
     18.7% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.3% down from the high of 3,624.54 on 07/18/2013.
     17.4% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.4% down from the high of 1,698.78 on 07/23/2013.
     18.6% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Gross domestic product8:30 WBMeasures economic activity; GDP deflator measures inflation.
Chicago purchasing managers index9:45 WBMonitors regional manufacturing activity.
Crude inventories10:30 W?My guess: Measures oil inventory.
FOMC Rate decision2:00 W?The Federal Reserves reports on interest rate changes.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Construction spending10:00 ThDCovers residential/non-residential/public spending on new construction.
Auto & truck sales2:00 ThC-Monthly sales of domestically produced vehicles.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Personal income & consumption8:30 FC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 FC+Covers durables, non-durables, and services.
Factory orders10:00 FD+Durable/non-durable goods orders w/factory inventories.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

On 07/26/2013, the CPI had:

13 bearish patterns,
3 bullish patterns,
247 patterns waiting for breakout.
The CPI signal is 18.8%, which is bearish (<= 35%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  15,353  15,456  15,508  15,611  15,664 
Weekly  15,324  15,441  15,523  15,640  15,722 
Monthly  14,185  14,872  15,238  15,925  16,291 
S&P 500 (^GSPC): Daily  1,671  1,681  1,687  1,697  1,702 
Weekly  1,666  1,679  1,689  1,702  1,712 
Monthly  1,512  1,602  1,650  1,740  1,789 
Nasdaq (^IXIC): Daily  3,571  3,592  3,603  3,624  3,635 
Weekly  3,560  3,587  3,600  3,626  3,640 
Monthly  3,181  3,397  3,511  3,727  3,840 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 5 weeks up 7.8%   Expect a reversal soon. 
 1 month up 52.1%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week down 27.7%   The trend may continue. 
 1 month up 53.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 42.8%   Expect a random direction. 
 1 month up 48.5%   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 indices, based on the most recent trend of closes.

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
26Head-and-shoulders bottom
18Broadening wedge, descending
13Double Bottom, Adam and Adam
11Triangle, symmetrical
9Broadening top
8Flag
5Pipe bottom
4Rectangle top
4Triangle, descending
4Triangle, ascending

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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Retail (Special Lines)1. Retail (Special Lines)
2. Insurance (Life)2. Insurance (Life)
3. Biotechnology3. Shoe
4. Shoe4. Biotechnology
5. Aerospace/Defense5. Semiconductor
50. Investment Co. (Foreign)50. Homebuilding
51. Medical Supplies51. Computers and Peripherals
52. Metals and Mining (Div.)52. Investment Co. (Foreign)
53. Homebuilding53. Metals and Mining (Div.)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Saturday 7/27/13. Saturday Supplement

Picture of my books

I have four new children born this year. Their pictures are on the right. They are:

  1. Trading Basics
  2. Fundamental Analysis and Position Trading
  3. Swing and Day Trading
  4. Visual Guide to Chart Patterns

The three books in the Evolution of a Trader series (the top three) were written for people unfamiliar with the inner workings of the stock market, but will curl the toes of professionals, too.

Research is used to prove the ideas discussed, but is presented in an easy to understand and light-hearted manner. You will find the books to be as entertaining as they are informative and packed with moneymaking tips and ideas. Use the ideas presented to hone your trading style and improve your success.

Whether you are a novice who has never purchased a stock but wants to, or a professional money manager who trades daily, these books are a necessary addition to any market enthusiast's bookshelf.

The Visual Guide to Chart Patterns is a concise and accessible visual guide to identifying, understanding, and using chart patterns to predict the direction and extent of price moves. Packed with visual learning enhancements and exercises, this innovative book helps savvy investors and professionals alike master the essential skills of chart pattern recognition.

The books are available now at your favorite e-tailer.

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Thursday 7/25/13. Trading Thursday: Nasdaq

The index climbed by 0.0% or 0.33 points. Since 02/05/1971 the index made 577 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 322 occasions.
     Average loss was -1.0% on 255 occasions.
Expect the index to close higher 55.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 42/70 or 60.0% of the time.
     The prediction of the index closing lower has been right 20/38 or 52.6% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

I don't see any noteworthy chart patterns until a rectangle appears too late in the session to be useful.

On the daily scale, I flipped my bullish targets for the indices to bearish. The Chart Pattern Indicator (CPI) has turned bearish, too. I expect a retrace of the recent straight-line runs in the indices. Some of those have already begun to drop.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,170.11    
 Monthly S1  3,374.85  204.75   
 Monthly Pivot  3,499.70  124.84   
 Weekly S2  3,548.27  48.57   
 Daily S2  3,553.72  5.45   
 Weekly S1  3,563.93  10.21   
 Daily S1  3,566.66  2.73   Yes! The Daily S1 is close to the Weekly S1.
 Low  3,573.53  6.87   
 Close  3,579.60  6.07   
 61.8% Down from Intraday High  3,586.04  6.44   
 Daily Pivot  3,586.47  0.43   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,589.91  3.44   
 38.2% Down from Intraday High  3,593.77  3.86   
 Weekly Pivot  3,594.24  0.47   Yes! The Weekly Pivot is close to the 38.2% Down from Intraday High.
 Daily R1  3,599.41  5.17   
 Open  3,605.26  5.85   
 High  3,606.28  1.02   Yes! The High is close to the Open.
 Weekly R1  3,609.90  3.62   
 Daily R2  3,619.22  9.32   
 Weekly R2  3,640.21  20.99   
 Monthly R1  3,704.44  64.24   
 Monthly R2  3,829.29  124.84   

Tuesday 7/23/13. Trading Tuesday: Dow

The index climbed by 0.0% or 1.81 points. Since 10/01/1928 the index made 1182 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 625 occasions.
     Average loss was -0.7% on 557 occasions.
Expect the index to close higher 52.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 54/81 or 66.7% of the time.
     The prediction of the index closing lower has been right 13/24 or 54.2% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

No obvious chart pattern appears in the index to talk about so let's discuss the unobvious one: a measured move down.

I show that as ABCD. AB is the first leg, BC is the corrective phase, and CD is the second leg. The idea behind the pattern is that AB is supposed to equal CD. Notice in this case, that it does. Also, one of the key behaviors of this pattern is that once the pattern completes, price often climbs back to the corrective phase, BC. This example does that, too, near 3:00 (or it comes close).

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,190.61    
 Monthly S1  14,868.08  677.47   
 Monthly Pivot  15,228.74  360.66   
 Weekly S2  15,343.20  114.46   
 Weekly S1  15,444.37  101.18   
 Daily S2  15,485.98  41.60   
 Daily S1  15,515.76  29.79   
 Low  15,516.20  0.44   Yes! The Low is close to the Daily S1.
 Weekly Pivot  15,516.89  0.69   Yes! The Weekly Pivot is close to the Low.
 61.8% Down from Intraday High  15,539.12  22.24   
 Open  15,543.97  4.85   Yes! The Open is close to the 61.8% Down from Intraday High.
 Close  15,545.55  1.58   Yes! The Close is close to the Open.
 Daily Pivot  15,545.99  0.44   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  15,546.21  0.22   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  15,553.29  7.08   
 Daily R1  15,575.77  22.49   
 High  15,576.21  0.44   Yes! The High is close to the Daily R1.
 Daily R2  15,606.00  29.79   
 Weekly R1  15,618.06  12.07   
 Weekly R2  15,690.58  72.51   
 Monthly R1  15,906.21  215.63   
 Monthly R2  16,266.87  360.66   

Monday 7/22/13. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq on the daily scale.

A week ago, I wrote that "I expected a retrace in the Nasdaq but it gapped higher and it may continue higher for some days yet to come." Now it appears that the retrace is at hand.

The picture shows the story. The index gapped lower on Friday. I believe that is the start of a short-term down trend. With earnings season here, any surprises could turn the index, so keep that in mind.

One interesting note is that the chart pattern indicator shows bearish divergence. That does not bode well for the market, either.

 

 

Top

A Brief Look Back

Picture of a praying mantis from my garden.

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

Monday: Up 19.96 points.
Tuesday: Down 32.41 points.
Wednesday: Up 18.67 points.
Thursday: Up 78.02 points.
Friday: Down 4.8 points.

For the Week...

The Dow industrials were up 79.44 points or 0.5%.
The Nasdaq composite was down 12.47 points or 0.3%.
The S&P 500 index was up 11.9 points or 0.7%.

Year to Date...

Dow Industrials
     0.3% down from the high of 15,589.40 on 07/18/2013.
     18.6% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     1.0% down from the high of 3,624.54 on 07/18/2013.
     16.6% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.1% down from the high of 1,693.12 on 07/18/2013.
     18.6% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Existing home sales10:00 MCCounts sales of used homes.
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.
Michigan sentiment9:55 FB-Consumer sentiment: Measures strength of consumer spending.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 07/19/2013, the CPI had:

5 bearish patterns,
35 bullish patterns,
316 patterns waiting for breakout.
The CPI signal is 87.5%, 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  15,474  15,509  15,527  15,562  15,579 
Weekly  15,343  15,443  15,516  15,617  15,690 
Monthly  14,190  14,867  15,228  15,905  16,266 
S&P 500 (^GSPC): Daily  1,681  1,687  1,689  1,695  1,697 
Weekly  1,664  1,678  1,686  1,700  1,707 
Monthly  1,516  1,604  1,649  1,737  1,781 
Nasdaq (^IXIC): Daily  3,575  3,581  3,585  3,592  3,596 
Weekly  3,551  3,569  3,597  3,615  3,643 
Monthly  3,173  3,380  3,502  3,710  3,832 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 4 weeks up 15.1%   Expect a reversal soon. 
 1 month up 52.1%   Expect a random direction. 
 S & P 500 (^GSPC) 4 weeks up 17.1%   Expect a reversal soon. 
 1 month up 53.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week down 31.2%   The trend may continue. 
 1 month up 48.5%   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 indices, based on the most recent trend of closes.

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
53Pipe bottom
26Head-and-shoulders bottom
24Double Bottom, Adam and Adam
18Broadening wedge, descending
10Broadening top
10Triangle, symmetrical
6Rectangle top
4Broadening top, right-angled and descending
4Triangle, descending
4Rising wedge

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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Retail (Special Lines)1. Retail (Special Lines)
2. Insurance (Life)2. Shoe
3. Shoe3. Insurance (Life)
4. Biotechnology4. Semiconductor
5. Semiconductor5. Biotechnology
50. Homebuilding50. Homebuilding
51. Computers and Peripherals51. Computers and Peripherals
52. Investment Co. (Foreign)52. Investment Co. (Foreign)
53. Metals and Mining (Div.)53. Metals and Mining (Div.)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 7/18/13. Trading Thursday: Nasdaq

The index climbed by 0.3% or 11.49 points. Since 02/05/1971 the index made 565 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 312 occasions.
     Average loss was -0.7% on 253 occasions.
Expect the index to close higher 55.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 41/69 or 59.4% of the time.
     The prediction of the index closing lower has been right 20/38 or 52.6% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

This picture may be a representation of what's wrong with the head-and-shoulders top chart pattern.

The measure rule for the head-and-shoulders says that the height of the pattern from the top of the head to the red neckline directly below subtracted from the breakout price (where price crosses -- the breakout price -- and closes below the red line, at A) gives a price target. In many cases, the target is too far away for a day trade.

Now consider triple top BCD. The height of this pattern is shorter than the head-and-shoulders. Thus, the index should be able to reach the target easier and, indeed, it does.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,196.54    
 Monthly S1  3,403.27  206.72   
 Weekly S2  3,437.13  33.86   
 Monthly Pivot  3,501.67  64.54   
 Weekly S1  3,523.56  21.89   
 Weekly Pivot  3,561.82  38.26   
 Daily S2  3,593.72  31.90   
 Low  3,600.69  6.97   
 Daily S1  3,601.86  1.17   Yes! The Daily S1 is close to the Low.
 61.8% Down from Intraday High  3,606.46  4.60   
 Open  3,608.13  1.67   
 50% Down from Intraday High  3,608.24  0.11   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  3,608.82  0.58   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  3,609.99  1.17   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  3,610.02  0.03   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  3,615.79  5.77   
 Daily R1  3,616.96  1.17   Yes! The Daily R1 is close to the High.
 Daily R2  3,623.92  6.97   
 Weekly R1  3,648.25  24.33   
 Weekly R2  3,686.51  38.26   
 Monthly R1  3,708.40  21.89   
 Monthly R2  3,806.80  98.41   

Tuesday 7/16/13. Trading Tuesday: Dow

The index climbed by 0.1% or 19.96 points. Since 10/01/1928 the index made 1226 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 629 occasions.
     Average loss was -0.7% on 597 occasions.
Expect the index to close higher 51.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 54/80 or 67.5% of the time.
     The prediction of the index closing lower has been right 13/24 or 54.2% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

A double bottom appears at A and B. This is a strange one since it acts as a continuation pattern and not your typical reversal. But the height of it from the low at B to the red line projected upward from the red line meets the target just after 3:00.

That's the way chart patterns are supposed to work. You just have to see them in time and take advantage of them at the right opportunity.

For Tuesday's close, the probabilities suggest a higher close based on historical moves similar to Monday's move.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,230.85    
 Monthly S1  14,857.56  626.70   
 Weekly S2  15,012.12  154.56   
 Monthly Pivot  15,177.97  165.85   
 Weekly S1  15,248.19  70.22   
 Weekly Pivot  15,373.29  125.10   
 Daily S2  15,429.46  56.17   
 Low  15,455.77  26.31   
 Daily S1  15,456.86  1.09   Yes! The Daily S1 is close to the Low.
 Open  15,459.69  2.83   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  15,476.29  16.60   
 50% Down from Intraday High  15,482.63  6.34   
 Daily Pivot  15,483.17  0.54   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  15,484.26  1.09   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  15,488.96  4.70   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  15,509.48  20.52   
 Daily R1  15,510.57  1.09   Yes! The Daily R1 is close to the High.
 Daily R2  15,536.88  26.31   
 Weekly R1  15,609.36  72.48   
 Weekly R2  15,734.46  125.10   
 Monthly R1  15,804.68  70.22   
 Monthly R2  16,125.09  320.42   

Monday 7/15/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utilities on the daily scale.

I drew a line of overhead resistance in red and that's my target going into the start of August.

I expect the index to cover the distance, so the target is not too far away from the current price.

What does that mean for the other indices? They are near recent highs so they may stall there, but the momentum is upward. They could continue to make new highs instead of retracing.

I expected a retrace in the Nasdaq but it gapped higher and it may continue higher for some days yet to come.

Returning to the picture, the index formed a head-and-shoulders bottom on the lower right. If you didn't buy your utility stock near the bottom, then you missed getting a good dividend rate.

# # #

I released a new version of Patternz with a few bug fixes.

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A Brief Look Back

Picture of a lizard from my garden.

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

Monday: Up 88.85 points.
Tuesday: Up 75.65 points.
Wednesday: Down 8.68 points.
Thursday: Up 169.26 points.
Friday: Up 3.38 points.

For the Week...

The Dow industrials were up 328.46 points or 2.2%.
The Nasdaq composite was up 120.7 points or 3.5%.
The S&P 500 index was up 48.3 points or 3.0%.

Year to Date...

Dow Industrials
     0.5% down from the high of 15,542.40 on 05/22/2013.
     18.0% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.0% down from the high of 3,600.08 on 07/12/2013.
     17.0% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.4% down from the high of 1,687.18 on 05/22/2013.
     17.8% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
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.
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).

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Swing and Position Traders: Chart Pattern Indicator

As of 07/12/2013, the CPI had:

2 bearish patterns,
54 bullish patterns,
216 patterns waiting for breakout.
The CPI signal is 96.4%, 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  15,370  15,417  15,458  15,505  15,546 
Weekly  15,005  15,235  15,367  15,596  15,728 
Monthly  14,224  14,844  15,171  15,791  16,118 
S&P 500 (^GSPC): Daily  1,670  1,675  1,678  1,683  1,685 
Weekly  1,619  1,650  1,665  1,696  1,711 
Monthly  1,520  1,600  1,640  1,720  1,760 
Nasdaq (^IXIC): Daily  3,569  3,584  3,592  3,608  3,616 
Weekly  3,434  3,517  3,559  3,642  3,683 
Monthly  3,193  3,397  3,498  3,702  3,804 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 3 weeks up 21.6%   Expect a reversal soon. 
 1 month up 52.1%   Expect a random direction. 
 S & P 500 (^GSPC) 3 weeks up 22.2%   Expect a reversal soon. 
 1 month up 53.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 3 weeks up 22.0%   Expect a reversal soon. 
 1 month up 48.5%   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 indices, based on the most recent trend of closes.

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season will be starting in about 1 days.

 Found Chart Pattern Name
40Pipe bottom
23Head-and-shoulders bottom
23Double Bottom, Adam and Adam
18Broadening wedge, descending
14Triangle, symmetrical
9Broadening top
8Head-and-shoulders top
7Rectangle top
7Rising wedge
6Double Top, 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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Retail (Special Lines)1. Retail (Special Lines)
2. Shoe2. Insurance (Life)
3. Insurance (Life)3. Semiconductor
4. Semiconductor4. Shoe
5. Biotechnology5. Biotechnology
50. Homebuilding50. Homebuilding
51. Computers and Peripherals51. Investment Co. (Foreign)
52. Investment Co. (Foreign)52. Computers and Peripherals
53. Metals and Mining (Div.)53. Metals and Mining (Div.)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 7/11/13. Trading Thursday: Nasdaq

The index climbed by 0.5% or 16.5 points. Since 02/05/1971 the index made 496 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 348 occasions.
     Average loss was -0.8% on 148 occasions.
Expect the index to close higher 70.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 40/68 or 58.8% of the time.
     The prediction of the index closing lower has been right 20/38 or 52.6% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

A head-and-shoulders bottom appears mid session. It confirms when the index closes above A. I prefer that in cases where the blue neckline slopes upward, as in this case. I draw a horizontal line from the right armpit and use that as the buy signal.

Later in the afternoon, a double top confirms as a valid pattern when the index closes below the line at D.

Looking to tomorrow's close, the probabilities suggest a higher close. I'm not so sure. The measured move up that is difficult to see but started with the low in June (daily chart) with a slight pause in July (2 days sideways move), looks to have moved far enough to complete the second leg. After that, the index should retrace to the corrective phase near 3450. That will take a week or so to happen.

I'm not certain that the index will begin that retrace process tomorrow. I'll let you decide the direction of Thursday's close.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,241.31    
 Monthly S1  3,381.04  139.72   
 Weekly S2  3,407.59  26.55   
 Monthly Pivot  3,434.67  27.09   
 Weekly S1  3,464.17  29.50   
 Weekly Pivot  3,471.82  7.64   
 Daily S2  3,494.26  22.44   
 Low  3,502.00  7.74   
 Open  3,502.11  0.11   Yes! The Open is close to the Low.
 Daily S1  3,507.51  5.40   
 61.8% Down from Intraday High  3,510.02  2.51   
 50% Down from Intraday High  3,512.50  2.48   
 38.2% Down from Intraday High  3,514.97  2.48   
 Daily Pivot  3,515.25  0.28   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  3,520.76  5.51   
 High  3,522.99  2.23   
 Weekly R1  3,528.40  5.41   
 Daily R1  3,528.50  0.10   Yes! The Daily R1 is close to the Weekly R1.
 Weekly R2  3,536.05  7.55   
 Daily R2  3,536.24  0.19   Yes! The Daily R2 is close to the Weekly R2.
 Monthly R1  3,574.40  38.16   
 Monthly R2  3,628.03  53.64   

Tuesday 7/9/13. Trading Tuesday: Dow

The index climbed by 0.6% or 88.85 points. Since 10/01/1928 the index made 799 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 443 occasions.
     Average loss was -0.6% on 356 occasions.
Expect the index to close higher 55.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 53/79 or 67.1% of the time.
     The prediction of the index closing lower has been right 13/24 or 54.2% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

The first pattern appeared early in the session and it was a bearish one: a double top (AB). This confirmed as a valid pattern when the index closed below the bottom of the pattern, at C.

The height of the pattern projected downward from the horizontal red line gives a price target that the index easily met.

Following the double top, a rectangle or channel appears at D. The index pushes through the top trendline at E, staging an upward breakout. The pattern also fulfilled the measure rule when the index reached the predicted target, but just barely.

Looking to tomorrow's (Tuesday's) close, I expect the index to close higher even though it has closed higher for three days running.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,249.86    
 Monthly S1  14,737.28  487.41   
 Weekly S2  14,795.13  57.85   
 Weekly S1  15,009.91  214.78   
 Monthly Pivot  15,038.68  28.77   
 Weekly Pivot  15,073.71  35.03   
 Daily S2  15,082.71  9.00   Yes! The Daily S2 is close to the Weekly Pivot.
 Low  15,137.22  54.51   
 Open  15,137.22  0.00   Yes! The Open is close to the Low.
 Daily S1  15,153.70  16.48   
 61.8% Down from Intraday High  15,185.16  31.46   
 50% Down from Intraday High  15,199.97  14.81   
 Daily Pivot  15,208.21  8.24   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  15,214.78  6.57   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  15,224.69  9.91   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  15,262.72  38.03   
 Daily R1  15,279.20  16.48   
 Weekly R1  15,288.49  9.29   Yes! The Weekly R1 is close to the Daily R1.
 Daily R2  15,333.71  45.22   
 Weekly R2  15,352.29  18.58   
 Monthly R1  15,526.10  173.81   
 Monthly R2  15,827.50  301.41   

Monday 7/8/13. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

I show the Nasdaq composite index on the daily scale.

This chart impressed me over the other indices. My first thought was that the index was going to hit overhead resistance and reverse at the red line.

Will that happen? If I had to guess, I think the index will carry higher.

This is based on the rise from the June low (A). See that congestion area circled? The rise from A to B should equal the rise above the circle. Clearly, we haven't moved far enough to equal the AB move. Thus, I expect the index to carry higher and to plow through overhead resistance shown by the red line.

I am describing the behavior of a measured move up chart pattern, of course. If it works as it's supposed to (and it may not), that would probably mean a new high for the index.

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 65.36 points.
Tuesday: Down 42.55 points.
Wednesday: Up 56.14 points.
Friday: Up 147.29 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 226.24 points or 1.5%.
The Nasdaq composite was up 76.13 points or 2.2%.
The S&P 500 index was up 25.61 points or 1.6%.

Year to Date...

Dow Industrials
     2.6% down from the high of 15,542.40 on 05/22/2013.
     15.5% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     1.5% down from the high of 3,532.03 on 05/22/2013.
     13.1% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     3.3% down from the high of 1,687.18 on 05/22/2013.
     14.4% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer credit3:00 MD-Measures auto, credit card and other debt.
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.

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Swing and Position Traders: Chart Pattern Indicator

As of 07/05/2013, the CPI had:

8 bearish patterns,
77 bullish patterns,
376 patterns waiting for breakout.
The CPI signal is 90.6%, 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  14,915  15,026  15,082  15,192  15,248 
Weekly  14,766  14,951  15,044  15,229  15,323 
Monthly  14,220  14,678  15,009  15,467  15,798 
S&P 500 (^GSPC): Daily  1,609  1,620  1,626  1,638  1,644 
Weekly  1,595  1,614  1,623  1,641  1,650 
Monthly  1,522  1,577  1,615  1,671  1,709 
Nasdaq (^IXIC): Daily  3,429  3,454  3,467  3,492  3,505 
Weekly  3,394  3,437  3,458  3,501  3,522 
Monthly  3,228  3,353  3,421  3,547  3,614 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 30.4%   The trend may continue. 
 1 month up 52.1%   Expect a random direction. 
 S & P 500 (^GSPC) 2 weeks up 30.4%   The trend may continue. 
 1 month up 53.7%   Expect a random direction. 
 Nasdaq composite (^IXIC) 2 weeks up 28.6%   The trend may continue. 
 1 month up 48.5%   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 indices, based on the most recent trend of closes.

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season will be starting in about 8 days.

 Found Chart Pattern Name
15Triangle, symmetrical
14Broadening wedge, descending
14Pipe bottom
12Head-and-shoulders top
8Double Bottom, Adam and Adam
8Rectangle top
7Rising wedge
7Broadening top
6Double Top, Adam and Adam
5Channel

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

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

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Retail (Special Lines)1. Retail (Special Lines)
2. Insurance (Life)2. Insurance (Life)
3. Semiconductor3. Semiconductor
4. Shoe4. Shoe
5. Biotechnology5. Trucking/Transp. Leasing
50. Homebuilding50. Homebuilding
51. Investment Co. (Foreign)51. Investment Co. (Foreign)
52. Computers and Peripherals52. Computers and Peripherals
53. Metals and Mining (Div.)53. Metals and Mining (Div.)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Tuesday 7/2/13. Trading Tuesday: Dow

The index climbed by 0.4% or 65.36 points. Since 10/01/1928 the index made 1009 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 532 occasions.
     Average loss was -0.6% on 477 occasions.
Expect the index to close higher 52.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 53/78 or 67.9% of the time.
     The prediction of the index closing lower has been right 13/24 or 54.2% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

A long rectangle top appears and lasts throughout a significant part of the session. I show that highlighted by two red lines. It's an area of congestion.

When the index broke out of the rectangle, that was the time to make a move and short the index. At A, the index threw back to the rectangle before heading lower.

Looking to Tuesday's close, the probabilities say it should close higher, based on historical moves. However, I see the index moving lower based on it reaching the corrective phase of a measured move down. I think that resistance will repel the index.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,045.69    
 Weekly S2  14,343.34  297.65   
 Monthly S1  14,510.32  166.98   
 Weekly S1  14,659.15  148.83   
 Daily S2  14,818.27  159.12   
 Weekly Pivot  14,867.08  48.81   
 Daily S1  14,896.61  29.53   
 Open  14,911.60  14.99   Yes! The Open is close to the Daily S1.
 Low  14,911.60  0.00   Yes! The Low is close to the Open.
 Close  14,974.96  63.36   
 61.8% Down from Intraday High  14,977.18  2.22   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  14,989.95  12.76   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  14,997.44  7.49   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Monthly Pivot  15,015.91  18.47   
 38.2% Down from Intraday High  15,017.70  1.79   Yes! The 38.2% Down from Intraday High is close to the Monthly Pivot.
 Daily R1  15,068.29  50.59   
 High  15,083.28  14.99   Yes! The High is close to the Daily R1.
 Daily R2  15,161.63  78.35   
 Weekly R1  15,182.89  21.26   
 Weekly R2  15,390.82  207.93   
 Monthly R1  15,480.54  89.72   
 Monthly R2  15,986.13  505.58   

Monday 7/1/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show a picture of the Dow industrials on the daily scale.

This pattern, ABCD, is one I've discussed often enough. It's a measured move down.

The idea is that the CD leg will be equal in length and time to the AB leg. The corrective phase, BC, is where price often returns and gets hung up.

Just 18% of the time does the stock rise above the top of the measured move (a close above A). I did not run the stats on indices since that would give too few samples.

The number suggests the index is going to drop again now that it's hit the corrective phase. That may or may not be what happens. Who can tell until we get there?

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A Brief Look Back

Picture of my dog.

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 139.84 points.
Tuesday: Up 100.75 points.
Wednesday: Up 149.83 points.
Thursday: Up 114.35 points.
Friday: Down 114.89 points.

For the Week...

The Dow industrials were up 110.2 points or 0.7%.
The Nasdaq composite was up 46 points or 1.4%.
The S&P 500 index was up 13.85 points or 0.9%.

Year to Date...

Dow Industrials
     4.1% down from the high of 15,542.40 on 05/22/2013.
     13.8% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     3.6% down from the high of 3,532.03 on 05/22/2013.
     10.6% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     4.8% down from the high of 1,687.18 on 05/22/2013.
     12.6% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
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.
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Trade balance8:30 WC+Signals balance of exports & imports.
Crude inventories10:30 W?My guess: Measures oil inventory.
Market holidayTh?Yippee!
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Initial jobless claims8:30 FC+Counts people filing for state unemployment benefits.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 06/28/2013, the CPI had:

4 bearish patterns,
14 bullish patterns,
484 patterns waiting for breakout.
The CPI signal is 77.8%, 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  14,793  14,851  14,943  15,001  15,093 
Weekly  14,322  14,616  14,845  15,139  15,369 
Monthly  14,024  14,467  14,994  15,437  15,964 
S&P 500 (^GSPC): Daily  1,593  1,600  1,608  1,614  1,623 
Weekly  1,536  1,571  1,596  1,631  1,655 
Monthly  1,500  1,553  1,614  1,667  1,727 
Nasdaq (^IXIC): Daily  3,363  3,383  3,403  3,423  3,442 
Weekly  3,246  3,325  3,373  3,452  3,501 
Monthly  3,184  3,294  3,404  3,514  3,624 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.6%   Expect a random direction. 
 1 month down 20.3%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week up 43.6%   Expect a random direction. 
 1 month down 21.2%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week up 42.5%   Expect a random direction. 
 1 month down 26.5%   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 indices, based on the most recent trend of closes.

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
17Head-and-shoulders top
11Triangle, symmetrical
9Rectangle top
9Double Top, Adam and Adam
8Double Bottom, Adam and Adam
6Broadening wedge, descending
6Triple top
5Rising wedge
5Channel
4Pipe 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, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

The industries I follow were the best (rank 1) and worst performing.

This WeekLast Week
1. Retail (Special Lines)1. Insurance (Life)
2. Insurance (Life)2. Retail (Special Lines)
3. Semiconductor3. Trucking/Transp. Leasing
4. Shoe4. Semiconductor
5. Trucking/Transp. Leasing5. Shoe
50. Homebuilding50. Homebuilding
51. Investment Co. (Foreign)51. Investment Co. (Foreign)
52. Computers and Peripherals52. Computers and Peripherals
53. Metals and Mining (Div.)53. Metals and Mining (Div.)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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