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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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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/20/2017
21,612 -28.97 -0.1%
9,483 -92.64 -1.0%
720 5.10 0.7%
6,390 4.96 0.1%
2,473 -0.38 0.0%
YTD
9.4%
4.9%
9.1%
18.7%
10.5%
Tom's Targets    Overview: 07/14/2017
21,850 or 21,000 by 08/01/2017
9,950 or 9,400 by 08/01/2017
725 or 685 by 08/01/2017
6,450 or 6,175 by 08/01/2017
2,525 or 2,400 by 08/01/2017

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July 2017 Headlines


Archives


Friday 7/21/17. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 16 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 601 stocks searched, or 2.7%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

I found 1 pipe bottom chart patterns, which is neutral. High numbers of pipe bottoms can signal a bullish move (I see many of them just before a bear market ends or during a bear market rally. Often it means the first bottom of a double bottom has formed. Thus, expect a move down to the second bottom).

Excluding ETFs, there were 10 bullish chart patterns this week and 4 bearish ones with any remaining (3) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
ACIWRectangle top      05/04/201707/19/2017IT Services
ALKSTriangle, symmetrical      06/09/201707/20/2017Drug
ADSDouble Top, Eve and Eve      06/27/201707/17/2017Information Services
AIGRoof, inverted      05/31/201707/20/2017Insurance (Prop/Casualty)
AXETriangle, ascending      05/16/201707/20/2017Electronics
CTSTriangle, ascending      03/17/201707/20/2017Electronics
CMIRising wedge      05/10/201707/20/2017Machinery
FDSDouble Bottom, Adam and Adam      07/06/201707/18/2017Information Services
FEYERectangle top      05/15/201707/18/2017Computer Software and Svcs
KBALTriangle, symmetrical      07/06/201707/20/2017Furn/Home Furnishings
NCSRectangle top      05/01/201707/20/2017Building Materials
NFXDouble Bottom, Adam and Adam      07/07/201707/18/2017Natural Gas (Diversified)
OLNRising wedge      06/20/201707/20/2017Chemical (Basic)
PICOTriangle, symmetrical      05/31/201707/20/2017Diversified Co.
RDCPipe bottom      07/03/201707/10/2017Oilfield Svcs/Equipment
TFXRising wedge      06/02/201707/20/2017Diversified Co.
XLNXRectangle top      05/11/201707/20/2017Semiconductor Cap Equip.

 

Weekly screen for chart patterns ending between 07/13/2017 and 07/20/2017. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
ACI Worldwide (ACIW)
Industry: IT Services
Industry RS rank: 23 out of 56
Stock RS rank: 60 out of 593
7/20/17 close: $24.11
1 Month avg volatility: $0.59. Volatility stop (for upward breakout): $22.70 or 5.9% below the close.
Change YTD: 32.84%
Volume: 199,300 shares. 3 month avg: 489,235 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Rectangle top continuation pattern from 05/04/2017 to 07/19/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

Top

Alkermes (ALKS)
Industry: Drug
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 17 out of 56
Stock RS rank: 373 out of 593
7/20/17 close: $57.53
1 Month avg volatility: $1.51. Volatility stop (for upward breakout): $54.25 or 5.7% below the close.
Change YTD: 3.51%
Volume: 660,800 shares. 3 month avg: 842,532 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 06/09/2017 to 07/20/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

Top

Alliance Data Systems Corp (ADS)
Industry: Information Services
Industry RS rank: 18 out of 56
Stock RS rank: 374 out of 593
7/20/17 close: $238.62
1 Month avg volatility: $4.71. Volatility stop (for downward breakout): $261.86 or 9.7% above the close.
Change YTD: 4.43%
Volume: 2,094,400 shares. 3 month avg: 674,938 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Double Top, Eve and Eve reversal pattern from 06/27/2017 to 07/17/2017
Breakout is downward 100% of the time.
Average decline: 18%.
Break-even failure rate: 11%.
Pullbacks occur 59% of the time.
Price hits measure rule target 73% of the time.

Top

American International Group (AIG)
Industry: Insurance (Prop/Casualty)
Industry RS rank: 21 out of 56
Stock RS rank: 439 out of 593
7/20/17 close: $64.23
1 Month avg volatility: $0.74. Volatility stop (for downward breakout): $65.83 or 2.5% above the close.
Change YTD: -1.65%
Volume: 3,390,100 shares. 3 month avg: 6,270,166 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Roof, inverted reversal pattern from 05/31/2017 to 07/20/2017
Breakout is downward 50% of the time.
Average decline: 17%.
Break-even failure rate: 10%.
Pullbacks occur 56% of the time.
Price hits measure rule target 73% of the time.

Top

Anixter International Inc (AXE)
Industry: Electronics
Industry RS rank: 9 out of 56
Stock RS rank: 416 out of 593
7/20/17 close: $79.30
1 Month avg volatility: $1.96. Volatility stop (for upward breakout): $74.44 or 6.1% below the close.
Change YTD: -2.16%
Volume: 81,100 shares. 3 month avg: 142,245 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, ascending reversal pattern from 05/16/2017 to 07/20/2017
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

Top

CTS Corp (CTS)
Industry: Electronics
Industry RS rank: 9 out of 56
Stock RS rank: 358 out of 593
7/20/17 close: $22.55
1 Month avg volatility: $0.62. Volatility stop (for upward breakout): $21.01 or 6.8% below the close.
Change YTD: 0.67%
Volume: 48,400 shares. 3 month avg: 72,742 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, ascending reversal pattern from 03/17/2017 to 07/20/2017
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

Top

Cummins Inc. (CMI)
Industry: Machinery
Industry RS rank: 19 out of 56
Stock RS rank: 158 out of 593
7/20/17 close: $164.43
1 Month avg volatility: $2.24. Volatility stop (for downward breakout): $170.08 or 3.4% above the close.
Change YTD: 20.31%
Volume: 1,329,700 shares. 3 month avg: 1,394,931 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rising wedge reversal pattern from 05/10/2017 to 07/20/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

Top

FactSet Research Systems Inc (FDS)
Industry: Information Services
Industry RS rank: 18 out of 56
Stock RS rank: 441 out of 593
7/20/17 close: $165.57
1 Month avg volatility: $2.78. Volatility stop (for upward breakout): $157.97 or 4.6% below the close.
Change YTD: 1.31%
Volume: 201,900 shares. 3 month avg: 307,512 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Double Bottom, Adam and Adam reversal pattern from 07/06/2017 to 07/18/2017
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 5%.
Throwbacks occur 64% of the time.
Price hits measure rule target 66% of the time.

Top

FireEye Inc (FEYE)
Industry: Computer Software and Svcs
Industry RS rank: 8 out of 56
Stock RS rank: 111 out of 593
7/20/17 close: $15.86
1 Month avg volatility: $0.44. Volatility stop (for upward breakout): $14.67 or 7.5% below the close.
Change YTD: 33.28%
Volume: 6,241,200 shares. 3 month avg: 6,297,980 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Monday.
 
Chart pattern: Rectangle top continuation pattern from 05/15/2017 to 07/18/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

Top

Kimball International, Inc. (KBAL)
Industry: Furn/Home Furnishings
Industry RS rank: 46 out of 56
Stock RS rank: 402 out of 593
7/20/17 close: $16.89
1 Month avg volatility: $0.42. Volatility stop (for upward breakout): $16.00 or 5.2% below the close.
Change YTD: -3.82%
Volume: 47,800 shares. 3 month avg: 132,885 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 07/06/2017 to 07/20/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

Top

NCI Building Systems Inc. (NCS)
Industry: Building Materials
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 36 out of 56
Stock RS rank: 274 out of 593
7/20/17 close: $17.90
1 Month avg volatility: $0.39. Volatility stop (for upward breakout): $16.88 or 5.7% below the close.
Change YTD: 14.38%
Volume: 389,900 shares. 3 month avg: 391,900 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Rectangle top continuation pattern from 05/01/2017 to 07/20/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

Top

Newfield Exploration Company (NFX)
Industry: Natural Gas (Diversified)
Industry RS rank: 53 out of 56
Stock RS rank: 572 out of 593
7/20/17 close: $26.80
1 Month avg volatility: $1.07. Volatility stop (for upward breakout): $24.62 or 8.1% below the close.
Change YTD: -33.83%
Volume: 4,726,200 shares. 3 month avg: 3,209,706 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Double Bottom, Adam and Adam reversal pattern from 07/07/2017 to 07/18/2017
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 5%.
Throwbacks occur 64% of the time.
Price hits measure rule target 66% of the time.

Top

Olin Corp. (OLN)
Industry: Chemical (Basic)
Industry RS rank: 25 out of 56
Stock RS rank: 171 out of 593
7/20/17 close: $30.87
1 Month avg volatility: $0.77. Volatility stop (for downward breakout): $32.88 or 6.5% above the close.
Change YTD: 20.54%
Volume: 1,159,700 shares. 3 month avg: 2,343,143 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Rising wedge reversal pattern from 06/20/2017 to 07/20/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

Top

PICO Holdings (PICO)
Industry: Diversified Co.
Industry RS rank: 12 out of 56
Stock RS rank: 199 out of 593
7/20/17 close: $16.85
1 Month avg volatility: $0.43. Volatility stop (for upward breakout): $15.85 or 6.0% below the close.
Change YTD: 11.22%
Volume: 85,900 shares. 3 month avg: 94,880 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 05/31/2017 to 07/20/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

Top

Rowan Companies (RDC)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 56 out of 56
Stock RS rank: 580 out of 593
7/20/17 close: $11.38
1 Month avg volatility: $0.57. Volatility stop (for upward breakout): $10.15 or 10.8% below the close.
Change YTD: -39.76%
Volume: 3,844,700 shares. 3 month avg: 3,902,995 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Pipe bottom reversal pattern from 07/03/2017 to 07/10/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

Top

Teleflex Inc (TFX)
Industry: Diversified Co.
Industry RS rank: 12 out of 56
Stock RS rank: 66 out of 593
7/20/17 close: $212.57
1 Month avg volatility: $3.20. Volatility stop (for downward breakout): $219.80 or 3.4% above the close.
Change YTD: 31.91%
Volume: 83,800 shares. 3 month avg: 262,334 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Rising wedge reversal pattern from 06/02/2017 to 07/20/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

Top

Xilinx Inc (XLNX)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 219 out of 593
7/20/17 close: $65.81
1 Month avg volatility: $1.24. Volatility stop (for upward breakout): $62.31 or 5.3% below the close.
Change YTD: 9.01%
Volume: 2,890,700 shares. 3 month avg: 3,428,209 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Rectangle top continuation pattern from 05/11/2017 to 07/20/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

Top


Thursday 7/20/17. Intraday Market Direction: Nasdaq

The index climbed by 0.6% or 40.73 points. Since 02/05/1971 the index made 475 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 295 occasions.
     Average loss was -0.7% on 180 occasions.
Expect the index to close higher 62.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 133/231 or 57.6% of the time.
     The prediction of the index closing lower has been right 42/82 or 51.2% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale.

Not much of interest in this figure. The index is just coasting to a new high.

I drew two lines, in red, touching the peaks and valleys. The lines are roughly parallel, forming a channel.

The theory with channels is they will continue to trend...until they don't. Often you'll see price bounce from one side of the channel to the other. Then something will happen and price will drop out of the channel. It'll drop, consolidate, and sometimes resume the upward move again, forming another channel. Sometimes, though, price moves higher at a slower velocity.

Long-term channels are one of the things I have on my list to study, to see how price behaves after a channel ends. Until then, happy channel surfing.

$ $ $

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

© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  6,023.12    
 Weekly S2  6,102.95  79.83   
 Monthly S1  6,204.08  101.13   
 Weekly S1  6,243.99  39.91   
 Monthly Pivot  6,262.92  18.93   
 Weekly Pivot  6,282.88  19.96   
 Daily S2  6,352.78  69.90   
 Low  6,362.19  9.41   
 Open  6,363.24  1.05   Yes! The Open is close to the Low.
 Daily S1  6,368.91  5.67   
 61.8% Down from Intraday High  6,371.95  3.04   
 50% Down from Intraday High  6,374.96  3.01   
 38.2% Down from Intraday High  6,377.97  3.01   
 Daily Pivot  6,378.32  0.35   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  6,385.04  6.72   
 High  6,387.73  2.69   
 Daily R1  6,394.45  6.72   
 Daily R2  6,403.86  9.41   
 Weekly R1  6,423.92  20.06   
 Monthly R1  6,443.88  19.96   
 Weekly R2  6,462.81  18.93   
 Monthly R2  6,502.72  39.91   

Wednesday 7/19/17. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

The indicator turned bullish again, as the green vertical bar on the far right of the chart, shows.

Notice, though, how the blue indicator line (bottom of chart) has rounded over and is heading lower. That spells weakness in the markets, I think.

You can see this on the chart of the other indices, where they have reached the level of a prior peak and stalled. They look about to turn lower.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Monday, 23% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 25%.
The fewest was 14% on 12/09/2016.
And the most was 36% on 11/03/2016.
Shown as a blue line on the above chart...
The 503 stocks in my database are down an average of 12% from their yearly high.
A week ago, the average was 14%.
The peak was 9% on 12/09/2016.
And the bottom was 18% on 11/03/2016.

Both lines this week are substantially higher than they were last week. By substantially, I mean a few percentage points higher.

A close look at the charts shows both the blue and red lines moved up and then went flat. That flatness, for lack of a better word, could mean nothing at all or it could mean trouble.

We'll have to wait and see.

-- Thomas Bulkowski

Top


Tuesday 7/18/17. Intraday Market Direction: Dow

The index dropped by 0.0% or -8.02 points. Since 10/01/1928 the index made 1266 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 672 occasions.
     Average loss was -0.6% on 594 occasions.
Expect the index to close higher 53.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 140/239 or 58.6% of the time.
     The prediction of the index closing lower has been right 32/64 or 50.0% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Dow industrials on the 5 minute scale.

$ $ $

I show a picture of the Dow industrials on the 5-minute scale.

A double bottom appears at AB and confirms as a valid pattern when the index closes above line C.

The height of the pattern (C to the lower bottom, B) added to the breakout (C) gives a target. The index reached that target on Friday. It made for a good swing trade.

I drew a green trendline (E) beneath the recent bottoms to illustrate the measure rule for trendlines.

The tallest distance from a recent high (D) to the trendline (E), directly below the peak, gives a height. Subtract the height from the price at which the index crosses the trendline (F) and you have a target. I show the approximate target as the bottom of line G. It suggests the index will drop in the coming day(s).

$ $ $

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

© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  21,003.75    
 Weekly S2  21,127.95  124.20   
 Monthly S1  21,316.74  188.78   
 Weekly S1  21,378.84  62.10   
 Monthly Pivot  21,499.13  120.30   
 Weekly Pivot  21,530.18  31.05   
 Daily S2  21,592.25  62.06   
 Daily S1  21,610.98  18.74   
 Low  21,617.66  6.68   
 Close  21,629.72  12.06   
 Open  21,633.97  4.25   Yes! The Open is close to the Close.
 61.8% Down from Intraday High  21,634.53  0.55   Yes! The 61.8% Down from Intraday High is close to the Open.
 Daily Pivot  21,636.40  1.87   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  21,639.73  3.34   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  21,644.95  5.21   
 Daily R1  21,655.13  10.19   
 High  21,661.81  6.68   
 Daily R2  21,680.55  18.74   
 Weekly R1  21,781.07  100.52   
 Monthly R1  21,812.12  31.05   
 Weekly R2  21,932.41  120.30   
 Monthly R2  21,994.51  62.10   

Monday 7/17/17. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show the Dow industrials on the daily chart.

A double bottom appears at AB. This confirms as a valid chart pattern when the index closes above the red line (C), a line marking the highest peak between the two bottoms.

The index threw back to D before recovering. That's typical but it usually occurs quickly (within a week).

Since then, the index has climbed in a robust move higher initially before stalling for the last month.

The index appears to be headed higher now, and the other indices are showing strength as well. So I expect continued strength over the next week.

 

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A Brief Look Back

Picture of a flower from my garden.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Down 5.82 points.
Tuesday: Up 0.55 points.
Wednesday: Up 123.07 points.
Thursday: Up 20.95 points.
Friday: Up 84.65 points.

For the Week...

The Dow industrials were up 223.4 points or 1.0%.
The Nasdaq composite was up 159.39 points or 2.6%.
The S&P 500 index was up 34.087 points or 1.4%.

Year to Date...

Dow Industrials
     0.2% down from the high of 21,681.53 on 07/14/2017.
     10.0% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     0.5% down from the high of 6,341.70 on 06/09/2017.
     16.9% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     0.2% down from the high of 2,463.54 on 07/14/2017.
     9.5% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

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

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Swing and Position Traders: Chart Pattern Indicator

As of 07/14/2017, the CPI had:

3 bearish patterns,
36 bullish patterns,
440 patterns waiting for breakout.
The CPI signal is 92.3%, 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  21,454  21,546  21,614  21,706  21,773 
Weekly  21,131  21,384  21,533  21,786  21,935 
Monthly  21,006  21,322  21,502  21,817  21,997 
S&P500 (^GSPC): Daily  2,440  2,449  2,457  2,466  2,473 
Weekly  2,394  2,427  2,445  2,478  2,496 
Monthly  2,385  2,422  2,443  2,480  2,501 
Nasdaq (^IXIC): Daily  6,261  6,287  6,304  6,330  6,347 
Weekly  6,079  6,196  6,259  6,376  6,439 
Monthly  5,999  6,156  6,239  6,396  6,479 
  • 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 31.3%   The trend may continue. 
 4 months up 21.5%   Expect a reversal soon. 
 S & P 500 (^GSPC) 2 weeks up 31.3%   The trend may continue. 
 4 months up 28.3%   The trend may continue. 
 Nasdaq composite (^IXIC) 2 weeks up 33.6%   The trend may continue. 
 1 month up 46.3%   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.

Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
15Double Top, Adam and Adam
11Triangle, symmetrical
8Pipe bottom
5Rising wedge
3Broadening top
3Pipe top
3Triangle, ascending
3Double Bottom, Adam and Adam
2Double Top, Adam and Eve
2Triple 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. Semiconductor Cap Equip.1. Medical Supplies
2. Medical Supplies2. Medical Services
3. Semiconductor3. Semiconductor Cap Equip.
4. Homebuilding4. Precision Instrument
5. Precision Instrument5. Homebuilding
50. Food Processing50. Food Processing
51. Apparel51. Apparel
52. Petroleum (Integrated)52. Retail (Special Lines)
53. Natural Gas (Diversified)53. Petroleum (Integrated)
54. Short ETFs54. Furn/Home Furnishings
55. Retail (Special Lines)55. Natural Gas (Diversified)
56. Petroleum (Producing)56. Petroleum (Producing)
57. Oilfield Svcs/Equipment57. Oilfield Svcs/Equipment

-- Thomas Bulkowski

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Friday 7/14/17. New Patternz Available

I released a new version of Patternz, my free pattern recognition program.

This version is much easier to use when updating quotes. You can switch from one quote provider to another without worrying about the file format.

However, make sure you use the 'Get historical quotes' option to replace all of your data files the first time you use this version. Doing so replaces the quote files so that they are written to disk in the correct format.

As always, let me know if you find any bugs.

-- Thomas Bulkowski


Friday 7/14/17. Pattern Trading Setups for the Weekend.

Go to Table.

You can find setups based on a Fibonacci retrace by clicking on the link.

Click the link for a list of symbols from the table.

The following patterns were found manually, so the results may differ from those found using Patternz.

There were 17 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 601 stocks searched, or 2.8%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

I found 5 pipe bottom chart patterns, which is neutral. High numbers of pipe bottoms can signal a bullish move (I see many of them just before a bear market ends or during a bear market rally. Often it means the first bottom of a double bottom has formed. Thus, expect a move down to the second bottom).

Excluding ETFs, there were 12 bullish chart patterns this week and 7 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
ANFDead-cat bounce      07/10/201707/10/2017Apparel
AEISPipe bottom      06/26/201707/03/2017Semiconductor
AEOPipe top      06/26/201707/03/2017Apparel
AMATPipe bottom      06/26/201707/03/2017Semiconductor Cap Equip.
ASNATriangle, symmetrical      05/31/201707/12/2017Apparel
CALMPipe top      06/26/201707/03/2017Food Processing
COTYTriangle, symmetrical      05/10/201707/07/2017Toiletries/Cosmetics
CMIRising wedge      05/10/201707/13/2017Machinery
FEYERectangle top      05/15/201707/13/2017Computer Software and Svcs
FDPTriangle, symmetrical      06/13/201707/11/2017Food Processing
GSOLFalling wedge      05/31/201707/13/2017Advertising
HLITTriangle, descending      06/08/201707/13/2017Telecom. Equipment
KLICPipe bottom      06/26/201707/03/2017Semiconductor Cap Equip.
LRCXPipe bottom      06/26/201707/03/2017Semiconductor Cap Equip.
LXUTriangle, ascending      04/28/201707/13/2017Building Materials
NWLDiamond top      05/25/201707/13/2017Household Products
PESDouble Bottom, Adam and Adam      06/23/201707/10/2017Oilfield Svcs/Equipment
SEEBroadening top      06/14/201707/12/2017Packaging and Container
TERPipe bottom      06/26/201707/03/2017Semiconductor Cap Equip.
XLNXRectangle top      05/11/201707/13/2017Semiconductor Cap Equip.
XLRising wedge      06/01/201707/13/2017Insurance (Diversified)
EWWTriangle, symmetrical      06/16/201707/07/2017Investment Co. (Foreign)

 

Weekly screen for chart patterns ending between 07/06/2017 and 07/13/2017. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Abercrombie and Fitch Co. (ANF)
Industry: Apparel
Industry RS rank: 50 out of 56
Stock RS rank: 546 out of 593
7/13/17 close: $9.03
1 Month avg volatility: $0.42. Volatility stop (for downward breakout): $9.95 or 10.2% above the close.
Change YTD: -24.75%
Volume: 6,899,100 shares. 3 month avg: 4,031,183 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Dead-cat bounce continuation pattern from 07/10/2017 to 07/10/2017
Breakout is downward 67% of the time.
Average decline: 18%.

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Advanced Energy (AEIS)
Industry: Semiconductor
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 5 out of 56
Stock RS rank: 94 out of 593
7/13/17 close: $70.64
1 Month avg volatility: $2.47. Volatility stop (for upward breakout): $65.05 or 7.9% below the close.
Change YTD: 29.02%
Volume: 313,900 shares. 3 month avg: 483,022 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe bottom reversal pattern from 06/26/2017 to 07/03/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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American Eagle Outfitters Inc. (AEO)
Industry: Apparel
Industry RS rank: 50 out of 56
Stock RS rank: 539 out of 593
7/13/17 close: $11.76
1 Month avg volatility: $0.34. Volatility stop (for downward breakout): $12.50 or 6.3% above the close.
Change YTD: -22.48%
Volume: 4,018,700 shares. 3 month avg: 4,981,874 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe top reversal pattern from 06/26/2017 to 07/03/2017
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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Applied Materials (AMAT)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 23 out of 593
7/13/17 close: $45.30
1 Month avg volatility: $1.14. Volatility stop (for upward breakout): $42.72 or 5.7% below the close.
Change YTD: 40.38%
Volume: 9,028,300 shares. 3 month avg: 10,198,962 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe bottom reversal pattern from 06/26/2017 to 07/03/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Ascena Retail Group (ASNA)
Industry: Apparel
Industry RS rank: 50 out of 56
Stock RS rank: 589 out of 593
7/13/17 close: $2.26
1 Month avg volatility: $0.16. Volatility stop (for upward breakout): $1.73 or 23.4% below the close.
Change YTD: -63.49%
Volume: 2,591,400 shares. 3 month avg: 3,825,748 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 05/31/2017 to 07/12/2017
WARNING: A dead-cat bounce occurred on 05/18/2017. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 08/17/2017 and a 38% chance by 11/16/2017.
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Cal-Maine Foods Inc (CALM)
Industry: Food Processing
Industry RS rank: 49 out of 56
Stock RS rank: 524 out of 593
7/13/17 close: $36.60
1 Month avg volatility: $0.96. Volatility stop (for downward breakout): $38.61 or 5.5% above the close.
Change YTD: -17.16%
Volume: 417,100 shares. 3 month avg: 351,688 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pipe top reversal pattern from 06/26/2017 to 07/03/2017
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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Coty (COTY)
Industry: Toiletries/Cosmetics
Industry RS rank: 35 out of 56
Stock RS rank: 410 out of 593
7/13/17 close: $18.26
1 Month avg volatility: $0.35. Volatility stop (for upward breakout): $17.38 or 4.8% below the close.
Change YTD: -0.27%
Volume: 2,135,500 shares. 3 month avg: 4,676,191 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 05/10/2017 to 07/07/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Cummins Inc. (CMI)
Industry: Machinery
Industry RS rank: 21 out of 56
Stock RS rank: 139 out of 593
7/13/17 close: $165.17
1 Month avg volatility: $2.42. Volatility stop (for downward breakout): $171.05 or 3.6% above the close.
Change YTD: 20.85%
Volume: 1,323,100 shares. 3 month avg: 1,416,020 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rising wedge reversal pattern from 05/10/2017 to 07/13/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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FireEye Inc (FEYE)
Industry: Computer Software and Svcs
Industry RS rank: 8 out of 56
Stock RS rank: 115 out of 593
7/13/17 close: $15.50
1 Month avg volatility: $0.40. Volatility stop (for upward breakout): $14.59 or 5.9% below the close.
Change YTD: 30.25%
Volume: 3,670,200 shares. 3 month avg: 6,128,762 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Rectangle top continuation pattern from 05/15/2017 to 07/13/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

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Fresh Del Monte Produce (FDP)
Industry: Food Processing
Industry RS rank: 49 out of 56
Stock RS rank: 519 out of 593
7/13/17 close: $50.98
1 Month avg volatility: $1.00. Volatility stop (for upward breakout): $48.81 or 4.3% below the close.
Change YTD: -15.92%
Volume: 233,400 shares. 3 month avg: 281,574 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 06/13/2017 to 07/11/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Global Sources Ltd (GSOL)
Industry: Advertising
Industry RS rank: 37 out of 56
Stock RS rank: 1 out of 593
7/13/17 close: $19.85
1 Month avg volatility: $0.24. Volatility stop (for upward breakout): $19.21 or 3.2% below the close.
Change YTD: 124.29%
Volume: 37,700 shares. 3 month avg: 52,566 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Falling wedge from 05/31/2017 to 07/13/2017
Breakout is upward 68% of the time.
Average rise: 32%.
Break-even failure rate: 11%.
Throwbacks occur 56% of the time.
Price hits measure rule target 70% of the time.

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Harmonic Inc (HLIT)
Industry: Telecom. Equipment
Industry RS rank: 43 out of 56
Stock RS rank: 384 out of 593
7/13/17 close: $5.15
1 Month avg volatility: $0.20. Volatility stop (for downward breakout): $5.57 or 8.2% above the close.
Change YTD: 3.00%
Volume: 192,100 shares. 3 month avg: 551,605 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, descending reversal pattern from 06/08/2017 to 07/13/2017
Breakout is downward 64% of the time.
Average decline: 16%.
Break-even failure rate: 16%.
Pullbacks occur 54% of the time.
Price hits measure rule target 54% of the time.

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Kulicke and Soffa (KLIC)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 47 out of 593
7/13/17 close: $21.81
1 Month avg volatility: $0.60. Volatility stop (for upward breakout): $20.31 or 6.9% below the close.
Change YTD: 36.74%
Volume: 1,017,200 shares. 3 month avg: 646,363 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pipe bottom reversal pattern from 06/26/2017 to 07/03/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Lam Research Corp (LRCX)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 15 out of 593
7/13/17 close: $154.94
1 Month avg volatility: $3.70. Volatility stop (for upward breakout): $146.75 or 5.3% below the close.
Change YTD: 46.54%
Volume: 1,445,000 shares. 3 month avg: 2,374,454 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe bottom reversal pattern from 06/26/2017 to 07/03/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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LSB Industries Inc (LXU)
Industry: Building Materials
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 36 out of 56
Stock RS rank: 31 out of 593
7/13/17 close: $10.99
1 Month avg volatility: $0.57. Volatility stop (for upward breakout): $9.29 or 15.5% below the close.
Change YTD: 30.52%
Volume: 339,700 shares. 3 month avg: 484,917 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, ascending reversal pattern from 04/28/2017 to 07/13/2017
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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Newell Rubbermaid Inc (NWL)
Industry: Household Products
Industry RS rank: 23 out of 56
Stock RS rank: 179 out of 593
7/13/17 close: $53.45
1 Month avg volatility: $0.79. Volatility stop (for downward breakout): $55.14 or 3.2% above the close.
Change YTD: 19.71%
Volume: 2,615,200 shares. 3 month avg: 3,738,178 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Diamond top reversal pattern from 05/25/2017 to 07/13/2017
Breakout is downward 69% of the time.
Average decline: 21%.
Break-even failure rate: 6%.
Pullbacks occur 57% of the time.
Price hits measure rule target 76% of the time.

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Pioneer Energy Services (PES)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 56 out of 56
Stock RS rank: 590 out of 593
7/13/17 close: $2.40
1 Month avg volatility: $0.18. Volatility stop (for upward breakout): $1.83 or 23.6% below the close.
Change YTD: -64.96%
Volume: 1,101,900 shares. 3 month avg: 1,170,188 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Double Bottom, Adam and Adam reversal pattern from 06/23/2017 to 07/10/2017
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 5%.
Throwbacks occur 64% of the time.
Price hits measure rule target 66% of the time.

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Sealed Air Corp (SEE)
Industry: Packaging and Container
Industry RS rank: 11 out of 56
Stock RS rank: 442 out of 593
7/13/17 close: $45.86
1 Month avg volatility: $0.53. Volatility stop (for downward breakout): $47.28 or 3.1% above the close.
Change YTD: 1.15%
Volume: 1,067,500 shares. 3 month avg: 2,181,797 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening top reversal pattern from 06/14/2017 to 07/12/2017
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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Teradyne Inc. (TER)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 62 out of 593
7/13/17 close: $33.16
1 Month avg volatility: $0.80. Volatility stop (for upward breakout): $31.31 or 5.6% below the close.
Change YTD: 30.55%
Volume: 2,334,500 shares. 3 month avg: 2,742,462 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Pipe bottom reversal pattern from 06/26/2017 to 07/03/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Xilinx Inc (XLNX)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 1 out of 56
Stock RS rank: 155 out of 593
7/13/17 close: $67.85
1 Month avg volatility: $1.15. Volatility stop (for upward breakout): $65.44 or 3.6% below the close.
Change YTD: 12.39%
Volume: 1,654,500 shares. 3 month avg: 3,354,846 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Rectangle top continuation pattern from 05/11/2017 to 07/13/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

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XL Group (XL)
Industry: Insurance (Diversified)
Industry RS rank: 16 out of 56
Stock RS rank: 97 out of 593
7/13/17 close: $45.03
1 Month avg volatility: $0.58. Volatility stop (for downward breakout): $46.53 or 3.3% above the close.
Change YTD: 20.85%
Volume: 1,237,600 shares. 3 month avg: 1,509,491 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Rising wedge reversal pattern from 06/01/2017 to 07/13/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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MSCI Mexico Investable Mkt idx (EWW)
Industry: Investment Co. (Foreign)
Industry RS rank: 18 out of 56
Stock RS rank: 27 out of 593
7/13/17 close: $56.35
1 Month avg volatility: $0.60. Volatility stop (for upward breakout): $54.76 or 2.8% below the close.
Change YTD: 28.16%
Volume: 1,301,800 shares. 3 month avg: 2,436,746 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 06/16/2017 to 07/07/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Thursday 7/13/17. Intraday Market Direction: Nasdaq

The index climbed by 1.1% or 67.87 points. Since 02/05/1971 the index made 172 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 110 occasions.
     Average loss was -1.0% on 62 occasions.
Expect the index to close higher 64.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 132/230 or 57.4% of the time.
     The prediction of the index closing lower has been right 42/82 or 51.2% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale.

A head-and-shoulders bottom appeared on Tuesday and confirmed when the index closed above the green neckline.

If you bought the stock before Wednesday's open, then you stood a good chance of making money. If you bought early at the open on Wednesday, the your profit would have diminished because of the opening gap.

The two red lines show a minor channel or flag, but I like to see a longer pole leading to flags, not one that's invisible because of the gap up.

$ $ $

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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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  5,968.54    
 Weekly S2  6,078.10  109.57   
 Monthly S1  6,114.85  36.75   
 Weekly S1  6,169.64  54.78   
 Weekly Pivot  6,173.49  3.86   
 Daily S2  6,225.72  52.23   
 Monthly Pivot  6,228.28  2.55   Yes! The Monthly Pivot is close to the Daily S2.
 Low  6,236.82  8.54   
 Open  6,238.90  2.08   Yes! The Open is close to the Low.
 Daily S1  6,243.45  4.55   
 61.8% Down from Intraday High  6,247.83  4.38   
 50% Down from Intraday High  6,251.23  3.40   
 Daily Pivot  6,254.54  3.31   
 38.2% Down from Intraday High  6,254.63  0.09   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  6,261.17  6.54   
 Weekly R1  6,265.03  3.86   
 High  6,265.64  0.61   Yes! The High is close to the Weekly R1.
 Weekly R2  6,268.88  3.24   
 Daily R1  6,272.27  3.38   
 Daily R2  6,283.36  11.10   
 Monthly R1  6,374.59  91.23   
 Monthly R2  6,488.02  113.42   

Wednesday 7/12/17. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

Any bullish signal disappeared, leaving behind the vertical red bar on the far right of the chart.

It's bearish, by the way.

Now look at the thin blue indicator line. See how it's been trending lower over the past 6 weeks or so? That's not good news until you look at the similar situation in April 2017.

There, the indicator trended down but then shot up. So maybe that'll happen this time as well.

Look above those two indicator peaks (April, June). Notice how price climbed, rounded over and then climbed again. That scenario might unfold for a third time.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Monday, 25% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 24%.
The fewest was 14% on 12/09/2016.
And the most was 36% on 11/03/2016.
Shown as a blue line on the above chart...
The 504 stocks in my database are down an average of 14% from their yearly high.
A week ago, the average was 13%.
The peak was 9% on 12/09/2016.
And the bottom was 18% on 11/03/2016.

This week, both lines show weakness. That means the stocks I follow in my database have suffered over the last week.

Coupled with the CPI chart, I think that maybe the inverted and ascending scallop move I described above won't happen for a third time. The index might just drop instead.

-- Thomas Bulkowski

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Tuesday 7/11/17. Intraday Market Direction: Dow

The index dropped by 0.0% or -5.82 points. Since 10/01/1928 the index made 1264 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 670 occasions.
     Average loss was -0.6% on 594 occasions.
Expect the index to close higher 53.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 139/238 or 58.4% of the time.
     The prediction of the index closing lower has been right 32/64 or 50.0% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Dow industrials on the 5 minute scale.

$ $ $

I show a picture of the Dow industrials on the 5-minute scale.

A double bottom appears at AB and made for a tasty gain for those finding it.

A weird looking head-and-shoulders bottom appears at LHR. I write "weird" because of the narrow shoulders. But this one makes money, too.

Recently, two inverted and ascending scallops appear drawn in red and green. Notice how the green one is shorter than the red one. That's a sign of a retrace coming. I often see this when they come bunched in threes. The first is tall and wide. The middle one is less so, and the third is small. Then price retraces. It's not a huge decline that follows, though.

Knock on wood.

$ $ $

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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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  20,912.09    
 Monthly S1  21,160.30  248.22   
 Weekly S2  21,168.18  7.88   
 Weekly S1  21,288.35  120.17   
 Daily S2  21,333.39  45.04   
 Monthly Pivot  21,361.53  28.13   
 Daily S1  21,370.96  9.43   
 Low  21,371.11  0.15   Yes! The Low is close to the Daily S1.
 Open  21,381.23  10.12   
 61.8% Down from Intraday High  21,399.87  18.64   
 Close  21,408.52  8.65   
 Daily Pivot  21,408.67  0.15   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  21,408.75  0.08   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  21,417.63  8.88   
 Weekly Pivot  21,425.55  7.92   
 Daily R1  21,446.24  20.69   
 High  21,446.39  0.15   Yes! The High is close to the Daily R1.
 Daily R2  21,483.95  37.56   
 Weekly R1  21,545.72  61.77   
 Monthly R1  21,609.74  64.02   
 Weekly R2  21,682.92  73.18   
 Monthly R2  21,810.97  128.05   

Monday 7/10/17. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

I shows the Dow transports on the daily scale.

The chart shows a big W chart pattern. That pattern appears at BC. It begins at A with a tall left side, bottoms at B, bounces to D and retraces back to C before climbing above D, confirming the chart pattern as a valid one. It throws back to E before resuming the upward rise to F.

Whew! That's a big W.

Because F is above A, it suggests the index will continue rising. But that's not a guarantee. It could form a 2B pattern here which sees the index reverse.

 

 

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A Brief Look Back

Picture of a flower from my garden.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 129.64 points.
Wednesday: Down 1.1 points.
Thursday: Down 158.13 points.
Friday: Up 94.3 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 64.71 points or 0.3%.
The Nasdaq composite was up 12.66 points or 0.2%.
The S&P 500 index was up 1.773 points or 0.1%.

Year to Date...

Dow Industrials
     0.7% down from the high of 21,562.75 on 07/03/2017.
     8.8% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     3.0% down from the high of 6,341.70 on 06/09/2017.
     14.0% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     1.2% down from the high of 2,453.82 on 06/19/2017.
     8.0% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

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  21,322  21,368  21,397  21,443  21,472 
Weekly  21,170  21,292  21,427  21,550  21,685 
Monthly  20,914  21,164  21,363  21,614  21,813 
S&P500 (^GSPC): Daily  2,408  2,417  2,422  2,430  2,435 
Weekly  2,393  2,409  2,424  2,440  2,455 
Monthly  2,380  2,403  2,428  2,451  2,476 
Nasdaq (^IXIC): Daily  6,089  6,121  6,143  6,175  6,197 
Weekly  6,042  6,098  6,137  6,193  6,233 
Monthly  5,933  6,043  6,192  6,303  6,452 
  • 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 43.0%   Expect a random direction. 
 4 months up 21.5%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week up 42.6%   Expect a random direction. 
 4 months up 28.3%   The trend may continue. 
 Nasdaq composite (^IXIC) 1 week up 45.4%   Expect a random direction. 
 1 month up 46.3%   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.

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 6 days.

 Found Chart Pattern Name
16Double Top, Adam and Adam
10Triangle, symmetrical
7Pipe top
6Triangle, ascending
4Head-and-shoulders bottom
4Head-and-shoulders top
3Broadening bottom
3Broadening top, right-angled and ascending
3Triple top
3Rising 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. Medical Supplies1. Medical Supplies
2. Medical Services2. Medical Services
3. Semiconductor Cap Equip.3. Homebuilding
4. Precision Instrument4. Internet
5. Homebuilding5. Precision Instrument
50. Food Processing50. Apparel
51. Apparel51. Retail (Special Lines)
52. Retail (Special Lines)52. Short ETFs
53. Petroleum (Integrated)53. Petroleum (Integrated)
54. Furn/Home Furnishings54. Furn/Home Furnishings
55. Natural Gas (Diversified)55. Natural Gas (Diversified)
56. Petroleum (Producing)56. Oilfield Svcs/Equipment
57. Oilfield Svcs/Equipment57. Petroleum (Producing)

-- Thomas Bulkowski

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Friday 7/7/17. The TXN Trade

Picture of TXN.

It's rare that I discuss a trade but here's one worth talking about: TXN (Texas Instruments).

I show a picture of the stock the day before I bought it.

Highlighted in red is a broadening top chart pattern. I didn't put any significance on it.

In green, I show an ascending triangle. That's the pattern I was trading.

How did I find this stock?

At the time, I was flush with cash but the indices were making new highs. I vary between loving bottom fishing (buy low, sell high) and hating it, loving momentum plays (buy high, sell higher) and hating them. This was a momentum swing trade with an option to hold longer.

I checked the industries relative strength (#3 here), which is a comparison of one industry with another and saw that semiconductors and semiconductor manufacturing equipment makers were in the top 10 and were staying there week after week.

So the market looked good (rising). The industry looked good (rising). What about the company?

I checked the fundamentals by reading analyst reports. TXN pays a dividend and I've found that helps cushion any downturn in the market or stock. I've tested to see whether dividend payments help or hurt a stock (it helps. See my book, Fundamental Analysis and Position TradingFundamental Analysis and Position Trading: Evolution of a Trader book.). Regardless, I like being paid to hold the thing.

Insiders were selling the stock (a bad sign) back in January, April and July 2016 and for large amounts, too.

I could go on about what I found out about the company but it's too long to post here. Let's just say I liked what I found.

Let's turn to the technical side.

At one time, I loved ascending triangles. But it seemed the more I traded them, the worse the trades performed. So I stopped trading them and only do so rarely now.

My book, Chart Patterns: After the BuyChart Patterns: After the Buy describes how they work. Ascending triangles breakout upward 64% of the time. Within 5 days, price peaks and returns to the breakout price in about 10 days, 61% of the time. After that, price resumes the rise 70% of the time. Twenty-eight percent of the time, price will drop after an upward breakout and close below the bottom of the triangle 28% of the time and continue lower. That means they bust an upward breakout. That information is straight from charts in the book.

I scored the triangle and found it had a -3 rating. Scores below 0 suggest a less than stellar performer, one that would be difficult to reach a 95 target. (Indeed, the stock has fallen short, so far).

My After the Buy book says that setup 22.9 occurred 24% of the time (a continued move higher), but setup 22.13 was a sell (a busted pattern).

With the industry hot, I was hoping for a continue move higher, so I followed setup 22.9.

A look at stocks in the industry showed that 11 were up and 2 down during the past month, 13 up over the past 2 months, and 11 up, 2 down over 6 months. Strength, in other words.

The average volume was falling over the prior 3 weeks, which wasn't good, but the stock was outperforming the S&P 500 index (another measure of relative strength).

Earnings were due in 10 days and I never never never buy within 3 weeks of an earnings announcement. Unless I do. As in this case. Go figure.

I knew the risk and felt or hoped the quarter would be strong, that the appearance of a bullish ascending triangle meant it would.

I bought the stock on January 14, 2017 and received a fill at 74.67

TXN Exit

Picture of TXN.

This chart shows that I bought before the breakout from the triangle because I was confident that it would breakout upward.

I also suspected that the stock would drop and I could double my position. Instead, it climbed, so I added more at a higher price (76.19 on 1/24).

I show the two buy points on the chart. I also show the throwback, and where it bottomed, B.

The stock moved up at a good climb but then turned sideways.

I kept an eye on it and saw that the industry relative strength (the industry compared to other industries that I follow), was growing soft. In other words, the ranking was getting worse.

I hadn't planned to sell but I became convinced that the upward move was over. A check of other stocks in the industry showed a mixed bag with one more stock heading lower than higher (like 6 stocks down to 5 up).

I sold the stock on June 23 at 78.92 (A) and collected two dividend payments for a profit of 7% and 5%, respectively. Yuck. Seems like a small profit for all of the work, but it still beats a loss.

The stock has continued falling after I sold.

-- Thomas Bulkowski


Thursday 7/6/17. Intraday Market Direction: Nasdaq

The index climbed by 0.7% or 40.8 points. Since 02/05/1971 the index made 398 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 248 occasions.
     Average loss was -0.8% on 150 occasions.
Expect the index to close higher 62.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 132/229 or 57.6% of the time.
     The prediction of the index closing lower has been right 42/82 or 51.2% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

I show a picture of the Nasdaq composite on the 5-minute scale, but using only 5 days worth of data. I wanted to show a clearer picture of the chart.

On the right, a head-and-shoulders top appears in red. There's just one problem.

It's not a valid head-and-shoulders.

Rather, it's just squiggles on the price chart until the index closes below the neckline. I show that as a horizontal red line at A.

The unconfirmed head-and-shoulders has a left shoulder (LS), head (H), and right shoulder (RS) as one would expect. The neckline joins the two armpits but when it slopes downward, as in this case, I draw a horizontal line to make a potential entry sooner.

If the index drops tomorrow to confirm the head-and-shoulders, the index could drop to the green support line, B.

$ $ $

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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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  5,939.57    
 Weekly S2  5,965.07  25.50   
 Monthly S1  6,045.21  80.15   
 Weekly S1  6,057.96  12.75   
 Daily S2  6,075.10  17.14   
 Low  6,100.42  25.32   
 Daily S1  6,112.98  12.56   
 Open  6,122.06  9.08   
 61.8% Down from Intraday High  6,124.56  2.50   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  6,132.02  7.46   
 Daily Pivot  6,138.30  6.28   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  6,139.48  1.18   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  6,150.86  11.38   
 High  6,163.62  12.76   
 Daily R1  6,176.18  12.56   
 Weekly Pivot  6,180.71  4.53   Yes! The Weekly Pivot is close to the Daily R1.
 Monthly Pivot  6,193.46  12.75   
 Daily R2  6,201.50  8.04   
 Weekly R1  6,273.60  72.10   
 Monthly R1  6,299.10  25.50   
 Weekly R2  6,396.35  97.24   
 Monthly R2  6,447.35  51.00   

Wednesday 7/5/17. A Look At Indicators

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. The indicator is the line chart below a chart of the S&P 500 composite.

The indicator has signaled green but I have my doubts about this signal. I think the market is going lower over the next two weeks.

The indicator thinks otherwise.

Picture of the percent down indicators

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Shown as a red line on the above chart...
On Friday, 24% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 23%.
The fewest was 14% on 12/09/2016.
And the most was 38% on 07/05/2016.
Shown as a blue line on the above chart...
The 504 stocks in my database are down an average of 13% from their yearly high.
A week ago, the average was 13%.
The peak was 9% on 12/09/2016.
And the bottom was 19% on 07/05/2016.

The red line is the only one to move this week versus last week. It became more bearish, supporting my bearish view.

$ $ $

Hope you have/had a happy holiday (for US folks) without blowing up anything important (body parts, mail boxes, and so on).

$ $ $

I received a letter from my health insurance company saying that they will no longer offer individual health insurance coverage in my area. At $11,300 per year, I know they were expensive, but they accepted many of the hospitals and doctors without the need for a referral. I'll have to wait until November to see what other carriers remain. There were two last year, both of which sucked. None of my doctors were covered in their plans and they only accepted the worst hospitals with the highest costs in their networks. And you needed to get a referral. The last time I asked for a referral, the doctor charged me $200. Unbelievable.

-- Thomas Bulkowski

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Monday 7/3/17. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I shows a picture of the Dow utilities on the daily scale.

The index formed a double top at AB. This confirmed as a valid chart pattern when the index closed below the valley between the two peaks.

Notice how the index found support (so far) between the two red lines.

I drew those lines as a support layer formed by peaks and valleys.

The index might not turn here. Rather, it could continue lower, maybe bounce off the bottom red line or even plunge deeper.

Of it could turn here and spurt higher.

It's also possible that it won't go far either up or down. It could line sideways, mirroring the horizontal move that formed the support layer.

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A Brief Look Back

Picture of a flower from my garden.

The following is a brief review of how the markets performed over time. The numbers refer to the close-to-close move in the Dow industrials.

Monday: Up 14.79 points.
Tuesday: Down 98.89 points.
Wednesday: Up 143.95 points.
Thursday: Down 167.58 points.
Friday: Up 62.6 points.

For the Week...

The Dow industrials were down 45.13 points or 0.2%.
The Nasdaq composite was down 124.83 points or 2.0%.
The S&P 500 index was down 14.89 points or 0.6%.

Year to Date...

Dow Industrials
     0.9% down from the high of 21,535.30 on 06/20/2017.
     8.5% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     3.2% down from the high of 6,341.70 on 06/09/2017.
     13.8% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     1.2% down from the high of 2,453.82 on 06/19/2017.
     7.9% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

The chart pattern indicator is bullish 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  21,266  21,308  21,367  21,409  21,468 
Weekly  21,042  21,196  21,351  21,505  21,660 
Monthly  20,683  21,016  21,276  21,609  21,869 
S&P500 (^GSPC): Daily  2,415  2,419  2,426  2,430  2,437 
Weekly  2,382  2,403  2,427  2,447  2,471 
Monthly  2,377  2,400  2,427  2,450  2,477 
Nasdaq (^IXIC): Daily  6,105  6,123  6,147  6,164  6,188 
Weekly  5,962  6,051  6,177  6,267  6,393 
Monthly  5,936  6,038  6,190  6,292  6,444 
  • 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 down 28.6%   The trend may continue. 
 3 months up 30.7%   The trend may continue. 
 S & P 500 (^GSPC) 1 week down 27.4%   The trend may continue. 
 3 months up 37.6%   The trend may continue. 
 Nasdaq composite (^IXIC) 1 week down 27.9%   The trend may continue. 
 1 month down 26.1%   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.

Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
18Double Top, Adam and Adam
16Double Bottom, Adam and Adam
14Triangle, symmetrical
9Head-and-shoulders bottom
9Pipe top
7Triangle, ascending
6Pipe bottom
5Triple bottom
4Head-and-shoulders top
4Broadening 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. Medical Supplies1. Medical Supplies
2. Medical Services2. Medical Services
3. Homebuilding3. Semiconductor Cap Equip.
4. Internet4. Internet
5. Precision Instrument5. Computer Software and Svcs
50. Apparel50. Short ETFs
51. Retail (Special Lines)51. Retail Store
52. Short ETFs52. Petroleum (Integrated)
53. Petroleum (Integrated)53. Retail (Special Lines)
54. Furn/Home Furnishings54. Natural Gas (Diversified)
55. Natural Gas (Diversified)55. Furn/Home Furnishings
56. Oilfield Svcs/Equipment56. Oilfield Svcs/Equipment
57. Petroleum (Producing)57. Petroleum (Producing)

-- Thomas Bulkowski

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