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

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Busted
Patterns
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Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/21/2017
20,548 -30.95 -0.2%
9,134 7.68 0.1%
706 4.81 0.7%
5,911 -6.26 -0.1%
2,349 -7.15 -0.3%
YTD
4.0%
1.0%
7.0%
9.8%
4.9%
Tom's Targets    Overview: 04/17/2017
20,100 or 21,150 by 05/01/2017
8,500 or 9,500 by 05/01/2017
725 or 685 by 05/01/2017
5,950 or 5,650 by 05/01/2017
2,275 or 2,425 by 05/01/2017
Mutt Winners: None YTD

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March 2013 Headlines


Archives


Thursday 3/28/13. Trading Thursday: Nasdaq

The index climbed by 0.1% or 4.04 points. Since 02/05/1971 the index made 599 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 332 occasions.
     Average loss was -0.8% on 267 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 34/59 or 57.6% of the time.
     The prediction of the index closing lower has been right 19/34 or 55.9% 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 highlight two patterns in the chart. The first is a double bottom at AB. This confirms as a valid chart pattern when the index closes above the peak between the two bottoms. That happens at C.

The next pattern I thought was a channel. That's the pattern between the two nearly-parallel red lines. Since the lines diverge, you can call it a descending broadening wedge. Take a position when the index closes outside of the lines.

If you look at the Dow utility average, it's shooting up. I think the index is leading the other indices upward. So, I expect a higher close on Thursday going into the holiday weekend (the markets are closed Friday).

$ $ $

I've taken the first step to exploring the social media by creating a page on Facebook. The link to facebook for my page is on the bottom left of the home page and at the top right of these pages.

If you're looking for a friend, I'm there for you. I want to beat the number of friends my brother has (28). I have three. Sigh.

I thought I'd use facebook to highlight some of the trouble I get into. After I finish posting here, tonight, I'll share with facebook how my eyeball exam went and disclose a related money making idea.

I'll be making my way to linked in soon, probably next week.

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  3,052.24    
 Monthly S1  3,154.38  102.14   
 Weekly S2  3,187.41  33.03   
 Monthly Pivot  3,207.50  20.09   
 Daily S2  3,216.03  8.53   
 Weekly S1  3,221.96  5.94   
 Low  3,227.02  5.06   
 Open  3,230.76  3.74   
 Daily S1  3,236.27  5.51   
 61.8% Down from Intraday High  3,238.95  2.68   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 Weekly Pivot  3,239.98  1.02   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,242.64  2.66   Yes! The 50% Down from Intraday High is close to the Weekly Pivot.
 38.2% Down from Intraday High  3,246.33  3.69   
 Daily Pivot  3,247.27  0.94   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  3,256.52  9.25   
 High  3,258.26  1.74   Yes! The High is close to the Close.
 Daily R1  3,267.51  9.25   
 Weekly R1  3,274.53  7.02   
 Daily R2  3,278.51  3.97   
 Weekly R2  3,292.55  14.04   
 Monthly R1  3,309.64  17.09   
 Monthly R2  3,362.76  53.12   

Tuesday 3/26/13. Trading Tuesday: Dow

The index dropped by -0.4% or -64.28 points. Since 10/01/1928 the index made 855 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 432 occasions.
     Average loss was -0.6% on 423 occasions.
Expect the index to close higher 50.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 43/66 or 65.2% of the time.
     The prediction of the index closing lower has been right 13/22 or 59.1% 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.

Can you tell me what chart pattern appears in the chart?

If you said a head-and-shoulders bottom, you would be wrong. Why? Because the pattern has not confirmed as a valid one. It's just squiggles on a price chart.

Confirmation occurs when the index closes above the neckline. However, since the red neckline slopes upward, I require a close above the right armpit. Steep, up-sloping necklines might prevent confirmation, hence the reliance on the armpit.

I'm looking for the index to close higher tomorrow, based on confirmation of the head-and-shoulders and the breakout from a small knot of consolidation that has taken place over the last two weeks or so.

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  13,496.72    
 Monthly S1  13,972.23  475.52   
 Monthly Pivot  14,259.53  287.29   
 Weekly S2  14,294.16  34.63   
 Daily S2  14,300.08  5.93   Yes! The Daily S2 is close to the Weekly S2.
 Weekly S1  14,370.95  70.87   
 Daily S1  14,373.92  2.96   Yes! The Daily S1 is close to the Weekly S1.
 Low  14,395.00  21.08   
 Close  14,447.75  52.75   
 Weekly Pivot  14,458.89  11.14   Yes! The Weekly Pivot is close to the Close.
 61.8% Down from Intraday High  14,459.46  0.58   Yes! The 61.8% Down from Intraday High is close to the Weekly Pivot.
 Daily Pivot  14,468.83  9.37   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  14,479.38  10.54   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  14,499.29  19.91   
 Open  14,512.03  12.74   Yes! The Open is close to the 38.2% Down from Intraday High.
 Weekly R1  14,535.68  23.65   
 Daily R1  14,542.67  6.98   Yes! The Daily R1 is close to the Weekly R1.
 High  14,563.75  21.08   
 Weekly R2  14,623.62  59.87   
 Daily R2  14,637.58  13.97   Yes! The Daily R2 is close to the Weekly R2.
 Monthly R1  14,735.04  97.46   
 Monthly R2  15,022.34  287.29   

Monday 3/25/13. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

I show the Nasdaq composite on the daily scale.

I chose this index because it shows an interesting pattern: a diamond top.

That pattern begins as a broadening top as the index widens and then turns into a symmetrical triangle as the index narrows.

The borders of this pattern, usually composed of peaks and valleys, is not well defined. That's especially true on the bottom left line. It seems to join the middle of an existing trend instead of touching a peak or valley. Few patterns are perfect and diamonds are often flawed. They tend to lean one way or the other, too.

Anyway, the breakout from a diamond top is downward 69% of the time.

That's a clue to future market direction.

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A Brief Look Back

Picture of a bee from my garden.

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

Monday: Down 62.05 points.
Tuesday: Up 3.76 points.
Wednesday: Up 55.91 points.
Thursday: Down 90.24 points.
Friday: Up 90.54 points.

For the Week...

The Dow industrials were down 2.08 points or 0.0%.
The Nasdaq composite was down 4.07 points or 0.1%.
The S&P 500 index was down 3.81 points or 0.2%.

Year to Date...

Dow Industrials
     0.2% down from the high of 14,546.82 on 03/20/2013.
     10.7% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.5% down from the high of 3,260.62 on 03/15/2013.
     5.5% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.4% down from the high of 1,563.62 on 03/15/2013.
     9.2% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Durable goods orders8:30 TBMeasures orders, shipments of goods with lifespans >3 years.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
New home sales10:00 TC+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.
Gross domestic product8:30 ThBMeasures economic activity; GDP deflator measures inflation.
Chicago purchasing managers index9:45 ThBMonitors regional manufacturing activity.
Personal income & consumption8:30 FC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 FC+Covers durables, non-durables, and services.
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 03/22/2013, the CPI had:

14 bearish patterns,
14 bullish patterns,
278 patterns waiting for breakout.
The CPI signal is 50.0%, which is neutral (between 35% and 65%).

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  14,386  14,449  14,484  14,547  14,583 
Weekly  14,316  14,414  14,480  14,579  14,645 
Monthly  13,518  14,015  14,281  14,778  15,044 
S&P 500 (^GSPC): Daily  1,542  1,549  1,554  1,561  1,565 
Weekly  1,529  1,543  1,552  1,566  1,575 
Monthly  1,457  1,507  1,535  1,585  1,614 
Nasdaq (^IXIC): Daily  3,224  3,235  3,241  3,252  3,258 
Weekly  3,184  3,214  3,236  3,267  3,289 
Monthly  3,048  3,147  3,204  3,302  3,359 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 29.2%  The trend may continue.
 4 months up 17.8%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week down 27.9%  The trend may continue.
 5 months up 18.8%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week down 31.5%  The trend may continue.
 5 months up 12.2%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
31Pipe bottom
16Triangle, symmetrical
10Rectangle top
8Target price
6Broadening top
6Scallop, ascending
5Head-and-shoulders bottom
5Head-and-shoulders top
5Broadening wedge, descending
4Broadening top, right-angled and descending

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

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

 

 

 

 

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

This WeekLast Week
1. Trucking/Transp. Leasing1. Cement and Aggregates
2. Human Resources2. Human Resources
3. Cement and Aggregates3. Trucking/Transp. Leasing
4. Furn/Home Furnishings4. Securities Brokerage
5. Air Transport5. Air Transport
48. Retail Store48. E-Commerce
49. Apparel49. Retail (Special Lines)
50. E-Commerce50. Retail Store
51. Telecom. Equipment51. Telecom. Equipment
52. Metals and Mining (Div.)52. Metals and Mining (Div.)
53. Short ETFs53. Short ETFs
54. Computers and Peripherals54. Computers and Peripherals

-- Thomas Bulkowski

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Saturday 3/23/13. Saturday Supplement

Picture of the my brick work.

I show two images of where you can find the daily list of small chart patterns in the figure on the right.

The blue image is a screen shot from the home page. You will find the link on the far left, middle, of the screen.

On most other pages on this website, you'll find the link in the grid at the upper right of the screen.

After trading each day, I will create a new list of small chart patterns found that day. That list will be posted each evening when I update the site.

Not all stocks in the universe are covered. Only those 700+ securities I follow are included. And I don't scan for every small chart pattern. Why? Because the list gets too long (over 800 entries).

I include the top performing small patterns.

These small pattern may be beneficial to swing traders. They are based on end-of-day data.

-- Thomas Bulkowski


Thursday 3/21/13. Trading Thursday: Nasdaq

The index climbed by 0.8% or 25.09 points. Since 02/05/1971 the index made 348 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 229 occasions.
     Average loss was -0.9% on 119 occasions.
Expect the index to close higher 65.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 34/58 or 58.6% of the time.
     The prediction of the index closing lower has been right 19/34 or 55.9% of the time.

Instead of discussing Wednesday's Nasdaq chart, I want to cover two subjects.

Table 1: Performance of Small Patterns with Upward Breakouts
Pattern Name Average 
Gain
 Percent 
Wins
 Hold 
 Time 
 Rank 
Downside weekly reversals$132.3960%361
Open-close reversal, uptrend$118.6759%312
Key reversal, downtrend$95.2858%283
Wide ranging day downside reversal$92.0458%294
Open-close reversal, downtrend$90.3158%305
Outside Days$90.1658%296
Narrow range 4$89.2058%307
Upside weekly reversals$84.5857%368
Hook reversal, downtrend$81.5057%269
Inside Days$79.8238%2810
Narrow range 7$78.7957%3111
Wide ranging day upside reversal$75.9856%2712
Hook reversal, uptrend$75.9557%2813
3L-R$75.9357%2614
Pivot point reversal, uptrend$73.5657%2915
Key reversal, uptrend$71.1156%3016
Pivot point reversal, downtrend$71.0356%2817
Shark-32$69.5556%2618
Inverted gap2H$65.4456%2919
One day reversal, bottom$61.3556%2720
Gap2H$56.0855%2821
One day reversal, top$46.1254%2922
Closing price reversal, downtrend$0.0952%2823
Pattern Name Average 
Gain
 Percent 
Wins
 Hold 
 Time 
 Rank 

The first topic is to show my findings for small chart patterns, which I list in the table. Visit the above link for the results for downward breakouts if you're interested in seeing how awful the results are. I'm not kidding. All of them lose money.

You can click on the links in the table to take you to the associated pages describing the patterns.

My goal is to add a daily list of these small patterns to this website, similar to Friday's "Patterns for the weekend" post.

In the tests of each pattern, I used a 7% profit target and 7% stop on a $10,000 investment per trade. Included were $20 round trip commissions.

As the table shows, small patterns are not huge winners. The net gain is tiny -- $132 -- compared to $700 (a 7% gain).

The second topic is a shout-out to three websites that catch my interest.

Charles Kirk, of The Kirk Report, has been blogging about the market since September 2003. Throughout the trading week Charles shares his views about the market along with interesting tidbits, charts, stock screens, and links that focus on helping the "little guy."

Many of you know Charles because he referred you to my website. If you don't know him, visit his site and take a look.

The second site is called trading goddess.

Since most of you are guys, you'll wonder what she looks like. When I first came upon her "handle" years ago, I visited her site to check her out. Alas, at that time, she didn't have a picture of herself. During a conference call with my publisher yesterday (Tuesday), we all visited her site and saw a pair of legs at the top and a picture, presumably of her, on the left side, well down the page. Could that be her?

Like Kirk's, her site is well-regarded by the likes of the Wall Street Journal and Barron's. Her site is a collection of contributors and some of the posts are both eclectic and entertaining. Certainly the pictures are...

The last shout-out is to the site of Dan Zanger, called chartpattern.com. Notice the lack of an s on 'chartpattern.' Put the s on and you'll wind up in Kansas. Click your heels three times.

I referenced him in my book, Swing and Day Trading, pictured on the right, but he also advertises on this site from time to time.

According to his website, he is "the world record holder for the largest percent change for a personal portfolio for a 12 month period of time and an 18 month period of time in the history of the stock market." I recall that Active Trader magazine audited his results.

He trades using chart patterns, so he's worth visiting, too.

$ $ $

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  3,051.46    
 Monthly S1  3,152.83  101.36   
 Monthly Pivot  3,206.72  53.90   
 Weekly S2  3,217.54  10.82   
 Daily S2  3,233.94  16.39   
 Weekly S1  3,235.87  1.93   
 Low  3,240.90  5.03   
 Daily S1  3,244.06  3.16   
 61.8% Down from Intraday High  3,247.43  3.36   
 Weekly Pivot  3,248.24  0.81   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,249.45  1.20   Yes! The 50% Down from Intraday High is close to the Weekly Pivot.
 Daily Pivot  3,251.03  1.58   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,251.46  0.44   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Open  3,251.91  0.45   Yes! The Open is close to the 38.2% Down from Intraday High.
 Close  3,254.19  2.28   
 High  3,257.99  3.80   
 Daily R1  3,261.15  3.16   
 Weekly R1  3,266.57  5.41   
 Daily R2  3,268.12  1.55   Yes! The Daily R2 is close to the Weekly R1.
 Weekly R2  3,278.94  10.83   
 Monthly R1  3,308.09  29.14   
 Monthly R2  3,361.98  53.90   

Tuesday 3/19/13. Trading Tuesday: Dow

The index dropped by -0.4% or -62.05 points. Since 10/01/1928 the index made 854 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 431 occasions.
     Average loss was -0.6% on 423 occasions.
Expect the index to close higher 50.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 42/65 or 64.6% of the time.
     The prediction of the index closing lower has been right 13/22 or 59.1% 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.

Pictured are two weird looking chart patterns. The first is an uneven double top. The first top is at B and the matching peak is LS (but the head is really closer, isn't it?). The pattern confirms as a valid chart pattern when the index closes below the blue line at C. Almost immediately, the index reversed and formed the head of a head-and-shoulders top.

The head-and-shoulders confirms as valid when the index closes below the red neckline, at A. By the time that happened, there wasn't much time left in the session. That's typical for many chart patterns I follow intraday. You can swing trade in the morning and trade chart patterns in the early to late afternoon.

The probabilities say that the index will close higher on Tuesday. Based on the daily chart, but I think the index will close lower. I believe we are in a new down trend. The chart pattern indicator has turned bearish today but that could revert back to bullish if the market makes a move higher. The bearish signal can disappear for up to a week, so keep that in mind.

$ $ $

Picture of the my brick work.

This weekend, I worked on repairing my compost pile. I built the wall a few years ago out of leftover bricks and made it a double wall. The outer wall started leaning over and eventually fell over. I didn't cement the bricks in place since I rearrange them when I feel like it.

Anyway, last weekend I fixed the part that fell over (the near horizontal red line part, shown in the picture) and completed the rest of the red lines this weekend. Fun stuff since the weather was in the 70s here.

$ $ $

I have a conference call with my publisher tomorrow afternoon. So, let me take this opportunity to promote my books. I have four new ones out this year. They are pictured on the left. You can pretend they are like Girl Scout cookies and pick up a dozen of each flavor. Makes a wonderful gift. Those that can't read can still chew on the covers and in a pinch, they will help feed the fireplace if you're still suffering the chill of winter.

$ $ $

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  13,503.17    
 Monthly S1  13,977.62  474.44   
 Monthly Pivot  14,258.45  280.84   
 Weekly S2  14,288.92  30.47   
 Daily S2  14,341.91  52.99   
 Weekly S1  14,370.49  28.58   
 Daily S1  14,396.98  26.49   
 Low  14,404.21  7.23   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  14,449.05  44.84   
 Close  14,452.06  3.01   Yes! The Close is close to the 61.8% Down from Intraday High.
 Weekly Pivot  14,454.89  2.83   Yes! The Weekly Pivot is close to the Close.
 Daily Pivot  14,459.29  4.40   Yes! The Daily Pivot is close to the Weekly Pivot.
 50% Down from Intraday High  14,462.90  3.61   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  14,476.75  13.85   
 Open  14,514.11  37.36   
 Daily R1  14,514.36  0.25   Yes! The Daily R1 is close to the Open.
 High  14,521.59  7.23   Yes! The High is close to the Daily R1.
 Weekly R1  14,536.46  14.87   
 Daily R2  14,576.67  40.21   
 Weekly R2  14,620.86  44.19   
 Monthly R1  14,732.90  112.04   
 Monthly R2  15,013.73  280.84   

Monday 3/18/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show the Dow industrials on the daily scale.

When I looked at the chart this evening (Friday), I was struck with the measured move up type pattern. By that, I mean the rise-retrace pattern.

To put it another way, count the Elliott waves. Odd numbered waves are advancing ones. Even numbered ones recede. The chart shows five waves. Does that mean a corrective wave will follow?

No. And that's one of the problems with Elliott wave. There seems to be an exception every time reality disagrees with theory. I'm talking about extensions. The 5-wave structure can become 7 waves or 9 waves or whatever.

What I'm saying is that things are frothy now. We could enter an ABC type correction. That will happen, but when is unclear.

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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 50.22 points.
Tuesday: Up 2.77 points.
Wednesday: Up 5.22 points.
Thursday: Up 83.86 points.
Friday: Down 25.03 points.

For the Week...

The Dow industrials were up 117.04 points or 0.8%.
The Nasdaq composite was up 4.7 points or 0.1%.
The S&P 500 index was up 9.52 points or 0.6%.

Year to Date...

Dow Industrials
     0.2% down from the high of 14,539.29 on 03/14/2013.
     10.8% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.4% down from the high of 3,260.62 on 03/15/2013.
     5.6% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.2% down from the high of 1,563.62 on 03/15/2013.
     9.4% 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
Housing starts8:30 TB-Number of homes beginning construction.
Building permits8:30 TB-Measures building permits for new construction.
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.
Existing home sales10:00 ThCCounts sales of used homes.
Leading indicators10:00 ThD-Summary of already known reports.

Options Expiration

VIX expires on Wednesday.

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Swing and Position Traders: Chart Pattern Indicator

As of 03/15/2013, the CPI had:

24 bearish patterns,
28 bullish patterns,
294 patterns waiting for breakout.
The CPI signal is 53.8%, which is neutral (between 35% and 65%).

The chart pattern indicator is bullish with 1 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  14,439  14,477  14,508  14,545  14,577 
Weekly  14,310  14,412  14,476  14,578  14,642 
Monthly  13,524  14,019  14,279  14,774  15,034 
S&P 500 (^GSPC): Daily  1,552  1,556  1,560  1,564  1,568 
Weekly  1,541  1,551  1,557  1,567  1,573 
Monthly  1,458  1,509  1,536  1,588  1,615 
Nasdaq (^IXIC): Daily  3,233  3,241  3,251  3,259  3,269 
Weekly  3,216  3,232  3,247  3,263  3,277 
Monthly  3,050  3,149  3,205  3,305  3,360 
  • 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 15.6%  Expect a reversal soon.
 4 months up 17.8%  Expect a reversal soon.
 S & P 500 (^GSPC) 3 weeks up 22.1%  Expect a reversal soon.
 5 months up 18.8%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 3 weeks up 22.0%  Expect a reversal soon.
 5 months up 12.2%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
26Pipe bottom
15Triangle, symmetrical
14Rectangle top
7Target price
6Broadening top
6Pipe top
5Head-and-shoulders top
5Broadening wedge, descending
4Broadening top, right-angled and 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, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

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

This WeekLast Week
1. Cement and Aggregates1. Cement and Aggregates
2. Human Resources2. Human Resources
3. Trucking/Transp. Leasing3. Securities Brokerage
4. Securities Brokerage4. Building Materials
5. Air Transport5. Air Transport
48. E-Commerce48. Metals and Mining (Div.)
49. Retail (Special Lines)49. Electric Utility (East)
50. Retail Store50. Telecom. Equipment
51. Telecom. Equipment51. Retail Store
52. Metals and Mining (Div.)52. Retail (Special Lines)
53. Short ETFs53. Short ETFs
54. Computers and Peripherals54. Computers and Peripherals

-- Thomas Bulkowski

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Thursday 3/14/13. Trading Thursday: Nasdaq

The index climbed by 0.1% or 2.8 points. Since 02/05/1971 the index made 598 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 331 occasions.
     Average loss was -0.8% on 267 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 33/57 or 57.9% of the time.
     The prediction of the index closing lower has been right 19/34 or 55.9% 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.

About once every year or even longer, I see a chart such as the one here without any tradable patterns.

I am worried about this up trend. It's going to end and when it does, it could mean a swift and violent plunge. Until then, the probabilities say to expect a higher close on Thursday. Sounds good to me.

# # #

I released a new version of patternz, with a few bug fixes/tweaks. Nothing exciting.

I also released another set of patterns: the key reversal and one-day reversal.

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  3,056.25    
 Weekly S2  3,122.16  65.91   
 Monthly S1  3,150.69  28.53   
 Weekly S1  3,183.64  32.95   
 Monthly Pivot  3,199.79  16.15   
 Weekly Pivot  3,216.27  16.48   
 Daily S2  3,221.57  5.30   
 Low  3,230.62  9.05   
 Daily S1  3,233.34  2.72   
 61.8% Down from Intraday High  3,238.58  5.23   
 50% Down from Intraday High  3,241.03  2.46   
 Daily Pivot  3,242.40  1.36   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Open  3,243.04  0.64   Yes! The Open is close to the Daily Pivot.
 38.2% Down from Intraday High  3,243.49  0.45   Yes! The 38.2% Down from Intraday High is close to the Open.
 Close  3,245.12  1.63   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  3,251.45  6.33   
 Daily R1  3,254.17  2.72   
 Daily R2  3,263.23  9.05   
 Weekly R1  3,277.75  14.52   
 Monthly R1  3,294.23  16.48   
 Weekly R2  3,310.38  16.15   
 Monthly R2  3,343.33  32.95   

Tuesday 3/12/13. Trading Tuesday: Dow

The index climbed by 0.3% or 50.22 points. Since 10/01/1928 the index made 1017 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 563 occasions.
     Average loss was -0.8% on 454 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 41/64 or 64.1% of the time.
     The prediction of the index closing lower has been right 13/22 or 59.1% 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 formed a triple top, ABC that confirmed as a valid chart pattern when the index closed below the red line, at D.

The triple top confirmed too late in the session to be worth the risk of shorting the index. That was good news since the index reversed soon after confirmation. Then it made a strong push higher. If that push continues, the index will close higher tomorrow, just as the probabilities suggest.

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  13,585.66    
 Weekly S2  13,914.14  328.48   
 Monthly S1  14,016.48  102.33   
 Weekly S1  14,180.72  164.24   
 Monthly Pivot  14,214.82  34.11   
 Weekly Pivot  14,296.94  82.12   
 Daily S2  14,348.15  51.21   
 Low  14,373.32  25.17   
 Open  14,397.07  23.75   
 Daily S1  14,397.72  0.65   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  14,401.87  4.15   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  14,410.69  8.82   
 38.2% Down from Intraday High  14,419.51  8.82   
 Daily Pivot  14,422.89  3.38   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  14,447.29  24.40   
 High  14,448.06  0.77   Yes! The High is close to the Close.
 Daily R1  14,472.46  24.40   
 Daily R2  14,497.63  25.17   
 Weekly R1  14,563.52  65.89   
 Monthly R1  14,645.64  82.12   
 Weekly R2  14,679.74  34.11   
 Monthly R2  14,843.98  164.24   

Monday 3/11/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show a picture of the Dow utilities on the daily scale because of the measured move up chart pattern.

The first leg is AB, corrective phase is BC, and the second leg is CD.

Typically, the stock or index will collapse back to the corrective phase BC. The start of that downtrend may be happening as we speak.

In the coming weeks, I expect the index to drop back to the corrective phase and then resume moving up.

But, it could just as easily defy gravity and continue moving higher, too. That's okay since I own utility stocks. If it retraces, I'll buy a new utility.

Top

A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 38.16 points.
Tuesday: Up 125.95 points.
Wednesday: Up 42.47 points.
Thursday: Up 33.25 points.
Friday: Up 67.58 points.

For the Week...

The Dow industrials were up 307.41 points or 2.2%.
The Nasdaq composite was up 74.63 points or 2.4%.
The S&P 500 index was up 32.98 points or 2.2%.

Year to Date...

Dow Industrials
     0.1% down from the high of 14,413.17 on 03/08/2013.
     9.9% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.1% down from the high of 3,248.90 on 03/08/2013.
     5.5% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.1% down from the high of 1,552.48 on 03/08/2013.
     8.8% up from the low of 1,426.19 on 01/02/2013.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
Treasury budget2:00 TDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 WA-Reports total retail sales (not services). Are people spending?
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Business inventories10:00 WC-Reports manufacturing, wholesale, retail inventories.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Producer price index8:30 ThB-Measures wholesale goods cost. An indication of future inflation.
Consumer price index8:30 FB+Inflation report. Measures cost of goods and services.
Industrial production9:15 FB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 FB-Gauges economic activity, hints of inflation.

Options Expiration

The following is courtesy of the Options Industry Council.

OptionDate
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 03/08/2013, the CPI had:

4 bearish patterns,
129 bullish patterns,
404 patterns waiting for breakout.
The CPI signal is 97.0%, which is bullish (>= 65%).

The chart pattern indicator is bearish with 0 of 3 full triangles showing (). Additional triangles are a measure of strength with solid triangles meaning a more reliable signal than half triangles. A red question mark means a neutral measure.

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  14,296  14,347  14,380  14,430  14,464 
Weekly  13,897  14,147  14,280  14,530  14,663 
Monthly  13,569  13,983  14,198  14,612  14,827 
S&P 500 (^GSPC): Daily  1,539  1,545  1,549  1,555  1,558 
Weekly  1,498  1,525  1,539  1,565  1,579 
Monthly  1,462  1,507  1,530  1,574  1,597 
Nasdaq (^IXIC): Daily  3,219  3,232  3,240  3,253  3,261 
Weekly  3,122  3,183  3,216  3,277  3,310 
Monthly  3,056  3,150  3,200  3,294  3,343 
  • 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 20.9%  Expect a reversal soon.
 4 months up 17.8%  Expect a reversal soon.
 S & P 500 (^GSPC) 2 weeks up 30.1%  The trend may continue.
 5 months up 18.8%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 2 weeks up 28.2%  The trend may continue.
 5 months up 12.2%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
27Channel
21Triangle, symmetrical
19Rectangle top
14Pipe bottom
11Head-and-shoulders top
7Broadening top
7Target price
6Triangle, ascending
5Rising wedge
5Broadening wedge, descending

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

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

 

 

 

 

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

This WeekLast Week
1. Cement and Aggregates1. Cement and Aggregates
2. Human Resources2. Securities Brokerage
3. Securities Brokerage3. Human Resources
4. Building Materials4. Building Materials
5. Air Transport5. Machinery
48. Metals and Mining (Div.)48. Telecom. Equipment
49. Electric Utility (East)49. Apparel
50. Telecom. Equipment50. Electric Utility (East)
51. Retail Store51. Retail Store
52. Retail (Special Lines)52. Retail (Special Lines)
53. Short ETFs53. Short ETFs
54. Computers and Peripherals54. Computers and Peripherals

-- Thomas Bulkowski

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Saturday 3/9/13. Saturday Supplement

Picture of my dog.

Be sure to throw your clocks ahead this weekend. I'm not sure what that means unless you live near a time zone boarder.

On Friday, I released the analysis of two new chart patterns, uptrending and downtrending closing price reversals. In terms of performance, they are real stinkers.

On tap this weekend is planting for the summer sun that will fry my vegetables before they have a chance to feed the birds, and starting work on my taxes. What fun.

-- Thomas Bulkowski

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Thursday 3/7/13. Trading Thursday: Nasdaq

The index dropped by -0.1% or -1.76 points. Since 02/05/1971 the index made 505 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 274 occasions.
     Average loss was -1.0% on 231 occasions.
Expect the index to close higher 54.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 32/56 or 57.1% of the time.
     The prediction of the index closing lower has been right 19/34 or 55.9% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

The index forms a head-and-shoulders bottom with LS being the left shoulder, RS being the right one. But there's a problem. Another shoulder marked A better matches the left shoulder.

Thus, this is really a complex head-and-shoulders bottom because it has two heads.

On the daily chart, the index looks tired, but I think it still has room to climb. I agree with the probabilities that say the index will close higher on Thursday.

$ $ $

Picture of my dog.

Took my dog to the vet to have her teeth cleaned yesterday. The normal procedure is to sedate the dog, clean her teeth, and hope she wakes up. But there's a new sheriff in town. They don't sedate the dog. They just clean her teeth in the human fashion, like the dental hygienist does.

Of course, my dog bit the vet. That's probably a wise course since my dentist charges me $50 but these #$%^ blood suckers wanted to charge $170! Wow. What's wrong with this picture? If I were in the room, I'd bite the vet, too. If you want to make big bucks, quit trading and become a vet. Then you can charge outrageous sums and people will pay.

I'll just continue to brush her teeth daily and save the money.

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  3,072.20    
 Weekly S2  3,090.44  18.23   
 Monthly S1  3,147.29  56.85   
 Weekly S1  3,156.40  9.12   
 Weekly Pivot  3,171.33  14.92   
 Monthly Pivot  3,180.44  9.12   
 Daily S2  3,208.72  28.28   
 Daily S1  3,215.55  6.82   
 Low  3,217.67  2.12   
 Close  3,222.37  4.70   
 61.8% Down from Intraday High  3,223.69  1.32   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  3,224.49  0.80   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,225.55  1.06   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  3,227.42  1.86   
 Daily R1  3,231.32  3.90   
 Open  3,233.31  1.99   
 High  3,233.44  0.13   Yes! The High is close to the Open.
 Weekly R1  3,237.29  3.85   
 Daily R2  3,240.26  2.97   
 Weekly R2  3,252.22  11.95   
 Monthly R1  3,255.53  3.31   
 Monthly R2  3,288.68  33.16   

Tuesday 3/5/13. Trading Tuesday: Dow

The index climbed by 0.3% or 38.16 points. Since 10/01/1928 the index made 1015 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 561 occasions.
     Average loss was -0.8% on 454 occasions.
Expect the index to close higher 55.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 40/63 or 63.5% of the time.
     The prediction of the index closing lower has been right 13/22 or 59.1% 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 midway through the session, at A and B. It confirms as a valid pattern when the index closes above C. As tall as the pattern is on the intraday chart, it reached the target setup by the height of the pattern added to C.

For tomorrow's close, I am inclined to agree with a higher close, just as a the probabilities suggest.

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  13,655.19    
 Weekly S2  13,655.19  0.00   Yes! The Weekly S2 is close to the Monthly S2.
 Weekly S1  13,891.50  236.32   
 Monthly S1  13,891.50  0.00   Yes! The Monthly S1 is close to the Weekly S1.
 Daily S2  13,997.63  106.12   
 Weekly Pivot  14,020.33  22.70   
 Monthly Pivot  14,020.33  0.00   Yes! The Monthly Pivot is close to the Weekly Pivot.
 Low  14,030.37  10.04   
 Daily S1  14,062.72  32.35   
 61.8% Down from Intraday High  14,067.75  5.02   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  14,079.29  11.54   
 Open  14,089.66  10.37   
 38.2% Down from Intraday High  14,090.83  1.17   Yes! The 38.2% Down from Intraday High is close to the Open.
 Daily Pivot  14,095.47  4.63   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  14,127.82  32.35   
 High  14,128.21  0.39   Yes! The High is close to the Close.
 Daily R1  14,160.56  32.35   
 Daily R2  14,193.31  32.74   
 Weekly R1  14,256.64  63.34   
 Monthly R1  14,256.64  0.00   Yes! The Monthly R1 is close to the Weekly R1.
 Monthly R2  14,385.47  128.82   
 Weekly R2  14,385.47  0.00   Yes! The Weekly R2 is close to the Monthly R2.

Monday 3/4/13. Market Monday: The Week Ahead

My Prediction

Picture of the chart pattern indicator.

I show a picture of the Dow industrials above the chart pattern indicator (CPI).

I haven't spoken much about the indicator so I thought I'd show you what it says as of Friday's close. At the link, I post this figure and two others related to the CPI, but update the pictures only after the market's close each Friday. Daily updates to the signal are at the top of this page, represented by the green/red arrows on the lower right of the grid.

Vertical red lines are bearish signals. Green lines are bullish. Between them is the neutral zone (oddly, that's not shown on this chart. This chart only shows bull/bear signal changes). The bars can change for up to a week, so don't try to trade with this indicator. However, it can be timely and signals are usually stable after three days.

As the chart shows, the most recent signal was red. That came out after the close on the day shown. Other signals, green ones, have appeared and disappeared since then, but this one remains.

Not shown on this chart is that the indicator is neutral. That suggests we are in the middle of a transition from red to green. Maybe not, but that's the hint it gives.

The actual indicator is the wavy line at the bottom of the chart. Notice that since January (A), it's been heading down even as the market has trended higher. That's bearish divergence. It says the market is going to tumble. When? It doesn't say.

Compare that to line B. It also shows divergence but the drop didn't last long going into January.

I'll let you draw your own conclusions about the future direction of the market.

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Down 216.4 points.
Tuesday: Up 115.96 points.
Wednesday: Up 175.24 points.
Thursday: Down 20.88 points.
Friday: Up 35.17 points.

For the Week...

The Dow industrials were up 89.09 points or 0.6%.
The Nasdaq composite was up 7.92 points or 0.3%.
The S&P 500 index was up 2.6 points or 0.2%.

Year to Date...

Dow Industrials
     0.4% down from the high of 14,149.15 on 02/28/2013.
     7.5% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     1.4% down from the high of 3,213.60 on 02/19/2013.
     3.0% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.8% down from the high of 1,530.94 on 02/19/2013.
     6.5% 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
Factory orders10:00 WD+Durable/non-durable goods orders w/factory inventories.
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.
Trade balance8:30 ThC+Signals balance of exports & imports.
Productivity & costs8:30 ThD+Cost of producing a unit of output.
Consumer credit3:00 ThD-Measures auto, credit card and other debt.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Wholesale inventories10:00 FD-Wholesale sales and inventory statistics.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 03/01/2013, the CPI had:

13 bearish patterns,
21 bullish patterns,
255 patterns waiting for breakout.
The CPI signal is 61.8%, which is neutral (between 35% and 65%).

The chart pattern indicator is bearish 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  13,875  13,982  14,045  14,152  14,214 
Weekly  13,642  13,866  14,008  14,231  14,373 
Monthly  13,642  13,866  14,008  14,231  14,373 
S&P 500 (^GSPC): Daily  1,495  1,506  1,513  1,525  1,532 
Weekly  1,469  1,494  1,510  1,534  1,551 
Monthly  1,465  1,492  1,511  1,538  1,557 
Nasdaq (^IXIC): Daily  3,115  3,142  3,157  3,184  3,199 
Weekly  3,073  3,121  3,154  3,202  3,235 
Monthly  3,055  3,112  3,163  3,220  3,271 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 29.9%  The trend may continue.
 4 months up 17.8%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 43.7%  Expect a random direction.
 5 months up 18.8%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week up 42.6%  Expect a random direction.
 5 months up 12.2%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
28Channel
18Triangle, symmetrical
18Rectangle top
11Head-and-shoulders top
9Rising wedge
9Broadening top
6Triangle, ascending
5Scallop, ascending
5Dead-cat bounce
5Pennant

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

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

 

 

 

 

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

This WeekLast Week
1. Cement and Aggregates1. Securities Brokerage
2. Securities Brokerage2. Cement and Aggregates
3. Human Resources3. Human Resources
4. Building Materials4. Building Materials
5. Machinery5. Precision Instrument
48. Telecom. Equipment48. Metals and Mining (Div.)
49. Apparel49. Telecom. Equipment
50. Electric Utility (East)50. Shoe
51. Retail Store51. Electric Utility (East)
52. Retail (Special Lines)52. Retail (Special Lines)
53. Short ETFs53. Short ETFs
54. Computers and Peripherals54. Computers and Peripherals

-- Thomas Bulkowski

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