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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
Candles Chart
Patterns
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Patterns
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 10/20/2017
23,329 165.59 0.7%
9,972 85.59 0.9%
749 1.35 0.2%
6,629 23.98 0.4%
2,575 13.11 0.5%
YTD
18.0%
10.3%
13.6%
23.1%
15.0%
Tom's Targets    Overview: 10/16/2017
23,700 or 22,700 by 11/01/2017
10,300 or 9,700 by 11/01/2017
775 or 725 by 11/01/2017
6,700 or 6,500 by 11/01/2017
2,625 or 2,525 by 11/01/2017

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March 2016 Headlines


Archives


Thursday 3/31/16. Intraday Market Direction: Nasdaq

The index climbed by 0.5% or 22.67 points. Since 02/05/1971 the index made 516 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 358 occasions.
     Average loss was -0.8% on 158 occasions.
Expect the index to close higher 69.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 103/176 or 58.5% of the time.
     The prediction of the index closing lower has been right 34/72 or 47.2% 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.

The chart pattern shows an ugly double top. I haven't studied these, especially on the intraday charts, but look for a peak such as that at A. A lower peak, B, should follow A. Together, it's a double top with the right top below the left one.

It will confirm as a valid chart pattern when the index closes below the horizontal red line at C. That hasn't happened yet, so all you are looking at is squiggles on the chart.

If the index were to drop and confirm the double top, then it could drop as far as D, the launch price. I don't know what might cause such a drop, but it's possible.

If the index moves above the top of peak A, then I would expect a strong move higher. That would signal a resumption of the DA move.

$ $ $

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

© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,300.32    
 Monthly S1  4,584.81  284.48   
 Monthly Pivot  4,710.20  125.40   
 Weekly S2  4,712.39  2.19   Yes! The Weekly S2 is close to the Monthly Pivot.
 Weekly S1  4,790.84  78.45   
 Weekly Pivot  4,813.22  22.38   
 Daily S2  4,836.14  22.92   
 Daily S1  4,852.71  16.58   
 Low  4,859.35  6.64   
 Close  4,869.29  9.94   
 61.8% Down from Intraday High  4,874.55  5.26   
 Open  4,875.46  0.91   Yes! The Open is close to the 61.8% Down from Intraday High.
 Daily Pivot  4,875.93  0.47   Yes! The Daily Pivot is close to the Open.
 50% Down from Intraday High  4,879.25  3.32   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  4,883.94  4.70   
 Weekly R1  4,891.67  7.73   
 Daily R1  4,892.50  0.83   Yes! The Daily R1 is close to the Weekly R1.
 High  4,899.14  6.64   
 Weekly R2  4,914.05  14.91   
 Daily R2  4,915.72  1.67   Yes! The Daily R2 is close to the Weekly R2.
 Monthly R1  4,994.69  78.97   
 Monthly R2  5,120.08  125.40   

Wednesday 3/30/16. 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.

This chart shows a surprising turn in the indicator. It has jumped upward from the recent low of just a few days ago.

This suggests bullish strength and a continuation of the upward move. Whether that is actually true, we will have to wait and see. The indicator can reverse quickly, too.

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, 46% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 45%.
The fewest was 19% on 04/15/2015.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 540 stocks in my database are down an average of 22% from their yearly high.
A week ago, the average was 21%.
The peak was 12% on 04/15/2015.
And the bottom was 32% on 02/11/2016.

This chart shows that the stocks I follow have weakened slightly from the prior week.

Although the prior chart shows strength, this shows that stocks haven't responded to that strength. You can think of it as the CPI being overly sensitive and this indicator is sluggish in comparison.

If you look at the wide trend, it appears that the downward slope so prevalent since last June has changed to an upward tilt. I show this trend with a green trendline(s). Notice how the two indicators have risen above that line in the last week or so.

Even here, caution is advised. Notice how close to the green lines both indicators are. That could mean the indicators have reached overhead resistance and will reverse soon. I wish I could be clear on a direction, but I thought we'd retrace more than we have. The prior chart shows strength and this one shows weakness from the prior week. Good luck discerning a direction from that.

-- Thomas Bulkowski

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Tuesday 3/29/16. Intraday Market Direction: Dow

The index climbed by 0.1% or 19.66 points. Since 10/01/1928 the index made 1280 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 657 occasions.
     Average loss was -0.6% on 623 occasions.
Expect the index to close higher 51.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 110/185 or 59.5% of the time.
     The prediction of the index closing lower has been right 29/57 or 50.9% 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.

Notice the looping curve at A. It's a chart pattern called an inverted and ascending scallop. I was going to call it a rounded top, but this is a better fit. The starting anchor (where the pattern begins) is lower than in a rounded top.

Look at B now. This is a smaller version of the larger one at A. I've seen them come in three, where each successive one is smaller than the prior. And that leads to a trend reversal.

Usually, though, B forms above A, not inside it like that shown here. I'm not sure if that's significant or not.

If it breaks out upward, then look for another looping curve like B.

A downward break could take the index down 100 to 17,400. Maybe below that, but it should at least pause there.

$ $ $

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

© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  15,633.65    
 Monthly S1  16,584.52  950.87   
 Monthly Pivot  17,116.73  532.21   
 Weekly S2  17,277.85  161.12   
 Weekly S1  17,406.62  128.77   
 Daily S2  17,446.63  40.01   
 Daily S1  17,491.01  44.38   
 Low  17,493.03  2.02   Yes! The Low is close to the Daily S1.
 Open  17,526.08  33.05   
 61.8% Down from Intraday High  17,527.71  1.63   Yes! The 61.8% Down from Intraday High is close to the Open.
 Weekly Pivot  17,527.78  0.07   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 Close  17,535.39  7.61   Yes! The Close is close to the Weekly Pivot.
 Daily Pivot  17,537.41  2.02   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  17,538.42  1.01   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  17,549.13  10.71   
 Daily R1  17,581.79  32.66   
 High  17,583.81  2.02   Yes! The High is close to the Daily R1.
 Daily R2  17,628.19  44.38   
 Weekly R1  17,656.55  28.36   
 Weekly R2  17,777.71  121.16   
 Monthly R1  18,067.60  289.89   
 Monthly R2  18,599.81  532.21   

Monday 3/28/16. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

This is a picture of the best performing index (year to date) out of the five that I follow.

Notice the nice uptrend it has been in since the low in mid December.

To emphasize the trend, I drew two up-sloping channels, shown here in red.

The index is at B, near the top of the channel, moving sideways to down.

Could it drop to A and then resume another move to the top side of the channel? That's a possibility which I show with the green line. The retrace coincides with the chart pattern indicator turning bearish several days ago.

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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 21.57 points.
Tuesday: Down 41.3 points.
Wednesday: Down 79.98 points.
Thursday: Up 13.14 points.
Friday: Holiday or other weird event!

For the Week...

The Dow industrials were down 86.57 points or 0.5%.
The Nasdaq composite was down 22.15 points or 0.5%.
The S&P 500 index was down 13.64 points or 0.7%.

Year to Date...

Dow Industrials
     0.8% down from the high of 17,648.94 on 03/22/2016.
     13.4% up from the low of 15,450.56 on 01/20/2016.
Nasdaq
     3.1% down from the high of 4,926.73 on 01/05/2016.
     13.4% up from the low of 4,209.76 on 02/11/2016.
S&P 500
     1.0% down from the high of 2,056.60 on 03/22/2016.
     12.5% up from the low of 1,810.10 on 02/11/2016.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
Personal consumption expenditures8:30 MC+Covers durables, non-durables, and services.
Personal income & consumption8:30 MC+Measures sources of income to predict future demand.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Chicago purchasing managers index9:45 ThBMonitors regional manufacturing activity.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Construction spending10:00 FDCovers residential/non-residential/public spending on new construction.
Michigan sentiment10:00 FB-Consumer sentiment: Measures strength of consumer spending.
Auto & truck sales2:00 FC-Monthly sales of domestically produced vehicles.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 03/24/2016, the CPI had:

11 bearish patterns,
6 bullish patterns,
426 patterns waiting for breakout.
The CPI signal is 35.3%, which is neutral (between 35% and 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  17,359  17,437  17,477  17,556  17,595 
Weekly  17,271  17,394  17,521  17,643  17,771 
Monthly  15,627  16,571  17,110  18,054  18,593 
S&P500 (^GSPC): Daily  2,018  2,027  2,031  2,040  2,045 
Weekly  2,004  2,020  2,038  2,054  2,072 
Monthly  1,829  1,932  1,995  2,098  2,160 
Nasdaq (^IXIC): Daily  4,722  4,748  4,761  4,786  4,799 
Weekly  4,680  4,727  4,781  4,828  4,882 
Monthly  4,268  4,521  4,678  4,931  5,088 
  • 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 28.3%   The trend may continue. 
 2 months up 37.6%   The trend may continue. 
 S & P 500 (^GSPC) 1 week down 27.2%   The trend may continue. 
 1 month up 53.1%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week down 28.7%   The trend may continue. 
 1 month up 47.2%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Top

Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
21Flag, high and tight
9Dead-cat bounce
8Head-and-shoulders bottom
7Double Bottom, Adam and Adam
6Flag
5Triangle, symmetrical
4Broadening top
3Double Top, Adam and Adam
3Pennant
3Pipe 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. Electric Utility (West)1. Electric Utility (West)
2. Semiconductor Cap Equip.2. Semiconductor Cap Equip.
3. Electric Utility (Central)3. Electric Utility (Central)
4. Electric Utility (East)4. Electric Utility (East)
5. Household Products5. Household Products
50. Information Services50. Information Services
51. Short ETFs51. Short ETFs
52. Homebuilding52. Homebuilding
53. Electronics53. Electronics
54. Shoe54. Shoe
55. Drug55. Drug
56. Biotechnology56. Biotechnology
57. Retail (Special Lines)57. Retail (Special Lines)

-- Thomas Bulkowski

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Thursday 3/24/16. Intraday Market Direction: Nasdaq

The index dropped by -1.1% or -52.8 points. Since 02/05/1971 the index made 156 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.4% on 81 occasions.
     Average loss was -1.4% on 75 occasions.
Expect the index to close higher 51.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 102/175 or 58.3% of the time.
     The prediction of the index closing lower has been right 34/72 or 47.2% 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 trendline, drawn here in red, shows how the index broke below it. That's bad news. Or is it?

The measure rule for trendlines is that the height of the last bump will reflect below the breakout.

The breakout occurs when the index closes below the red trendline.

I show the measure as the vertical cyan bar at A reflected downward at B. Notice that A and B are about the same height. That's how the measure rule is supposed to work.

Now that the index hit the measure rule target, what comes next? The chart pattern indicator flipped to bearish today, suggesting more of a downward move is coming.

I also see that in the stocks I follow. They are rounding over and look poised to fall. So that's my guess for Thursday's close (a lower close).

If I'm wrong, look for the index to climb back to 4825, potentially forming a double top.

$ $ $

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

© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,221.93    
 Monthly S1  4,495.39  273.47   
 Monthly Pivot  4,649.99  154.59   
 Weekly S2  4,669.33  19.34   
 Weekly S1  4,719.09  49.77   
 Daily S2  4,732.35  13.25   
 Daily S1  4,750.60  18.26   
 Weekly Pivot  4,761.84  11.23   
 Low  4,765.38  3.54   Yes! The Low is close to the Weekly Pivot.
 Close  4,768.86  3.48   Yes! The Close is close to the Low.
 Daily Pivot  4,783.64  14.78   
 61.8% Down from Intraday High  4,784.97  1.34   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  4,791.02  6.05   
 38.2% Down from Intraday High  4,797.08  6.05   
 Daily R1  4,801.89  4.82   Yes! The Daily R1 is close to the 38.2% Down from Intraday High.
 Weekly R1  4,811.60  9.71   
 Open  4,813.87  2.27   Yes! The Open is close to the Weekly R1.
 High  4,816.67  2.80   Yes! The High is close to the Open.
 Daily R2  4,834.93  18.26   
 Weekly R2  4,854.35  19.42   
 Monthly R1  4,923.45  69.11   
 Monthly R2  5,078.05  154.59   

Wednesday 3/23/16. 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 chart shows the indicator taking a dive even as the index moves higher. This is bearish divergence and it suggests the market will drop, following the indicator lower.

When that will happen, if it does happen, is unknown.

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, 45% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 48%.
The fewest was 19% on 04/15/2015.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 540 stocks in my database are down an average of 22% from their yearly high.
A week ago, the average was 23%.
The peak was 12% on 04/15/2015.
And the bottom was 32% on 02/11/2016.

With the advance in the markets over the last nearly two months, the majority of stocks that I follow have continued to recover.

Both metrics cited above have improved over the last week.

-- Thomas Bulkowski

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Tuesday 3/22/16. Intraday Market Direction: Dow

The index climbed by 0.1% or 21.57 points. Since 10/01/1928 the index made 1278 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 656 occasions.
     Average loss was -0.6% on 622 occasions.
Expect the index to close higher 51.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 110/184 or 59.8% of the time.
     The prediction of the index closing lower has been right 29/57 or 50.9% 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.

I hope I'm wrong about what I'm going to write because I want my portfolio of stocks to hit their sell targets. I want to take profit on some utility stocks that have doubled or triple in price since I bought them (I'm not kidding). But if not, then I'll just sit collecting a 4-5.5% dividend. That's not a bad return for holding stocks in the best performing index this year (up 14%).

Anyway, let's look at the chart. It shows two right-angled and ascending broadening formations.

The top one at A can be argued that the second bottom touch isn't really flat with the first touch. That's true but it's close enough, I think.

If you can imagine the chart without the red lines, it looks tired, like it's struggling to move higher. If an index can't climb then it's going to tumble. That's a good saying to follow.

Look at pattern B. It shares many of the characteristics of A.

Look at what happened to the index last Tuesday (at C). The index plunged to the bottom of the pattern before rebounding. That could happen tomorrow (Tuesday).

The index could make a dramatic drop. What about if it doesn't?

It could continue higher, moseying higher. It could do both, of course. Touch the bottom red trendline and then fly.

My guess is that the index will drop tomorrow and remain below today's close. It just looks like that's what's going to happen.

Prove me wrong, Mr. Market, so I can sell some of my winners.

$ $ $

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

© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  15,477.42    
 Monthly S1  16,550.65  1,073.22   
 Weekly S2  16,954.70  404.06   
 Monthly Pivot  17,085.61  130.91   
 Weekly S1  17,289.29  203.67   
 Weekly Pivot  17,454.93  165.65   
 Daily S2  17,513.02  58.08   
 Low  17,551.28  38.26   
 Daily S1  17,568.44  17.16   
 61.8% Down from Intraday High  17,587.07  18.63   
 Open  17,589.70  2.63   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  17,598.13  8.43   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  17,606.71  8.58   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  17,609.18  2.47   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  17,623.87  14.69   
 High  17,644.97  21.10   
 Daily R1  17,662.13  17.16   
 Daily R2  17,700.40  38.26   
 Weekly R1  17,789.52  89.12   
 Weekly R2  17,955.16  165.65   
 Monthly R1  18,158.84  203.67   
 Monthly R2  18,693.80  534.97   

Monday 3/21/16. Anatomy of a Trade: HIG.

Picture of the Hartford.

This is a chart of Hartford Financial Services Group (HIG), a stock I own.

Last Monday I discussed a round-trip trade in JC Penney. Today, I am going to show you a trade I made recently that had almost perfect timing.

My notes about the trade consist of just one line because at the time of purchase, I already owned the stock. This trade just added to an existing position.

That means I didn't have to go through researching the company or even going through my checklist. I just decided to buy the stock and did.

On January 22, 2016, I was shopping for stocks. I find it's a lot easier to know when a stock I own is oversold (low) than a stock I don't own.

That was the case with this stock. I felt that the downward move (part of which is shown) was overdone (it peaked at 50.95 in mid August 2015), so I decided to buy at the market open. I bought 500 shares and received a fill at 38.78. That happened at A, just two days after the stock bottomed.

My notes say I was concerned about the timing of the February 4 earnings release. The market reacted to the news the next day (B).

Usually I won't buy a stock within three weeks of an earnings announcement, but I made an exception in this case. Why? I don't know. Clearly with new positions, I won't buy the stock but with existing positions, I'm more willing to ride out an earnings release since I'm familiar with the stock and have more confidence in it.

I still own the stock, but on these shares, I've made $3,675 as of the last close shown on the chart.

-- Thomas Bulkowski


Friday 3/18/16. 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 15 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 644 stocks searched, or 2.3%. 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 5 bullish chart patterns this week and 3 bearish ones with any remaining (7) 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
AMWDTriangle, symmetrical      02/25/201603/16/2016Building Materials
BECNFlag      03/07/201603/16/2016Retail Building Supply
BBBYFlag      03/08/201603/17/2016Retail (Special Lines)
BGPennant      03/07/201603/17/2016Food Processing
CNOTriangle, symmetrical      03/07/201603/15/2016Insurance (Diversified)
CMCOHorn bottom      02/22/201603/07/2016Machinery
EMCPennant      03/02/201603/15/2016Computers and Peripherals
FEYEFlag      03/09/201603/16/2016Computer Software and Svcs
HHSDead-cat bounce      03/14/201603/14/2016Advertising
KBHFlag      03/08/201603/17/2016Homebuilding
LLYHead-and-shoulders top      02/17/201603/11/2016Drug
MOSFlag      03/07/201603/16/2016Chemical (Diversified)
NBRFlag, high and tight      01/20/201603/11/2016Oilfield Svcs/Equipment
SUNETriangle, symmetrical      02/25/201603/17/2016Semiconductor
WMTRising wedge      02/01/201603/15/2016Retail Store
UNGPipe bottom      02/29/201603/07/2016Natural Gas (Diversified)

 

Weekly screen for chart patterns ending between 03/10/2016 and 03/17/2016. 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.
 
American Woodmark Corp (AMWD)
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: 243 out of 636
3/17/16 close: $71.28
1 Month avg volatility: $2.51. Volatility stop (for upward breakout): $63.00 or 11.6% below the close.
Change YTD: -10.88%
Volume: 141,700 shares. 3 month avg: 170,443 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: Triangle, symmetrical continuation pattern from 02/25/2016 to 03/16/2016
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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Beacon Roofing Supply Inc. (BECN)
Industry: Retail Building Supply
Industry RS rank: 21 out of 56
Stock RS rank: 182 out of 636
3/17/16 close: $39.52
1 Month avg volatility: $1.13. Volatility stop (for upward breakout): $36.18 or 8.5% below the close.
Change YTD: -4.03%
Volume: 787,900 shares. 3 month avg: 570,385 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: Flag continuation pattern from 03/07/2016 to 03/16/2016
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Bed Bath and Beyond (BBBY)
Industry: Retail (Special Lines)
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 56 out of 56
Stock RS rank: 526 out of 636
3/17/16 close: $49.33
1 Month avg volatility: $1.40. Volatility stop (for upward breakout): $45.79 or 7.2% below the close.
Change YTD: 2.24%
Volume: 1,615,100 shares. 3 month avg: 2,499,306 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: Flag continuation pattern from 03/08/2016 to 03/17/2016
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Bunge Ltd (BG)
Industry: Food Processing
Industry RS rank: 27 out of 56
Stock RS rank: 544 out of 636
3/17/16 close: $55.59
1 Month avg volatility: $1.68. Volatility stop (for upward breakout): $51.28 or 7.8% below the close.
Change YTD: -18.59%
Volume: 1,057,000 shares. 3 month avg: 1,573,025 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: Pennant continuation pattern from 03/07/2016 to 03/17/2016
WARNING: A dead-cat bounce occurred on 02/11/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 05/12/2016 and a 38% chance by 08/11/2016.
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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CNO Financial Group, Inc (CNO)
Industry: Insurance (Diversified)
Industry RS rank: 30 out of 56
Stock RS rank: 310 out of 636
3/17/16 close: $18.47
1 Month avg volatility: $0.47. Volatility stop (for upward breakout): $17.15 or 7.2% below the close.
Change YTD: -3.25%
Volume: 1,150,100 shares. 3 month avg: 1,707,572 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: Triangle, symmetrical continuation pattern from 03/07/2016 to 03/15/2016
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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Columbus McKinnon (CMCO)
Industry: Machinery
Industry RS rank: 24 out of 56
Stock RS rank: 520 out of 636
3/17/16 close: $15.28
1 Month avg volatility: $0.52. Volatility stop (for upward breakout): $13.94 or 8.8% below the close.
Change YTD: -19.15%
Volume: 75,200 shares. 3 month avg: 105,080 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: Horn bottom reversal pattern from 02/22/2016 to 03/07/2016
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 9%.
Throwbacks occur 29% of the time.
Price hits measure rule target 76% of the time.

Top

EMC Corporation (EMC)
Industry: Computers and Peripherals
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 42 out of 56
Stock RS rank: 203 out of 636
3/17/16 close: $26.45
1 Month avg volatility: $0.33. Volatility stop (for upward breakout): $25.57 or 3.3% below the close.
Change YTD: 3.00%
Volume: 10,469,800 shares. 3 month avg: 13,215,326 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: Pennant continuation pattern from 03/02/2016 to 03/15/2016
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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FireEye Inc (FEYE)
Industry: Computer Software and Svcs
Industry RS rank: 38 out of 56
Stock RS rank: 626 out of 636
3/17/16 close: $17.96
1 Month avg volatility: $0.97. Volatility stop (for upward breakout): $15.35 or 14.5% below the close.
Change YTD: -13.40%
Volume: 3,571,000 shares. 3 month avg: 6,206,103 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Friday.
 
Chart pattern: Flag continuation pattern from 03/09/2016 to 03/16/2016
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

Top

Harte-Hanks Inc (HHS)
Industry: Advertising
Industry RS rank: 6 out of 56
Stock RS rank: 545 out of 636
3/17/16 close: $2.81
1 Month avg volatility: $0.15. Volatility stop (for downward breakout): $3.19 or 13.5% above the close.
Change YTD: -13.27%
Volume: 179,500 shares. 3 month avg: 303,357 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: Dead-cat bounce continuation pattern from 03/14/2016 to 03/14/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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KB Home Corp. (KBH)
Industry: Homebuilding
Industry RS rank: 51 out of 56
Stock RS rank: 412 out of 636
3/17/16 close: $13.54
1 Month avg volatility: $0.43. Volatility stop (for upward breakout): $12.34 or 8.9% below the close.
Change YTD: 9.81%
Volume: 3,071,400 shares. 3 month avg: 4,496,248 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: Flag continuation pattern from 03/08/2016 to 03/17/2016
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Lilly, Eli and Co. (LLY)
Industry: Drug
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 54 out of 56
Stock RS rank: 503 out of 636
3/17/16 close: $69.06
1 Month avg volatility: $1.61. Volatility stop (for downward breakout): $75.56 or 9.4% above the close.
Change YTD: -18.04%
Volume: 15,421,100 shares. 3 month avg: 5,223,960 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Head-and-shoulders top reversal pattern from 02/17/2016 to 03/11/2016
Breakout is downward 100% of the time.
Average decline: 22%.
Break-even failure rate: 4%.
Pullbacks occur 50% of the time.
Price hits measure rule target 55% of the time.

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Mosaic Co (MOS)
Industry: Chemical (Diversified)
Industry RS rank: 15 out of 56
Stock RS rank: 552 out of 636
3/17/16 close: $29.87
1 Month avg volatility: $1.25. Volatility stop (for upward breakout): $26.80 or 10.3% below the close.
Change YTD: 8.26%
Volume: 5,492,000 shares. 3 month avg: 6,486,174 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: Flag continuation pattern from 03/07/2016 to 03/16/2016
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Nabors Industries, Ltd. (NBR)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 40 out of 56
Stock RS rank: 438 out of 636
3/17/16 close: $9.49
1 Month avg volatility: $0.70. Volatility stop (for upward breakout): $7.53 or 20.7% below the close.
Change YTD: 11.52%
Volume: 12,237,000 shares. 3 month avg: 9,248,157 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/11/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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SunEdison (SUNE)
Industry: Semiconductor
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 10 out of 56
Stock RS rank: 636 out of 636
3/17/16 close: $2.08
1 Month avg volatility: $0.29. Volatility stop (for upward breakout): $1.38 or 33.7% below the close.
Change YTD: -59.14%
Volume: 17,593,100 shares. 3 month avg: 46,454,202 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, symmetrical continuation pattern from 02/25/2016 to 03/17/2016
WARNING: A dead-cat bounce occurred on 01/07/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 04/07/2016 and a 38% chance by 07/07/2016.
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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Wal-Mart Stores Inc. (WMT)
Industry: Retail Store
Industry RS rank: 33 out of 56
Stock RS rank: 238 out of 636
3/17/16 close: $67.45
1 Month avg volatility: $1.26. Volatility stop (for downward breakout): $71.45 or 5.9% above the close.
Change YTD: 10.03%
Volume: 11,833,000 shares. 3 month avg: 12,075,511 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: Rising wedge reversal pattern from 02/01/2016 to 03/15/2016
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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United States Natural Gas (UNG)
Industry: Natural Gas (Diversified)
Industry RS rank: 43 out of 56
Stock RS rank: 619 out of 636
3/17/16 close: $6.83
1 Month avg volatility: $0.22. Volatility stop (for upward breakout): $6.04 or 11.6% below the close.
Change YTD: -21.22%
Volume: 13,411,400 shares. 3 month avg: 11,337,891 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: Pipe bottom reversal pattern from 02/29/2016 to 03/07/2016
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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Thursday 3/17/16. Intraday Market Direction: Nasdaq

The index climbed by 0.7% or 35.3 points. Since 02/05/1971 the index made 386 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 241 occasions.
     Average loss was -0.8% on 145 occasions.
Expect the index to close higher 62.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 101/174 or 58.0% of the time.
     The prediction of the index closing lower has been right 34/72 or 47.2% 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 is going on in this picture. I drew the red line connecting bottoms but slicing through the dip last Thursday. The cyan line connects the peaks. Both form an up-sloping channel.

If you believe the index will bounce between the two channel lines, then more of a climb remains until it hits the top of the channel.

If you think the index is rounding over now, showing weakness, then look for it to drop to the red line.

The size and sign of the Dow futures before the stock market opens could tell which line gets touched on Thursday.

$ $ $

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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,035.14    
 Monthly S1  4,399.56  364.41   
 Weekly S2  4,566.12  166.56   
 Monthly Pivot  4,574.17  8.06   
 Weekly S1  4,665.04  90.87   
 Daily S2  4,693.40  28.36   
 Weekly Pivot  4,706.92  13.51   
 Low  4,716.45  9.53   
 Open  4,717.88  1.43   Yes! The Open is close to the Low.
 Daily S1  4,728.69  10.81   
 61.8% Down from Intraday High  4,738.73  10.05   
 50% Down from Intraday High  4,745.62  6.88   
 Daily Pivot  4,751.73  6.12   
 38.2% Down from Intraday High  4,752.50  0.76   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  4,763.97  11.47   
 High  4,774.78  10.81   
 Daily R1  4,787.02  12.24   
 Weekly R1  4,805.84  18.83   
 Daily R2  4,810.06  4.22   Yes! The Daily R2 is close to the Weekly R1.
 Weekly R2  4,847.72  37.65   
 Monthly R1  4,938.59  90.87   
 Monthly R2  5,113.20  174.62   

Wednesday 3/16/16. 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 two red lines are signs of bearish divergence between the indicator and the index.

That suggests the uptrend that has been in place for a month now is ready to reverse.

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, 48% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 48%.
The fewest was 19% on 04/15/2015.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 541 stocks in my database are down an average of 23% from their yearly high.
A week ago, the average was 23%.
The peak was 12% on 04/15/2015.
And the bottom was 32% on 02/11/2016.

The above numbers, compared to a week ago, show that no progress has been made in the past week. If a stock cannot climb, that means weakness and a coming decline.

So both this chart and the prior one mean the market is going to turn. When it'll turn is the question. It could gather strength and resume the upward move. That's happened before but it's rare. So I'm looking for a retrace of the prior upward move.

-- Thomas Bulkowski

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Tuesday 3/15/16. Steps for a HTF Trade

This post is for and Mark, Christina, and especially Morgan Dodd and Beverly O'Keeffe

Several people have asked about the high and tight flag (HTF), because so many of those patterns appeared in Friday's list.

Let's pretend I want to buy a stock showing one. How would I analyze the trade?

First, we have to find a HTF. If you have the right software, it's easy enough to do (I wrote my own. Sorry you can't have it because I'd have to write an instruction manual). Just look for price to double within two months.

Of course, that only finds the flagpole. You have to wait for a flag to develop.

Let's suppose I found a potential HTF in Atwood Oceanics (ATW). What now?

Picture of ATW on the daily scale.

This is a chart of ATW as of Friday's (3/11) close.

The low at A is 4.82 on February 3, and the high at B is 10.79 on March 4. From the low to the high, the climb is (10.79 - 4.82)/4.82 or 124%. I look for moves of at least 90%.

The two dates, February 3 and March 4 are within the two month maximum for price to double (or nearly so), so this qualifies as a potential high and tight flag.

The stock has retraced to C, forming a flag. All we have to do is wait for the stock to climb above the flagpole.

Here's where it gets tricky.

Confirmation for a high and tight flag happens when the stock closes above the highest price in the chart pattern. Often that's the top of the flagpole, as in this case (B). If a pattern does not confirm, then you do not have a HTF.

I know from experience that buying a HTF before confirmation is a recipe for disaster. A study I did found that 14% never confirm (price dropped so far that it closed below the bottom of the flagpole, below A in this case). Ouch.

So you'll want to either use a conditional order for price to close above B and buy at the open the next day, or use a buy stop a penny above B. Conditional orders are a pain to use, so I often just use a buy stop. I'd place it at 10.83, above B (10.79) and above the round number 10.80. You want to give the stock every opportunity to reverse before you buy it.

HTF Failure Rate

Many of you have remarked about the 0% failure rate. When I wrote my book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., (pictured on the right) I did not find any HTFs that failed to see price rise at least 5%.

An updated study found the failure rate to be 19%. A full 34% failed to see price rise at least 10% (that is, 19% + 15% = 34% for the 5% and 10% failure rates), but those apply to both bull and bear markets. Bull market failures are fewer: 6% and 10% for the 5% and 10% failure rates, respectively (meaning 16% of them fail to rise at least 10%).

Before I went any further, I would check out the company to see what its potential for the continuation of the upward move would be.

The CEO bought 10,000 shares in February. If insiders are buying, that is good news. When you lose your shirt on a trade, they can share your pain.

On this stock, the analysts are mostly positive on the stock. I pay most attention to S&P, Credit Suisse, and Ford. Almost half the analysts (7 of 13) have a buy on the stock.

The company has four floating rigs coming off contract this year, so that's bad news. For this year, 66% of their rigs are contracted out. Next year will likely see more idle rigs. The price of oil going forward is unknown, but companies like this one will continue to suffer for this year and probably next.

In mid February, they eliminated the dividend.

A picture of the four combinations of slope leading to a hight and tight flag.

As of March 11, Ford said that the 68.5% rise in the stock is very negative. Combined with a very negative rating for the year (price down 67.6%) but positive for the quarter (price down 28.7%), they rate the stock a hold with "very negative" price movement. I did a study of their method and wrote about it here.

The discussion of price reminds me of the chart shown at the link. I show that chart here, but the performance figures remain at the link.

What we have with this stock is a steep downward price trend leading to a HTF recovery (the upper right quadrant). As the chart shows, a steep downtrend is a bad combination. HTFs with that combination of steep downtrends leading to the HTF result in almost 40% worse performance than the best combination (that is, a 22% average post-breakout rise versus 36% for the shallow upward move leading to the HTF).

I discovered this after the last bear market. I saw many HTFs that saw price double within the HTF but then they reversed soon after the breakout (or even before). That could be what will happen here. Or not.

So far we've found a HTF and checked out the company. What's next?

I'd go through my checklist, which my computer provides with the click of a button. Among the important items are these.

  • Position size, both for this trade and the max size for the portfolio (for multiple buys so any one position isn't too big)
  • Stop loss price
  • Support and resistance areas (sell targets, both up and down)
  • If a chart pattern trade, score it.
  • Next earnings date (I won't buy within three weeks of an earnings announcement)
  • How does the chart look on the weekly scale?
  • How is the industry doing? (A count of stocks trending up or down over 1, 2 and 6 months)
  • Is the stock outperforming the index? (such as the Dow Industrials)

HTF Target

If the stock works as we hope, how far can we expect the stock to rise?

Picture of ATW on the daily scale.

I reproduce the chart of ATW here so you don't hurt yourself paging back and forth.

You can get an estimate by using the height of the chart pattern. In this case, it's the height of the flagpole from A to B, or 10.79 - 4.82 or 5.97.

Add that to the top of the pattern, B in this case, to get a target of 16.76. You can also add the height to the bottom of the flag (if the flag has made a bottom). This will give you a more conservative target.

The study for my Encyclopedia book (the one shown above) said HTFs reach their target 90% of the time. We can leave the target at 16.76 or multiply it by 90% to get a more conservative value: 16.76 x 0.90 = 15.08.

Now look at the chart. I drew two red lines showing overhead resistance, D. I would expect the stock to climb to this price and struggle. It might climb just 10% or 15% or it could rise all the way to 18 (the top red line) and keep going until it passed out from oxygen deprivation. But the 15 to 18 range would be my target.

If it got there, I'd wait to see how it performed.

Is It a Buy?

Would I buy this stock? No.

Why not?

Several reasons. First, The chart showing the four trend combinations reminds me of what happened to HTFs after the last bear market. I'd be worried that will happen again.

HTFs tend to see price rise by 10% to 15% and then die. That's been the type of market in the last two years, where long trends are hard to come by. I'd be concerned that as soon as I buy a HTF, price will reverse.

Lastly, I don't buy stocks I discuss here. That would be like buying first, promoting it here, and then selling it. I'd never do that.

I read the disclosure statement of one blog that said they promoted such trades and were compensated $250,000 for the trouble. Wow. That's more than I make in a week!

Anyway, this is the process I go through for each trade in which I already don't own a position.

-- Thomas Bulkowski

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Monday 3/14/16. Anatomy of a Trade

This is a trade I made recently, but this has been happening a lot to me in the last year or two.

I looked at JC Penney (JCP) as a turnaround situation.

Based on the volatility of the market, the stock, how far down from the yearly high the market is, and my portfolio size, my computer recommended that I not buy more than $23,000 of the stock. But as a first chunk, it recommended 2,400 shares worth about $17,500.

Picture of JCP on the daily scale.

I went through my checklist including the date of the next earnings report (about 1.5 months away. The danger zone is 3 weeks or less), location of overhead resistance (at 9, 10), and a review of the company fundamentals, including business prospects going forward (Translation: I read analyst reports on this stuff).

My computer recommended a stop 10% below the anticipated purchase price, at 6.52 but I felt 6.47 would work better. That would place a stop below the bottoms in December (A) and January (B). Those bottoms could act as support just like they did at A and B.

The AB pattern is a double bottom, but on this size chart, it looks flattened. The pattern becomes a valid one when the stock closes above the peak between the two bottoms. I show that as line C.

Picture of a bird

My sell target for this trade was 10.

I bought the stock on January 13 and received a fill at 7.34 on 2,400 shares.

As the chart shows, the stock sold off over the next few days.

When it dropped below the bottom of the chart pattern, I sold the stock and received a fill at 6.43.

When I try to bottom fish (pick stocks near the bottom of their yearly trading range), I'm often early into the trade. Sometimes I ride out the drop and sometimes not.

With uncertainty about how the company's turnaround was unfolding, I didn't want to ride this down to bankruptcy. So I sold.

That's often the smart choice. The chart pattern didn't act as I expected, so I got out.

What pisses me off is what happened next.

The day after I sold, the stock began to go up. And up. And up.

I watched from the sidelines as it doubled to 12 from a low of 6.

-- Thomas Bulkowski

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Friday 3/11/16. 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 19 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 644 stocks searched, or 3.0%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

Excluding ETFs, there were 13 bullish chart patterns this week and 5 bearish ones with any remaining (1) 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
ATWFlag, high and tight      02/03/201603/04/2016Petroleum (Producing)
AVPFlag, high and tight      01/20/201603/04/2016Toiletries/Cosmetics
BCPCDouble Top, Adam and Adam      02/04/201603/07/2016Chemical (Specialty)
CBKFlag, high and tight      02/12/201603/10/2016Retail (Special Lines)
SCORPipe top      02/22/201602/29/2016Information Services
CLRFlag, high and tight      01/20/201603/04/2016Petroleum (Producing)
DBroadening top      02/05/201603/09/2016Electric Utility (East)
GNWFlag, high and tight      02/11/201603/04/2016Insurance (Life)
HLFlag, high and tight      01/19/201603/07/2016Metals and Mining (Div.)
ICONFlag, high and tight      01/20/201603/08/2016Shoe
JCPFlag, high and tight      01/20/201603/08/2016Retail Store
MURFlag, high and tight      01/20/201603/07/2016Petroleum (Integrated)
NEEBroadening top      02/03/201603/10/2016Electric Utility (East)
NKEPipe top      02/22/201602/29/2016Shoe
NEFlag, high and tight      02/11/201603/07/2016Oilfield Svcs/Equipment
SSYSFlag, high and tight      02/12/201603/04/2016Electronics
TLRDFlag, high and tight      01/20/201603/10/2016Retail (Special Lines)
WMBFlag, high and tight      02/08/201603/07/2016Natural Gas (Distributor)
XELBroadening top      02/05/201603/09/2016Electric Utility (West)

 

Weekly screen for chart patterns ending between 03/03/2016 and 03/10/2016. 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.
 
Atwood Oceanics Inc. (ATW)
Industry: Petroleum (Producing)
Industry RS rank: 37 out of 56
Stock RS rank: 618 out of 636
3/10/16 close: $9.08
1 Month avg volatility: $0.82. Volatility stop (for upward breakout): $6.84 or 24.7% below the close.
Change YTD: -11.24%
Volume: 5,889,100 shares. 3 month avg: 4,977,174 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: Flag, high and tight continuation pattern from 02/03/2016 to 03/04/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Avon Products (AVP)
Industry: Toiletries/Cosmetics
Industry RS rank: 7 out of 56
Stock RS rank: 386 out of 636
3/10/16 close: $4.22
1 Month avg volatility: $0.32. Volatility stop (for upward breakout): $3.27 or 22.4% below the close.
Change YTD: 4.20%
Volume: 6,654,900 shares. 3 month avg: 9,848,935 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/04/2016
WARNING: A dead-cat bounce occurred on 11/04/2015. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 05/04/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Balchem Corp (BCPC)
Industry: Chemical (Specialty)
Industry RS rank: 25 out of 56
Stock RS rank: 240 out of 636
3/10/16 close: $59.01
1 Month avg volatility: $2.11. Volatility stop (for downward breakout): $66.22 or 12.2% above the close.
Change YTD: -2.94%
Volume: 113,400 shares. 3 month avg: 137,929 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: Double Top, Adam and Adam reversal pattern from 02/04/2016 to 03/07/2016
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 8%.
Pullbacks occur 61% of the time.
Price hits measure rule target 72% of the time.

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Christopher and Banks Corp (CBK)
Industry: Retail (Special Lines)
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 56 out of 56
Stock RS rank: 1 out of 636
3/10/16 close: $2.67
1 Month avg volatility: $0.16. Volatility stop (for upward breakout): $1.67 or 37.3% below the close.
Change YTD: 61.82%
Volume: 4,147,100 shares. 3 month avg: 538,462 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: Flag, high and tight continuation pattern from 02/12/2016 to 03/10/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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comScore Inc (SCOR)
Industry: Information Services
Industry RS rank: 49 out of 56
Stock RS rank: 617 out of 636
3/10/16 close: $27.22
1 Month avg volatility: $2.41. Volatility stop (for downward breakout): $32.89 or 20.9% above the close.
Change YTD: -33.85%
Volume: 1,051,800 shares. 3 month avg: 953,155 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 top reversal pattern from 02/22/2016 to 02/29/2016
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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Continental Resources Inc. (CLR)
Industry: Petroleum (Producing)
Industry RS rank: 37 out of 56
Stock RS rank: 447 out of 636
3/10/16 close: $25.85
1 Month avg volatility: $1.75. Volatility stop (for upward breakout): $20.84 or 19.4% below the close.
Change YTD: 12.49%
Volume: 8,920,800 shares. 3 month avg: 9,743,372 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/04/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Dominion Resources Inc. (D)
Industry: Electric Utility (East)
Industry RS rank: 4 out of 56
Stock RS rank: 212 out of 636
3/10/16 close: $71.59
1 Month avg volatility: $1.19. Volatility stop (for downward breakout): $74.62 or 4.2% above the close.
Change YTD: 5.84%
Volume: 2,181,900 shares. 3 month avg: 3,287,580 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: Broadening top reversal pattern from 02/05/2016 to 03/09/2016
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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Genworth Financial Inc (GNW)
Industry: Insurance (Life)
Industry RS rank: 40 out of 56
Stock RS rank: 619 out of 636
3/10/16 close: $2.68
1 Month avg volatility: $0.20. Volatility stop (for upward breakout): $2.18 or 18.8% below the close.
Change YTD: -28.15%
Volume: 7,557,800 shares. 3 month avg: 9,131,989 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: Flag, high and tight continuation pattern from 02/11/2016 to 03/04/2016
WARNING: A dead-cat bounce occurred on 02/05/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 05/06/2016 and a 38% chance by 08/05/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Hecla Mining Co. (HL)
Industry: Metals and Mining (Div.)
Industry RS rank: 11 out of 56
Stock RS rank: 12 out of 636
3/10/16 close: $2.68
1 Month avg volatility: $0.17. Volatility stop (for upward breakout): $2.28 or 14.8% below the close.
Change YTD: 41.80%
Volume: 11,055,300 shares. 3 month avg: 7,103,615 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: Flag, high and tight continuation pattern from 01/19/2016 to 03/07/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Iconix Brand Group Inc. (ICON)
Industry: Shoe
Industry RS rank: 54 out of 56
Stock RS rank: 603 out of 636
3/10/16 close: $8.34
1 Month avg volatility: $0.67. Volatility stop (for upward breakout): $6.88 or 17.5% below the close.
Change YTD: 22.11%
Volume: 1,889,100 shares. 3 month avg: 2,377,843 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Monday.
 
Chart pattern: Flag, high and tight continuation pattern from 01/20/2016 to 03/08/2016
WARNING: A dead-cat bounce occurred on 12/28/2015. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 03/28/2016 and a 38% chance by 06/27/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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JC Penney Company Inc (JCP)
Industry: Retail Store
Industry RS rank: 28 out of 56
Stock RS rank: 72 out of 636
3/10/16 close: $11.55
1 Month avg volatility: $0.48. Volatility stop (for upward breakout): $10.36 or 10.3% below the close.
Change YTD: 73.42%
Volume: 12,668,200 shares. 3 month avg: 15,554,325 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/08/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Murphy Oil Corporation (MUR)
Industry: Petroleum (Integrated)
Industry RS rank: 31 out of 56
Stock RS rank: 504 out of 636
3/10/16 close: $22.95
1 Month avg volatility: $1.78. Volatility stop (for upward breakout): $18.45 or 19.6% below the close.
Change YTD: 2.23%
Volume: 6,458,100 shares. 3 month avg: 5,673,037 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/07/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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NextEra Energy Inc (NEE)
Industry: Electric Utility (East)
Industry RS rank: 4 out of 56
Stock RS rank: 62 out of 636
3/10/16 close: $115.69
1 Month avg volatility: $2.14. Volatility stop (for downward breakout): $121.25 or 4.8% above the close.
Change YTD: 11.36%
Volume: 1,586,900 shares. 3 month avg: 2,771,503 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: Broadening top reversal pattern from 02/03/2016 to 03/10/2016
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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Nike Inc (NKE)
Industry: Shoe
Industry RS rank: 54 out of 56
Stock RS rank: 183 out of 636
3/10/16 close: $58.88
1 Month avg volatility: $1.50. Volatility stop (for downward breakout): $62.04 or 5.4% above the close.
Change YTD: -5.79%
Volume: 9,401,900 shares. 3 month avg: 9,428,966 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pipe top reversal pattern from 02/22/2016 to 02/29/2016
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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Noble Corporation (NE)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 39 out of 56
Stock RS rank: 378 out of 636
3/10/16 close: $11.02
1 Month avg volatility: $0.86. Volatility stop (for upward breakout): $8.88 or 19.4% below the close.
Change YTD: 4.45%
Volume: 13,429,500 shares. 3 month avg: 9,782,492 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: Flag, high and tight continuation pattern from 02/11/2016 to 03/07/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Stratasys Ltd (SSYS)
Industry: Electronics
Industry RS rank: 52 out of 56
Stock RS rank: 508 out of 636
3/10/16 close: $23.49
1 Month avg volatility: $1.68. Volatility stop (for upward breakout): $20.01 or 14.8% below the close.
Change YTD: 0.04%
Volume: 1,939,700 shares. 3 month avg: 1,308,062 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: Flag, high and tight continuation pattern from 02/12/2016 to 03/04/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Tailored Brands Inc (TLRD)
Industry: Retail (Special Lines)
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 56 out of 56
Stock RS rank: 633 out of 636
3/10/16 close: $17.82
1 Month avg volatility: $0.84. Volatility stop (for upward breakout): $15.38 or 13.7% below the close.
Change YTD: 21.39%
Volume: 4,400,900 shares. 3 month avg: 2,058,634 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/10/2016
WARNING: A dead-cat bounce occurred on 12/10/2015. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 06/09/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Williams Companies Inc. (WMB)
Industry: Natural Gas (Distributor)
Industry RS rank: 23 out of 56
Stock RS rank: 634 out of 636
3/10/16 close: $15.89
1 Month avg volatility: $1.34. Volatility stop (for upward breakout): $12.17 or 23.4% below the close.
Change YTD: -38.17%
Volume: 36,163,700 shares. 3 month avg: 17,924,128 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: Flag, high and tight continuation pattern from 02/08/2016 to 03/07/2016
WARNING: A dead-cat bounce occurred on 01/13/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 04/13/2016 and a 38% chance by 07/13/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Xcel Energy, Inc (XEL)
Industry: Electric Utility (West)
Industry RS rank: 1 out of 56
Stock RS rank: 42 out of 636
3/10/16 close: $40.74
1 Month avg volatility: $0.70. Volatility stop (for downward breakout): $42.28 or 3.8% above the close.
Change YTD: 13.45%
Volume: 3,407,900 shares. 3 month avg: 4,175,312 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: Broadening top reversal pattern from 02/05/2016 to 03/09/2016
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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Thursday 3/10/16. Intraday Market Direction: Nasdaq

The index climbed by 0.5% or 25.56 points. Since 02/05/1971 the index made 515 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 358 occasions.
     Average loss was -0.9% on 157 occasions.
Expect the index to close higher 69.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 101/173 or 58.4% of the time.
     The prediction of the index closing lower has been right 34/72 or 47.2% 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.

The index has formed a down-sloping channel. I show that here in red.

Depending on how you draw the top trendline, the index appears to have moved and closed above the top trendline, signaling an upward breakout.

That suggests a resumption of the upward move.

Not shown, but one could argue that there's a head-and-shoulders bottom chart pattern formed in the last two days. That pattern has confirmed as a valid one (that is, the index has closed above the neckline).

The index could drop, of course. I would expect to see support at 4640, where the index found support Tuesday and Wednesday (yesterday and today).

$ $ $

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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,006.71    
 Monthly S1  4,340.54  333.84   
 Weekly S2  4,470.31  129.76   
 Monthly Pivot  4,543.60  73.29   
 Weekly S1  4,572.34  28.75   
 Daily S2  4,630.37  58.03   
 Low  4,642.42  12.05   
 Daily S1  4,652.38  9.96   
 61.8% Down from Intraday High  4,655.43  3.05   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  4,659.44  4.02   
 Weekly Pivot  4,659.50  0.05   Yes! The Weekly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  4,663.46  3.97   
 Daily Pivot  4,664.42  0.96   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Open  4,666.42  2.00   Yes! The Open is close to the Daily Pivot.
 Close  4,674.38  7.96   
 High  4,676.47  2.09   Yes! The High is close to the Close.
 Daily R1  4,686.43  9.96   
 Daily R2  4,698.47  12.05   
 Weekly R1  4,761.53  63.06   
 Weekly R2  4,848.69  87.15   
 Monthly R1  4,877.43  28.75   
 Monthly R2  5,080.49  203.05   

Wednesday 3/9/16. 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.

Notice that the indicator has plummeted. It suggests that this retrace will have legs. Maybe not since today's dip is blamed on weakness in China.

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, 48% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 56%.
The fewest was 19% on 04/15/2015.
And the most was 70% on 02/11/2016.
Shown as a blue line on the above chart...
The 541 stocks in my database are down an average of 23% from their yearly high.
A week ago, the average was 27%.
The peak was 12% on 04/15/2015.
And the bottom was 32% on 02/11/2016.

The above information says that the general market is making a recovery.

$ $ $

My above remarks are short, intentionally. I want to share the kind of day I had.

It started in the morning, after breakfast when I went to the bathroom. Flushing the toilet, it became plugged. That happens frequently with this 1.6 gallon flush toilet despite cleaning out the jets (small holes on the bowl's rim and one in the bottom of the bowl).

I took my plunger and tried to free the blockage without success. That was unusual. I went to my other toilet and flushed that one only to find that it started leaking at the floor.

Uh-oh. Two toilets were not working. That told me the plug might be a sewer break. I had my foundation lifted a few inches recently, so the sewer pipe could have snapped anywhere along the line.

I went downstairs to my third toilet and used a bucket of water to flush this one (I keep the water shut off). That flushing created a syphon that sucked some of the water from the upstairs toilets.

That told me it wasn't a sewer blockage as I feared but a normal plug. More upstairs flushing and plunger work freed the blockage. But that didn't explain why the second toilet was leaking at the floor line.

A flush there told me that it was leaking higher, at the joint between the reservoir and the bowl. I thought that after 30 years, the gasket needed to be replaced.

While thinking about that, storms blew through (tornado in a nearby county). Winds up to 70 mph tore off my neighbors skylight. It bounced off the opposite side of his roof and landed in his front yard, undamaged.

With me, it blew off about a dozen shingle tabs (the bottom 1/2 of the shingle).

Picture of my dog

After the hail, rain, and wind calmed down, I returned to the upstairs toilet. I tore it apart and bought a new gasket. That didn't work. It still leaked at the same place. Another trip to Home Depot where I bought a complete set of new internals (new flapper system and so on). I replaced everything but the hose leading to the toilet.

I spent a few hours, spanning lunch, to remove the old stuff and install the new toilet guts only to find that the hose leading to the toilet was now leaking. Another HD trip where I bought a hose, that was too small. Sigh. Another trip. I replaced the hose and turned on the water only to find that it leaking once again at the original joint. Jeepers.

I put that aside and climbed up on my roof and replaced the dozen or so shingle tabs.

When I started doing this years ago, I would remove the entire shingle by sliding a spade shovel under the shingle and popping up the nails on the one above the damaged shingle. That allowed me to insert the new shingle and nail the new one in place.

Now I just find the broken tab on the grass (or wherever it lands) and glue it down by sliding the top end under the old shingle and gluing the rest down.

It works. I saves my knuckles and gluing down the tabs keeps the shingles intact for longer (my 15 year shingles have lasted 30 years but will be replaced this year. Cost? About $8k for a new roof, but that's a guess.

Anyway, I fixed the roof and returned to the toilet.

I used a screwdriver to tighten up the two screws that hold the reservoir to the bowl. That appears to have worked. So far.

We'll have to see if it stays dry or not.

Along the way, I discovered that the heavy downpour that morning left big puddles on three upstairs windowsills (but the downstairs windows were dry. Go figure. Fortunately, I sponged up the water and don't think any leaked on the sheet rock.

So I'm exhausted now, and I still have to make dinner. Maybe default to frozen pizza accompanied by romaine salad and spinach. Simple and quick. Or just salad. Healthier that way.

More storms are due to roll in soon. Time to go.

-- Thomas Bulkowski

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Tuesday 3/8/16. Intraday Market Direction: Dow

The index climbed by 0.4% or 67.18 points. Since 10/01/1928 the index made 1045 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 549 occasions.
     Average loss was -0.6% on 496 occasions.
Expect the index to close higher 52.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 109/182 or 59.9% of the time.
     The prediction of the index closing lower has been right 29/57 or 50.9% 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.

The index has formed a rising wedge.

A rising wedge occurs when both trendlines slope upward (shown here in red) with the bottom trendline having a steeper slope. The two trendlines join at the triangle's apex sometime in the future.

In this case, I think it says the markets are getting tired of rising. I also see that in the daily readings from the chart pattern indicator. Today's chart (on my computer) shows the line turning lower.

That tells me the index is about to retrace. Maybe not, but that's how I'm leaning.

$ $ $

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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,987.08    
 Monthly S1  16,030.51  1,043.44   
 Weekly S2  16,330.26  299.75   
 Monthly Pivot  16,546.45  216.18   
 Weekly S1  16,702.11  155.66   
 Daily S2  16,879.12  177.02   
 Weekly Pivot  16,882.24  3.12   Yes! The Weekly Pivot is close to the Daily S2.
 Low  16,940.48  58.24   
 Daily S1  16,976.54  36.06   
 Open  16,991.29  14.75   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  17,001.13  9.84   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  17,019.87  18.73   
 Daily Pivot  17,037.89  18.03   
 38.2% Down from Intraday High  17,038.60  0.71   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  17,073.95  35.35   
 High  17,099.25  25.30   
 Daily R1  17,135.31  36.06   
 Daily R2  17,196.66  61.36   
 Weekly R1  17,254.09  57.42   
 Weekly R2  17,434.22  180.14   
 Monthly R1  17,589.88  155.66   
 Monthly R2  18,105.82  515.93   

Monday 3/7/16. Market Monday: The Week Ahead

My Prediction

Picture of the S and P on the daily scale.

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

A confirmed double bottom is at AB. It becomes a valid double bottom when the index closes above C, the red line drawn from the highest peak between the two bottoms.

The question is, what happens now?

I show a region of overhead resistance at D. I drew the lines connecting the peaks or valleys where they were thickest.

Notice that the index is approaching that range. When it gets there, I am anticipating it'll turn down and retrace.

Clearly the upward move has gone on for a long time. These upward runs often last longer than many believe, so it's difficult to call a turn.

The shape (height, long upper shadow) of the candles suggest momentum is weakening.

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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 123.47 points.
Tuesday: Up 348.58 points.
Wednesday: Up 34.24 points.
Thursday: Up 44.58 points.
Friday: Up 62.87 points.

For the Week...

The Dow industrials were up 366.8 points or 2.2%.
The Nasdaq composite was up 126.55 points or 2.8%.
The S&P 500 index was up 51.94 points or 2.7%.

Year to Date...

Dow Industrials
     2.3% down from the high of 17,405.48 on 01/04/2016.
     10.1% up from the low of 15,450.56 on 01/20/2016.
Nasdaq
     4.3% down from the high of 4,926.73 on 01/05/2016.
     12.0% up from the low of 4,209.76 on 02/11/2016.
S&P 500
     1.9% down from the high of 2,038.20 on 01/04/2016.
     10.5% up from the low of 1,810.10 on 02/11/2016.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer credit3:00 MD-Measures auto, credit card and other debt.
Wholesale inventories10:00 WD-Wholesale sales and inventory statistics.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 WC+Counts people filing for state unemployment benefits.
Treasury budget2:00 ThDTracks budget deficit. Important in April (tax filing).
International trade8:30 FC+Import/export prices, trade balance. US economy vs others.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 03/04/2016, the CPI had:

1 bearish patterns,
52 bullish patterns,
207 patterns waiting for breakout.
The CPI signal is 98.1%, which is bullish (>= 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  16,826  16,916  16,989  17,080  17,153 
Weekly  16,308  16,657  16,860  17,209  17,412 
Monthly  14,965  15,986  16,524  17,545  18,083 
S&P500 (^GSPC): Daily  1,976  1,988  1,999  2,010  2,021 
Weekly  1,903  1,951  1,980  2,029  2,058 
Monthly  1,741  1,870  1,940  2,069  2,139 
Nasdaq (^IXIC): Daily  4,658  4,688  4,717  4,746  4,776 
Weekly  4,485  4,601  4,674  4,790  4,863 
Monthly  4,021  4,369  4,558  4,906  5,095 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 3 weeks up 21.1%   Expect a reversal soon. 
 2 months up 37.6%   The trend may continue. 
 S & P 500 (^GSPC) 3 weeks up 21.5%   Expect a reversal soon. 
 1 month up 53.1%   Expect a random direction. 
 Nasdaq composite (^IXIC) 3 weeks up 23.5%   Expect a reversal soon. 
 1 month up 47.2%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
35Double Bottom, Adam and Adam
33Head-and-shoulders bottom
31Pipe bottom
20Dead-cat bounce
10Double Bottom, Adam and Eve
10Big W
9Triple bottom
8Triangle, symmetrical
8Flag, high and tight
5Double Bottom, Eve and Adam

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

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

 

 

 

 

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

This WeekLast Week
1. Electric Utility (West)1. Semiconductor Cap Equip.
2. Semiconductor Cap Equip.2. Electric Utility (West)
3. Electric Utility (Central)3. Household Products
4. Electric Utility (East)4. Electric Utility (Central)
5. Household Products5. Electric Utility (East)
50. Securities Brokerage50. Oilfield Svcs/Equipment
51. Natural Gas (Diversified)51. Securities Brokerage
52. Drug52. Biotechnology
53. Biotechnology53. Shoe
54. Electronics54. Petroleum (Producing)
55. Homebuilding55. Homebuilding
56. Shoe56. Electronics
57. Retail (Special Lines)57. Retail (Special Lines)

-- Thomas Bulkowski

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Friday 3/4/16. 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 19 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 647 stocks searched, or 2.9%. 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 12 bullish chart patterns this week and 5 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
DDDFlag, high and tight      01/20/201603/03/2016Electronics
BGTriangle, symmetrical      02/16/201603/01/2016Food Processing
CIENDead-cat bounce      03/03/201603/03/2016Telecom. Equipment
DRQHorn bottom      02/08/201602/22/2016Oilfield Svcs/Equipment
GSHorn bottom      02/08/201602/22/2016Securities Brokerage
GBDead-cat bounce      03/01/201603/01/2016Electronics
GLFFlag, high and tight      01/12/201603/03/2016Oilfield Svcs/Equipment
HSCDead-cat bounce      02/26/201602/26/2016Diversified Co.
IPIDead-cat bounce      02/29/201602/29/2016Chemical (Diversified)
INTUDiamond top      02/17/201603/03/2016Computer Software and Svcs
LOWHead-and-shoulders bottom      01/20/201603/01/2016Retail Building Supply
LXUFlag, high and tight      01/20/201603/03/2016Building Materials
NWYHead-and-shoulders bottom      01/28/201602/29/2016Apparel
PMCDead-cat bounce      02/26/201602/26/2016Medical Services
PESFlag, high and tight      01/20/201603/03/2016Oilfield Svcs/Equipment
COLPennant      02/24/201603/03/2016Aerospace/Defense
STJHead-and-shoulders bottom      01/20/201603/01/2016Medical Supplies
SWCFlag, high and tight      01/20/201603/03/2016Metals and Mining (Div.)
TMKHorn bottom      02/08/201602/22/2016Insurance (Diversified)
EWPPipe bottom      02/08/201602/22/2016Investment Co. (Foreign)

 

Weekly screen for chart patterns ending between 02/25/2016 and 03/03/2016. 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.
 
3D Systems (DDD)
Industry: Electronics
Industry RS rank: 55 out of 56
Stock RS rank: 343 out of 639
3/3/16 close: $12.55
1 Month avg volatility: $0.74. Volatility stop (for upward breakout): $10.52 or 16.1% below the close.
Change YTD: 44.42%
Volume: 4,780,400 shares. 3 month avg: 3,339,531 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Monday.
 
Chart pattern: Flag, high and tight continuation pattern from 01/20/2016 to 03/03/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Bunge Ltd (BG)
Industry: Food Processing
Industry RS rank: 19 out of 56
Stock RS rank: 557 out of 639
3/3/16 close: $54.02
1 Month avg volatility: $2.16. Volatility stop (for upward breakout): $47.24 or 12.6% below the close.
Change YTD: -20.88%
Volume: 2,118,600 shares. 3 month avg: 1,529,491 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 02/16/2016 to 03/01/2016
WARNING: A dead-cat bounce occurred on 02/11/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 05/12/2016 and a 38% chance by 08/11/2016.
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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Ciena Corp (CIEN)
Industry: Telecom. Equipment
Industry RS rank: 31 out of 56
Stock RS rank: 559 out of 639
3/3/16 close: $16.99
1 Month avg volatility: $0.73. Volatility stop (for downward breakout): $18.96 or 11.6% above the close.
Change YTD: -17.88%
Volume: 30,132,600 shares. 3 month avg: 3,841,497 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: Dead-cat bounce continuation pattern from 03/03/2016 to 03/03/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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Dril-Quip Inc (DRQ)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 47 out of 56
Stock RS rank: 513 out of 639
3/3/16 close: $56.67
1 Month avg volatility: $2.16. Volatility stop (for upward breakout): $50.34 or 11.2% below the close.
Change YTD: -4.32%
Volume: 557,300 shares. 3 month avg: 580,303 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: Horn bottom reversal pattern from 02/08/2016 to 02/22/2016
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 9%.
Throwbacks occur 29% of the time.
Price hits measure rule target 76% of the time.

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Goldman Sachs Group, The (GS)
Industry: Securities Brokerage
Industry RS rank: 48 out of 56
Stock RS rank: 496 out of 639
3/3/16 close: $155.33
1 Month avg volatility: $4.14. Volatility stop (for upward breakout): $145.07 or 6.6% below the close.
Change YTD: -13.82%
Volume: 3,615,600 shares. 3 month avg: 4,750,303 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Monday.
 
Chart pattern: Horn bottom reversal pattern from 02/08/2016 to 02/22/2016
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 9%.
Throwbacks occur 29% of the time.
Price hits measure rule target 76% of the time.

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Greatbatch Inc (GB)
Industry: Electronics
Industry RS rank: 55 out of 56
Stock RS rank: 610 out of 639
3/3/16 close: $33.89
1 Month avg volatility: $1.49. Volatility stop (for downward breakout): $36.95 or 9.0% above the close.
Change YTD: -35.45%
Volume: 521,900 shares. 3 month avg: 284,998 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Dead-cat bounce continuation pattern from 03/01/2016 to 03/01/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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Gulfmark Offshore Inc (GLF)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 47 out of 56
Stock RS rank: 596 out of 639
3/3/16 close: $5.34
1 Month avg volatility: $0.41. Volatility stop (for upward breakout): $3.56 or 33.4% below the close.
Change YTD: 14.35%
Volume: 409,900 shares. 3 month avg: 492,688 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: Flag, high and tight continuation pattern from 01/12/2016 to 03/03/2016
WARNING: A dead-cat bounce occurred on 11/10/2015. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 05/10/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Harsco Corp (HSC)
Industry: Diversified Co.
Industry RS rank: 18 out of 56
Stock RS rank: 634 out of 639
3/3/16 close: $4.17
1 Month avg volatility: $0.44. Volatility stop (for downward breakout): $5.08 or 21.7% above the close.
Change YTD: -47.08%
Volume: 2,866,200 shares. 3 month avg: 1,008,718 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: Dead-cat bounce continuation pattern from 02/26/2016 to 02/26/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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Intrepid Potash Inc (IPI)
Industry: Chemical (Diversified)
Industry RS rank: 27 out of 56
Stock RS rank: 639 out of 639
3/3/16 close: $0.95
1 Month avg volatility: $0.26. Volatility stop (for downward breakout): $1.51 or 58.7% above the close.
Change YTD: -67.80%
Volume: 4,956,200 shares. 3 month avg: 1,530,942 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: Dead-cat bounce continuation pattern from 02/29/2016 to 02/29/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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Intuit Inc (INTU)
Industry: Computer Software and Svcs
Industry RS rank: 35 out of 56
Stock RS rank: 103 out of 639
3/3/16 close: $97.71
1 Month avg volatility: $2.75. Volatility stop (for downward breakout): $103.97 or 6.4% above the close.
Change YTD: 1.25%
Volume: 1,851,500 shares. 3 month avg: 1,930,478 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: Diamond top reversal pattern from 02/17/2016 to 03/03/2016
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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Lowes Companies, Inc (LOW)
Industry: Retail Building Supply
Industry RS rank: 16 out of 56
Stock RS rank: 273 out of 639
3/3/16 close: $69.93
1 Month avg volatility: $2.11. Volatility stop (for upward breakout): $64.28 or 8.1% below the close.
Change YTD: -8.04%
Volume: 4,530,700 shares. 3 month avg: 5,721,612 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Head-and-shoulders bottom reversal pattern from 01/20/2016 to 03/01/2016
Breakout is upward 100% of the time.
Average rise: 38%.
Break-even failure rate: 3%.
Throwbacks occur 45% of the time.
Price hits measure rule target 74% 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: 44 out of 56
Stock RS rank: 632 out of 639
3/3/16 close: $10.08
1 Month avg volatility: $0.72. Volatility stop (for upward breakout): $7.59 or 24.8% below the close.
Change YTD: 39.03%
Volume: 2,057,600 shares. 3 month avg: 775,234 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/03/2016
WARNING: A dead-cat bounce occurred on 11/06/2015. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 05/06/2016.
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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New York and Company Inc (NWY)
Industry: Apparel
Industry RS rank: 32 out of 56
Stock RS rank: 406 out of 639
3/3/16 close: $2.37
1 Month avg volatility: $0.14. Volatility stop (for upward breakout): $2.09 or 11.8% below the close.
Change YTD: 3.49%
Volume: 27,900 shares. 3 month avg: 60,815 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 Thursday.
 
Chart pattern: Head-and-shoulders bottom reversal pattern from 01/28/2016 to 02/29/2016
Breakout is upward 100% of the time.
Average rise: 38%.
Break-even failure rate: 3%.
Throwbacks occur 45% of the time.
Price hits measure rule target 74% of the time.

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PharMerica Corp (PMC)
Industry: Medical Services
Industry RS rank: 41 out of 56
Stock RS rank: 583 out of 639
3/3/16 close: $23.20
1 Month avg volatility: $1.20. Volatility stop (for downward breakout): $25.62 or 10.5% above the close.
Change YTD: -33.71%
Volume: 382,800 shares. 3 month avg: 329,220 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: Dead-cat bounce continuation pattern from 02/26/2016 to 02/26/2016
Breakout is downward 67% of the time.
Average decline: 18%.

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Pioneer Energy Services (PES)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 47 out of 56
Stock RS rank: 603 out of 639
3/3/16 close: $1.87
1 Month avg volatility: $0.16. Volatility stop (for upward breakout): $1.29 or 31.3% below the close.
Change YTD: -13.82%
Volume: 1,294,000 shares. 3 month avg: 1,051,923 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/03/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Rockwell Collins (COL)
Industry: Aerospace/Defense
Industry RS rank: 10 out of 56
Stock RS rank: 152 out of 639
3/3/16 close: $89.20
1 Month avg volatility: $1.72. Volatility stop (for upward breakout): $84.85 or 4.9% below the close.
Change YTD: -3.36%
Volume: 491,800 shares. 3 month avg: 962,952 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: Pennant continuation pattern from 02/24/2016 to 03/03/2016
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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St. Jude Medical Inc (STJ)
Industry: Medical Supplies
Industry RS rank: 11 out of 56
Stock RS rank: 548 out of 639
3/3/16 close: $55.00
1 Month avg volatility: $1.07. Volatility stop (for upward breakout): $52.20 or 5.1% below the close.
Change YTD: -10.96%
Volume: 1,463,700 shares. 3 month avg: 2,146,038 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: Head-and-shoulders bottom reversal pattern from 01/20/2016 to 03/01/2016
Breakout is upward 100% of the time.
Average rise: 38%.
Break-even failure rate: 3%.
Throwbacks occur 45% of the time.
Price hits measure rule target 74% of the time.

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Stillwater Mining Co. (SWC)
Industry: Metals and Mining (Div.)
Industry RS rank: 13 out of 56
Stock RS rank: 223 out of 639
3/3/16 close: $9.72
1 Month avg volatility: $0.53. Volatility stop (for upward breakout): $7.70 or 20.8% below the close.
Change YTD: 13.42%
Volume: 2,873,500 shares. 3 month avg: 1,615,437 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: Flag, high and tight continuation pattern from 01/20/2016 to 03/03/2016
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Torchmark Corp (TMK)
Industry: Insurance (Diversified)
Industry RS rank: 29 out of 56
Stock RS rank: 400 out of 639
3/3/16 close: $53.29
1 Month avg volatility: $1.09. Volatility stop (for upward breakout): $50.96 or 4.4% below the close.
Change YTD: -6.77%
Volume: 823,300 shares. 3 month avg: 809,715 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: Horn bottom reversal pattern from 02/08/2016 to 02/22/2016
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 9%.
Throwbacks occur 29% of the time.
Price hits measure rule target 76% of the time.

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MSCI Spain Index (EWP)
Industry: Investment Co. (Foreign)
Industry RS rank: 34 out of 56
Stock RS rank: 488 out of 639
3/3/16 close: $26.56
1 Month avg volatility: $0.41. Volatility stop (for upward breakout): $25.36 or 4.5% below the close.
Change YTD: -6.05%
Volume: 926,800 shares. 3 month avg: 1,712,946 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: Pipe bottom reversal pattern from 02/08/2016 to 02/22/2016
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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Thursday 3/3/16. Intraday Market Direction: Nasdaq

The index climbed by 0.3% or 13.82 points. Since 02/05/1971 the index made 597 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 327 occasions.
     Average loss was -0.7% on 270 occasions.
Expect the index to close higher 54.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 100/172 or 58.1% of the time.
     The prediction of the index closing lower has been right 34/72 or 47.2% 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 descending triangle appears here in red.

The index broke out upward from this pattern. It suggests to me that the index will throwback to the top of the pattern before a resumption of the upward move.

Since this isn't on the daily chart, performance is worse (less reliable), I think.

I guess we'll have to see how tomorrow's (Thursday's) trading plays out. We've been in an uptrend for a week now. Maybe it's time for a rest. That could suggest the index reverses and keeps going down.

$ $ $

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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,089.53    
 Weekly S2  4,389.53  300.00   
 Monthly S1  4,396.48  6.94   
 Monthly Pivot  4,516.70  120.23   
 Weekly S1  4,546.48  29.77   
 Weekly Pivot  4,582.66  36.19   
 Daily S2  4,653.33  70.66   
 Low  4,665.93  12.60   
 Daily S1  4,678.37  12.44   
 61.8% Down from Intraday High  4,680.31  1.94   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 Open  4,683.80  3.49   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  4,684.75  0.96   Yes! The 50% Down from Intraday High is close to the Open.
 38.2% Down from Intraday High  4,689.20  4.44   
 Daily Pivot  4,690.98  1.78   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  4,703.42  12.44   
 High  4,703.58  0.16   Yes! The High is close to the Close.
 Daily R1  4,716.02  12.44   
 Daily R2  4,728.63  12.60   
 Weekly R1  4,739.61  10.98   
 Weekly R2  4,775.79  36.19   
 Monthly R1  4,823.65  47.85   
 Monthly R2  4,943.87  120.23   

Wednesday 3/2/16. 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 index keeps rising and the indicator is at or near its high.

That is good news for bulls. However, all good things must come to an end, so look for a retrace.

I'm not saying it'll happen tomorrow, but it will happen sooner or later.

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, 56% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 58%.
The fewest was 19% on 04/15/2015.
And the most was 69% on 02/11/2016.
Shown as a blue line on the above chart...
The 544 stocks in my database are down an average of 27% from their yearly high.
A week ago, the average was 27%.
The peak was 12% on 04/15/2015.
And the bottom was 32% on 02/11/2016.

The indicator confirms that the market is recovering.

Compare the above statistics with a week ago. Fewer stocks are 20% or more below their highs. That's good news. However, the average of 27% below their high hasn't changed this week.

-- Thomas Bulkowski

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Tuesday 3/1/16. Intraday Market Direction: Dow

The index dropped by -0.7% or -123.47 points. Since 10/01/1928 the index made 561 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 274 occasions.
     Average loss was -0.9% on 287 occasions.
Expect the index to close lower 51.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 109/182 or 59.9% of the time.
     The prediction of the index closing lower has been right 29/56 or 51.8% 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.

The horizontal lines are ones of support (below the current price) and resistance (the black one).

I drew the horizontal red line from the current low to the left. You'll notice that the index pushed up threw the line a week ago then found support in the blue circle.

On the way back up, the index hit resistance just above the blue congestion area, at the green circle.

The support and resistance areas don't work well intraday, clearly not as well as they do on the daily or weekly charts. Knowing that, we can theorize that the index is resting on support here. If it drops, it has three nearby areas (green, blue, red line) that should support the index well enough that it turns upward. The index might drop at the open and turn higher the rest of the day.

If the index drops, it could rise to the black line, recovering what it lost today (Monday).

I suppose that something could happen overnight which scares the market. That means it could tumble 300 points to 16,200. That's the launch price where the up move began last Wednesday.

$ $ $

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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© 2016 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,978.86    
 Monthly S1  15,747.68  768.82   
 Weekly S2  15,862.66  114.98   
 Weekly S1  16,189.58  326.92   
 Monthly Pivot  16,271.83  82.25   
 Daily S2  16,368.62  96.79   
 Daily S1  16,442.56  73.94   
 Weekly Pivot  16,492.78  50.22   
 Low  16,510.40  17.62   Yes! The Low is close to the Weekly Pivot.
 Close  16,516.50  6.10   Yes! The Close is close to the Low.
 Daily Pivot  16,584.34  67.84   
 61.8% Down from Intraday High  16,592.80  8.46   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  16,618.26  25.46   
 Open  16,634.15  15.89   Yes! The Open is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  16,643.71  9.56   Yes! The 38.2% Down from Intraday High is close to the Open.
 Daily R1  16,658.28  14.56   Yes! The Daily R1 is close to the 38.2% Down from Intraday High.
 High  16,726.12  67.84   
 Daily R2  16,800.06  73.94   
 Weekly R1  16,819.70  19.64   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  17,040.65  220.95   
 Weekly R2  17,122.90  82.25   
 Monthly R2  17,564.80  441.90   

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