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

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 09/21/2017
22,359 -53.36 -0.2%
9,669 14.62 0.2%
731 -0.83 -0.1%
6,423 -33.35 -0.5%
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YTD
13.1%
6.9%
10.8%
19.3%
11.7%
Tom's Targets    Overview: 09/14/2017
22,450 or 21,500 by 10/01/2017
9,750 or 9,200 by 10/01/2017
775 or 730 by 10/01/2017
6,650 or 6,200 by 10/01/2017
2,600 or 2,425 by 10/01/2017

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May 2014 Headlines


Archives


Wednesday 6/2/14. What's Hot Wednesday

The following are taken from my database of about 560 stocks and 100 exchange traded funds (ETFs), not from the entire stock market.

Stocks and ETFs with the least amount of noise (low noise means it trends up, down, or both rather than moving sideways) make for better swing trading candidates. ETFs, on average, have lower noise levels than stocks, but that could be due to lots of gaps (which I consider bad). Click here for more information on noise.

Biggest winners and losers over the past week, from the close on 07/29/2014 to 08/05/2014 and year to date. These lists are useful for momentum players, those that buy stocks moving up or trending lower. Also, look for several stocks from the same industry. Finding some may give a clue to an industry on the move, one either trending up or suffering. The lists also include country ETFs. If those are performing well, consider diversifying into them.

Below are the top 10 stocks with the least amount of noise during the past month.

Average
Noise
Last
Close
YTDStockIndustryMost Recent Chart Pattern
9.1%$1.11-79.56%Cache (CACH)ApparelDead-cat bounce from 05/08/2014 to 05/08/2014
13.6%$104.620.15%Kimberly-Clark Corp (KMB)Household ProductsDouble Top, Adam and Adam from 06/20/2014 to 07/16/2014
18.2%$115.00-1.33%Monsanto Co (MON)Chemical (Diversified)Double Top, Adam and Adam from 06/25/2014 to 07/02/2014
18.2%$3.78-42.90%Hovnanian Enterprises Inc (HOV)HomebuildingBroadening top, right-angled and ascending from 04/22/2014 to 06/04/2014
18.2%$565.070.84%Google (GOOG)InternetDouble Bottom, Adam and Adam from 06/04/2014 to 06/17/2014
18.2%$23.15-9.39%CRH plc (CRH)Cement and AggregatesFalling wedge from 06/25/2014 to 07/24/2014
22.7%$69.1018.57%Williams-Sonoma Inc. (WSM)Retail (Special Lines)Double Top, Adam and Eve from 03/21/2014 to 04/01/2014
22.7%$22.43-11.27%Semtech Corp (SMTC)Semiconductor Cap Equip.Triangle, descending from 09/04/2013 to 10/31/2013
22.7%$9.09-23.16%QLogic Corp (QLGC)SemiconductorHead-and-shoulders top from 03/26/2014 to 04/09/2014
22.7%$2.03-25.91%Mattson Technology Inc. (MTSN)Semiconductor Cap Equip.Pipe bottom from 12/09/2013 to 12/16/2013

Top

Below are the top 10 stocks with the least amount of noise during the past 3 months.

Average
Noise
Last
Close
YTDStockIndustryMost Recent Chart Pattern
18.8%$23.15-9.39%CRH plc (CRH)Cement and AggregatesFalling wedge from 06/25/2014 to 07/24/2014
23.4%$565.070.84%Google (GOOG)InternetDouble Bottom, Adam and Adam from 06/04/2014 to 06/17/2014
26.6%$21.94-6.99%Assured Guaranty Ltd. (AGO)Insurance (Life)Pipe top from 06/16/2014 to 06/23/2014
28.1%$124.960.04%Chevron Corp (CVX)Petroleum (Integrated)Vertical move up from 04/05/2013 to 04/11/2013
31.3%$91.570.96%Raytheon Co. (RTN)Aerospace/DefenseBroadening top, right-angled and descending from 03/05/2014 to 04/24/2014
31.3%$35.655.16%OGE Energy Corp (OGE)Electric Utility (Central)Triangle, symmetrical from 02/26/2014 to 03/27/2014
31.3%$31.93-3.18%FirstEnergy Corp. (FE)Electric Utility (East)Head-and-shoulders top from 04/16/2014 to 05/09/2014
31.3%$30.50-9.50%ConAgra Foods Inc (CAG)Food ProcessingDouble Top, Adam and Eve from 04/04/2014 to 04/22/2014
31.3%$25.65-17.07%Brady Corp (BRC)Chemical (Diversified)Broadening top, right-angled and ascending from 03/13/2014 to 04/07/2014
32.8%$49.677.42%New Jersey Resources Corp (NJR)Natural Gas (Distributor)Big M from 07/19/2013 to 08/08/2013

Top

Below are the top 10 stocks with the least amount of noise during the past 6 months.

Average
Noise
Last
Close
YTDStockIndustryMost Recent Chart Pattern
25.6%$23.15-9.39%CRH plc (CRH)Cement and AggregatesFalling wedge from 06/25/2014 to 07/24/2014
29.6%$565.070.84%Google (GOOG)InternetDouble Bottom, Adam and Adam from 06/04/2014 to 06/17/2014
32.0%$30.50-9.50%ConAgra Foods Inc (CAG)Food ProcessingDouble Top, Adam and Eve from 04/04/2014 to 04/22/2014
34.4%$62.84-10.46%Emerson Electric (EMR)Computers and PeripheralsTriangle, symmetrical from 06/20/2014 to 07/24/2014
34.4%$25.65-17.07%Brady Corp (BRC)Chemical (Diversified)Broadening top, right-angled and ascending from 03/13/2014 to 04/07/2014
35.2%$2.08-70.33%Prana Biotechnology Limited (PRAN)BiotechnologyDead-cat bounce from 04/01/2014 to 04/01/2014
36.8%$35.70-11.72%Yahoo! Inc. (YHOO)InternetRectangle bottom from 04/16/2014 to 07/31/2014
36.8%$105.02-7.72%United Technologies Corp (UTX)Diversified Co.Broadening top, right-angled and ascending from 12/30/2013 to 01/16/2014
36.8%$14.4580.40%Pioneer Energy Services (PES)Oilfield Svcs/EquipmentTriangle, ascending from 04/30/2014 to 05/14/2014
36.8%$124.960.04%Chevron Corp (CVX)Petroleum (Integrated)Vertical move up from 04/05/2013 to 04/11/2013

Top

Below are the top 10 ETFs with the least amount of noise during the past month.

Average
Noise
Last
Close
YTDStockIndustryMost Recent Chart Pattern
9.1%$45.83-3.41%S and P Europe 350 Index fund (IEV)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/21/2014
13.3%$54.79-0.94%Market Vectors Money-Center (RKH)Long ETFsRising wedge from 09/19/2013 to 12/04/2013
13.6%$32.49-1.52%MSCI Switzerland Index (EWL)Investment Co. (Foreign)Roof from 02/14/2014 to 03/20/2014
13.6%$33.72-5.89%MSCI Sweden Index (EWD)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/22/2014
18.2%$39.372.07%MSCI Spain Index (EWP)Investment Co. (Foreign)Double Top, Adam and Adam from 06/09/2014 to 06/19/2014
18.2%$28.30-10.89%MSCI Germany Index (EWG)Investment Co. (Foreign)Double Top, Adam and Adam from 06/06/2014 to 06/19/2014
18.2%$26.94-5.31%MSCI France Index (EWQ)Investment Co. (Foreign)Broadening top from 11/06/2013 to 12/31/2013
18.2%$16.520.79%MSCI Belgium Investable Mkt Idx (EWK)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/23/2014
18.2%$129.189.38%DJ US Pharmaceuticals index fund (IHE)DrugHead-and-shoulders bottom from 06/06/2013 to 07/03/2013
22.7%$16.21-6.95%UltraShort 2x Financials ProShares (SKF)Short ETFsPipe top from 04/07/2014 to 04/14/2014

Top

Below are the top 10 ETFs with the least amount of noise during the past 3 months.

Average
Noise
Last
Close
YTDStockIndustryMost Recent Chart Pattern
10.2%$54.79-0.94%Market Vectors Money-Center (RKH)Long ETFsRising wedge from 09/19/2013 to 12/04/2013
21.9%$15.740.96%MSCI Italy Index (EWI)Investment Co. (Foreign)Rising wedge from 01/15/2014 to 03/13/2014
25.0%$19.051.82%iShares Silver Trust (SLV)Metals and Mining (Div.)Pipe top from 10/21/2013 to 10/28/2013
25.0%$96.200.50%DJ US consumer goods (household goods) (IYK)Household ProductsDouble Top, Eve and Eve from 06/20/2014 to 07/14/2014
26.6%$16.21-6.95%UltraShort 2x Financials ProShares (SKF)Short ETFsPipe top from 04/07/2014 to 04/14/2014
26.6%$45.83-3.41%S and P Europe 350 Index fund (IEV)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/21/2014
26.6%$26.94-5.31%MSCI France Index (EWQ)Investment Co. (Foreign)Broadening top from 11/06/2013 to 12/31/2013
28.1%$33.72-5.89%MSCI Sweden Index (EWD)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/22/2014
28.1%$11.82-2.63%MSCI Japan Index fund (EWJ)Investment Co. (Foreign)Broadening top, right-angled and ascending from 04/17/2014 to 05/20/2014
29.7%$22.171.42%SPDR Financial Select Sector (XLF)Investment Co. (Domestic)Broadening top, right-angled and ascending from 06/09/2014 to 07/10/2014

Top

Below are the top 10 ETFs with the least amount of noise during the past 6 months.

Average
Noise
Last
Close
YTDStockIndustryMost Recent Chart Pattern
19.6%$54.79-0.94%Market Vectors Money-Center (RKH)Long ETFsRising wedge from 09/19/2013 to 12/04/2013
27.2%$65.611.45%MSCI South Korea Index (EWY)Investment Co. (Foreign)Triple top from 05/09/2013 to 06/03/2013
27.2%$15.740.96%MSCI Italy Index (EWI)Investment Co. (Foreign)Rising wedge from 01/15/2014 to 03/13/2014
28.0%$56.0017.50%MSCI Turkey Index (TUR)Long ETFsTriangle, symmetrical from 02/03/2014 to 03/13/2014
28.2%$13.46-33.53%UltraShort 2x Semiconductor ProShares (SSG)Short ETFsPipe bottom from 01/13/2014 to 01/21/2014
28.8%$16.520.79%MSCI Belgium Investable Mkt Idx (EWK)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/23/2014
29.6%$45.83-3.41%S and P Europe 350 Index fund (IEV)Investment Co. (Foreign)Double Top, Adam and Eve from 12/31/2013 to 01/21/2014
30.4%$11.82-2.63%MSCI Japan Index fund (EWJ)Investment Co. (Foreign)Broadening top, right-angled and ascending from 04/17/2014 to 05/20/2014
30.4%$28.30-10.89%MSCI Germany Index (EWG)Investment Co. (Foreign)Double Top, Adam and Adam from 06/06/2014 to 06/19/2014
31.2%$26.247.67%MSCI Australia Index fund (EWA)Investment Co. (Foreign)Rectangle top from 04/09/2014 to 07/17/2014

Top

Below are the top 10 stocks with the best performance during the past week out of 502 stocks. Stocks from this list may suggest what stocks or industries will do well in the future.

Week
Change
Last
Close
YTDStockIndustryMost Recent Chart Pattern
20.94%$33.96-14.60%Trex Company (TREX)Building MaterialsPipe top from 04/21/2014 to 04/28/2014
14.40%$54.3418.18%Open Text Corp (OTEX)E-CommerceRectangle bottom from 05/08/2014 to 07/30/2014
10.51%$20.5095.98%Century Aluminum Co. (CENX)Metals and Mining (Div.)Triangle, symmetrical from 11/05/2013 to 12/09/2013
9.63%$26.97-21.16%RTI International Metals Inc. (RTI)Metals and Mining (Div.)Pipe bottom from 05/12/2014 to 05/19/2014
9.54%$54.29-5.76%Armstrong World Industries (AWI)Building MaterialsTriple bottom from 03/27/2014 to 05/07/2014
8.99%$11.4050.99%Build-A-Bear Workshop Inc (BBW)Retail (Special Lines)Pipe top from 06/02/2014 to 06/09/2014
8.53%$32.31-34.91%SodaStream International Ltd (SODA)Food ProcessingFalling wedge from 04/23/2014 to 05/21/2014
7.65%$4.085.43%Advanced Micro Devices, Inc (AMD)SemiconductorPipe top from 06/09/2014 to 06/16/2014
7.62%$79.84-2.76%Bunge Ltd (BG)Food ProcessingFalling wedge from 05/22/2014 to 06/17/2014
7.14%$21.02-13.82%Surmodics, Inc (SRDX)Medical SuppliesPipe top from 06/30/2014 to 07/07/2014

Top

Below are the 10 worst performing stocks during the past week out of 502 stocks. Stocks from this list suggest companies or industries that may be having difficulty and might be future short sale candidates.

Week
Change
Last
Close
YTDStockIndustryMost Recent Chart Pattern
-21.10%$27.75-20.53%On Assignment, Inc. (ASGN)Human ResourcesDead-cat bounce from 07/31/2014 to 07/31/2014
-20.17%$12.98-16.42%Genworth Financial Inc (GNW)Insurance (Life)Triangle, symmetrical from 05/13/2014 to 06/23/2014
-19.56%$32.90-2.32%ArcBest Corp (ARCB)Trucking/Transp. LeasingDead-cat bounce from 07/31/2014 to 07/31/2014
-17.80%$26.55-29.14%Noble Corporation (NE)Oilfield Svcs/EquipmentTriangle, symmetrical from 03/14/2014 to 05/14/2014
-16.35%$7.11-49.11%hhgregg, Inc (HGG)Retail (Special Lines)Head-and-shoulders top from 08/26/2013 to 10/24/2013
-15.69%$5.59-21.60%Monster Worldwide (MWW)AdvertisingPennant from 06/10/2014 to 06/19/2014
-14.45%$14.4580.40%Pioneer Energy Services (PES)Oilfield Svcs/EquipmentTriangle, ascending from 04/30/2014 to 05/14/2014
-14.31%$41.027.49%Anika Therapeutics Inc (ANIK)BiotechnologyPipe top from 01/13/2014 to 01/21/2014
-12.92%$29.7822.35%Arris Group Inc. (ARRS)Telecom. EquipmentPipe bottom from 07/07/2014 to 07/14/2014
-12.60%$1.11-79.56%Cache (CACH)ApparelDead-cat bounce from 05/08/2014 to 05/08/2014

Top

Below are the top 10 stocks with the best performance year to date out of 502 stocks. Knowing which securities are trending higher makes selecting stocks for momentum trades much easier, especially if some share the same industry.

YTD
Change
Last
Close
StockIndustryMost Recent Chart Pattern
117.44%$11.22RF Micro Devices Inc. (RFMD)SemiconductorDouble Bottom, Adam and Adam from 01/10/2014 to 01/24/2014
95.98%$20.50Century Aluminum Co. (CENX)Metals and Mining (Div.)Triangle, symmetrical from 11/05/2013 to 12/09/2013
80.40%$14.45Pioneer Energy Services (PES)Oilfield Svcs/EquipmentTriangle, ascending from 04/30/2014 to 05/14/2014
76.31%$36.99Myriad Genetics Inc (MYGN)BiotechnologyDouble Top, Adam and Adam from 04/04/2014 to 05/01/2014
62.60%$53.87Skechers USA Inc (SKX)ShoeRising wedge from 04/23/2014 to 05/22/2014
61.55%$39.79Newfield Exploration Company (NFX)Natural Gas (Diversified)Pipe bottom from 07/07/2014 to 07/14/2014
56.92%$26.66Nabors Industries, Ltd. (NBR)Oilfield Svcs/EquipmentDouble Top, Eve and Adam from 07/03/2014 to 07/24/2014
56.73%$8.15MannKind Corp (MNKD)BiotechnologyTriangle, symmetrical from 04/10/2014 to 05/07/2014
54.66%$16.44Alcoa (AA)Metals and Mining (Div.)Pipe top from 01/21/2014 to 01/27/2014
50.99%$11.40Build-A-Bear Workshop Inc (BBW)Retail (Special Lines)Pipe top from 06/02/2014 to 06/09/2014

Top

Below are the 10 worst performing stocks year to date out of 502 stocks. These stocks might represent a good momentum trade from the short side. If some stocks also share the same industry, then the industry may be weak, so concentrate your search there.

YTD
Change
Last
Close
StockIndustryMost Recent Chart Pattern
-79.56%$1.11Cache (CACH)ApparelDead-cat bounce from 05/08/2014 to 05/08/2014
-70.33%$2.08Prana Biotechnology Limited (PRAN)BiotechnologyDead-cat bounce from 04/01/2014 to 04/01/2014
-58.64%$0.76Anadigics Inc (ANAD)SemiconductorHead-and-shoulders bottom from 11/20/2013 to 01/13/2014
-58.10%$57.92Nu Skin Enterprises, Inc (NUS)Household ProductsRectangle bottom from 05/15/2014 to 07/07/2014
-51.41%$17.97Acxiom Corp (ACXM)Computer Software and SvcsDead-cat bounce from 05/15/2014 to 05/15/2014
-49.45%$4.59Vivus Inc (VVUS)BiotechnologyPipe bottom from 11/04/2013 to 11/11/2013
-49.11%$7.11hhgregg, Inc (HGG)Retail (Special Lines)Head-and-shoulders top from 08/26/2013 to 10/24/2013
-49.09%$3.32Hercules Offshore, Inc. (HERO)Petroleum (Producing)Triangle, symmetrical from 04/24/2014 to 06/05/2014
-48.48%$40.54Conns Inc (CONN)Retail (Special Lines)Pipe bottom from 06/09/2014 to 06/16/2014
-46.23%$5.85Blyth Inc (BTH)Household ProductsHead-and-shoulders bottom from 01/14/2014 to 02/24/2014

Top

Below are the top 10 exchange traded funds (ETF) with the best performance this past week out of 95 ETFs. A hot ETF may suggest an industry or commodity that is doing well, so look there for individual stock picks or just trade the ETF for a momentum play.

Week
Change
Last
Close
YTDFundMost Recent Chart Pattern
8.76%$40.58-17.54%UltraShort 2x Oil and Gas ProShares (DUG)Triple bottom from 02/24/2014 to 03/11/2014
5.83%$26.67-2.74%DJIA short 2x ProShares (DXD)Pipe top from 04/07/2014 to 04/14/2014
5.78%$16.94-21.72%UltraShort 2x Technology ProShares (REW)Horn bottom from 03/17/2014 to 03/31/2014
5.12%$16.21-6.95%UltraShort 2x Financials ProShares (SKF)Pipe top from 04/07/2014 to 04/14/2014
5.02%$26.34-11.19%S and P short 2x ProShares (SDS)Pipe top from 04/07/2014 to 04/14/2014
4.67%$13.46-33.53%UltraShort 2x Semiconductor ProShares (SSG)Pipe bottom from 01/13/2014 to 01/21/2014
4.46%$29.29-14.43%UltraShort 2x Basic Materials ProShares (SMN)Double Top, Adam and Adam from 03/13/2014 to 03/27/2014
4.15%$48.96-18.35%Nasdaq 100 short 2x ProShares (QID)Falling wedge from 04/10/2014 to 05/19/2014
3.76%$15.72-27.19%UltraShort 2x Real Estate ProShares (SRS)Double Top, Adam and Adam from 08/19/2013 to 09/03/2013
2.92%$25.76-1.34%DJIA short 1x ProShares (DOG)Broadening top, right-angled and descending from 07/03/2013 to 10/09/2013

Top

Below are the 10 worst performing ETFs over the past week out of 95 ETFs. These funds may represent companies or industries that are suffering. Avoid going long in those stocks or buying any stocks from those industries.

Week
Change
Last
Close
YTDFundMost Recent Chart Pattern
-6.37%$15.740.96%MSCI Italy Index (EWI)Rising wedge from 01/15/2014 to 03/13/2014
-5.95%$39.372.07%MSCI Spain Index (EWP)Double Top, Adam and Adam from 06/09/2014 to 06/19/2014
-5.88%$56.0017.50%MSCI Turkey Index (TUR)Triangle, symmetrical from 02/03/2014 to 03/13/2014
-5.74%$113.90-1.05%DJIA, long 2x Ultra Dow 30 ProShares (DDM)Pipe bottom from 04/07/2014 to 04/14/2014
-5.57%$28.30-10.89%MSCI Germany Index (EWG)Double Top, Adam and Adam from 06/06/2014 to 06/19/2014
-5.45%$27.225.34%PowerShares Dynamic Oil Services (PXJ)Head-and-shoulders top from 06/23/2014 to 07/17/2014
-5.16%$17.29-12.72%MSCI Austria Investable Mkt Index (EWO)Head-and-shoulders bottom from 03/03/2014 to 03/24/2014
-5.04%$111.148.37%S and P long 2x Ultra SP 500 ProShares (SSO)Pipe bottom from 04/07/2014 to 04/14/2014
-4.79%$71.3810.14%DJ US Oil Equip and services (IEZ)Double Top, Adam and Adam from 07/17/2014 to 07/24/2014
-4.55%$40.697.16%SPDR Utilities Select Sector (XLU)Double Top, Adam and Adam from 06/19/2014 to 06/30/2014

Top

Below are the top 10 exchange traded funds (ETF) with the best performance year to date out of 95 ETFs. Concentrate your individual stock picks from industries that are doing well, or trade the ETF for a momentum play.

YTD
Change
Last
Close
FundMost Recent Chart Pattern
17.54%$43.55PowerShares Dynamic Biotech and Genome (PBE)Triangle, symmetrical from 04/15/2014 to 05/08/2014
17.50%$56.00MSCI Turkey Index (TUR)Triangle, symmetrical from 02/03/2014 to 03/13/2014
16.82%$87.29iShares Cohen and Steers Realty Majors (ICF)Triangle, descending from 12/04/2013 to 01/02/2014
16.75%$80.15MSCI Thailand Invest Mkt Index (THD)Double Top, Eve and Eve from 04/17/2014 to 05/02/2014
15.49%$115.03Nasdaq 100 long 2x Ultra QQQ ProShares (QLD)Pipe bottom from 04/07/2014 to 04/14/2014
13.91%$48.33Market Vectors Semiconductor (SMH)Triple top from 07/03/2014 to 07/22/2014
13.31%$82.39iShares PHLX SOX Semiconductor Sector (SOXX)Triple top from 07/03/2014 to 07/22/2014
13.20%$60.12Market Vectors Pharmaceutical (PPH)Triangle, symmetrical from 07/03/2014 to 07/30/2014
11.91%$104.36iShares DJ US Healthcare Provider (IHF)Double Top, Adam and Adam from 03/21/2014 to 04/02/2014
11.30%$53.50Market Vectors Oil Services (OIH)Double Top, Eve and Adam from 07/01/2014 to 07/23/2014

Top

Below are the 10 worst performing ETFs year to date out of 95 ETFs. These represent the stocks or industries you will want to avoid buying or want to concentrate selling short.

YTD
Change
Last
Close
FundMost Recent Chart Pattern
-33.53%$13.46UltraShort 2x Semiconductor ProShares (SSG)Pipe bottom from 01/13/2014 to 01/21/2014
-27.19%$15.72UltraShort 2x Real Estate ProShares (SRS)Double Top, Adam and Adam from 08/19/2013 to 09/03/2013
-21.72%$16.94UltraShort 2x Technology ProShares (REW)Horn bottom from 03/17/2014 to 03/31/2014
-18.35%$48.96Nasdaq 100 short 2x ProShares (QID)Falling wedge from 04/10/2014 to 05/19/2014
-17.54%$40.58UltraShort 2x Oil and Gas ProShares (DUG)Triple bottom from 02/24/2014 to 03/11/2014
-14.43%$29.29UltraShort 2x Basic Materials ProShares (SMN)Double Top, Adam and Adam from 03/13/2014 to 03/27/2014
-12.72%$17.29MSCI Austria Investable Mkt Index (EWO)Head-and-shoulders bottom from 03/03/2014 to 03/24/2014
-11.19%$26.34S and P short 2x ProShares (SDS)Pipe top from 04/07/2014 to 04/14/2014
-10.89%$28.30MSCI Germany Index (EWG)Double Top, Adam and Adam from 06/06/2014 to 06/19/2014
-10.48%$22.22DJ US Home construction index fund (ITB)Flag from 05/28/2014 to 06/04/2014

Top

Below is a list of market index performance over the past week.

Week
Change
Last
Close
YTDIndexMost Recent Chart Pattern
-1.92%8,059.538.90%DJ 20 Transportation (^DJT)Diamond top from 06/02/2014 to 06/27/2014
-2.02%4,352.844.22%Nasdaq Composite (^IXIC)Triangle, symmetrical from 04/24/2014 to 05/21/2014
-2.52%1,920.213.89%S and P 500 (^GSPC)Head-and-shoulders top from 11/18/2013 to 12/09/2013
-2.85%16,429.47-0.89%DJ 30 Industrials (^DJI)Channel from 05/27/2014 to 07/25/2014
-4.70%532.018.45%DJ 15 Utilities (^DJU)Head-and-shoulders top from 04/17/2014 to 05/07/2014

Top

Below are the top 10 country exchange traded funds with the best performance this past week out of 26 ETFs. These may highlight emerging markets that are ready to soar.

Week
Change
Last
Close
YTDFundMost Recent Chart Pattern
-0.07%$80.1516.75%MSCI Thailand Invest Mkt Index (THD)Double Top, Eve and Eve from 04/17/2014 to 05/02/2014
-0.48%$52.027.43%MSCI Israel Cap Invest Mt Index (EIS)Triangle, ascending from 04/21/2014 to 06/05/2014
-0.62%$15.920.63%MSCI Malaysia Index (EWM)Rectangle top from 05/08/2014 to 07/24/2014
-1.07%$13.925.69%MSCI Singapore Index (EWS)Triangle, symmetrical from 12/14/2012 to 02/08/2013
-1.14%$21.725.44%MSCI Hong Kong Index fund (EWH)Big W from 02/05/2014 to 03/20/2014
-1.79%$69.151.69%MSCI Mexico Investable Mkt idx (EWW)Scallop, ascending and inverted from 03/14/2014 to 04/25/2014
-1.87%$65.611.45%MSCI South Korea Index (EWY)Triple top from 05/09/2013 to 06/03/2013
-2.02%$50.047.08%MSCI Pacific ex-Japan Index fund (EPP)Broadening top from 07/17/2013 to 09/11/2013
-2.19%$69.547.83%MSCI South Africa Index (EZA)Double Top, Adam and Adam from 09/18/2013 to 10/22/2013
-2.30%$43.794.77%MSCI Emerging Markets Index fund (EEM)Double Top, Adam and Adam from 07/23/2013 to 08/14/2013

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Below are the top 10 country exchange traded funds with the best performance year to date out of 26 ETFs. Finding several countries from a similar region that is performing well helps identify which international mutual fund or ETF may continue to do well in the future.

YTD
Change
Last
Close
FundMost Recent Chart Pattern
17.50%$56.00MSCI Turkey Index (TUR)Triangle, symmetrical from 02/03/2014 to 03/13/2014
16.75%$80.15MSCI Thailand Invest Mkt Index (THD)Double Top, Eve and Eve from 04/17/2014 to 05/02/2014
8.54%$31.65MSCI Canada Index (EWC)Double Bottom, Adam and Adam from 06/24/2013 to 07/05/2013
8.35%$48.41MSCI Brazil Index fund (EWZ)Scallop, ascending from 09/20/2013 to 10/16/2013
7.83%$69.54MSCI South Africa Index (EZA)Double Top, Adam and Adam from 09/18/2013 to 10/22/2013
7.67%$26.24MSCI Australia Index fund (EWA)Rectangle top from 04/09/2014 to 07/17/2014
7.63%$15.52MSCI Taiwan Index (EWT)Head-and-shoulders bottom from 01/09/2014 to 02/25/2014
7.43%$52.02MSCI Israel Cap Invest Mt Index (EIS)Triangle, ascending from 04/21/2014 to 06/05/2014
7.08%$50.04MSCI Pacific ex-Japan Index fund (EPP)Broadening top from 07/17/2013 to 09/11/2013
5.69%$13.92MSCI Singapore Index (EWS)Triangle, symmetrical from 12/14/2012 to 02/08/2013

 

-- Thomas Bulkowski

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Saturday 5/31/14. Merger Chart Patterns

I was looking through my book, Fundamental Analysis and Position Trading (pictured) and found something interesting.

How often do buyouts and mergers accompany a chart pattern?

The answer: 50% of the time.

What chart patterns top the list?

The answer: None at 50% but you already know that because I just told you. In second place are double bottoms. They occur 31% of the time.

For the rest, look at Table 2.2 on page 12 of the book.

-- Thomas Bulkowski

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Thursday 5/29/14. Trading Thursday: Nasdaq

The index dropped by -0.3% or -12 points. Since 02/05/1971 the index made 452 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 236 occasions.
     Average loss was -0.8% on 216 occasions.
Expect the index to close higher 52.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 61/103 or 59.2% of the time.
     The prediction of the index closing lower has been right 25/50 or 50.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

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

An ascending triangle appears within the red lines. My book, Encyclopedia of Chart Patterns, Second Edition says that ascending triangles break out upward 70% of the time in a bull market. You have to do a small bit of math to get that number from the statistics presented, but it's easy enough to do.

In this case, however, the breakout was downward! How can that be? Because we are dealing with probabilities and even a 100% chance of an upward breakout won't guarantee that an upward breakout will happen. This time could be the outlier that sets a trend.

Anyway, the downward move hasn't reached the bottom of the triangle nor dropped the height of it yet (below the breakout where price crosses the lower trendline), suggesting more of a downward move on Thursday.

The above probabilities suggest the index will close higher, though.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,969.53    
 Weekly S2  4,051.57  82.04   
 Monthly S1  4,097.30  45.73   
 Weekly S1  4,138.32  41.02   
 Monthly Pivot  4,141.94  3.62   
 Weekly Pivot  4,162.45  20.51   
 Daily S2  4,205.43  42.98   
 Daily S1  4,215.25  9.82   
 Low  4,216.89  1.64   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  4,225.02  8.13   
 Close  4,225.07  0.05   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  4,226.71  1.64   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  4,227.53  0.82   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  4,230.04  2.51   
 Open  4,234.96  4.92   
 Daily R1  4,236.53  1.57   Yes! The Daily R1 is close to the Open.
 High  4,238.17  1.64   Yes! The High is close to the Daily R1.
 Daily R2  4,247.99  9.82   
 Weekly R1  4,249.20  1.21   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  4,269.71  20.51   
 Weekly R2  4,273.33  3.62   
 Monthly R2  4,314.35  41.02   

Tuesday 5/27/14. Trading Tuesday: Holidays

The index climbed by 0.4% or 63.19 points. Since 10/01/1928 the index made 1023 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 539 occasions.
     Average loss was -0.6% on 484 occasions.
Expect the index to close higher 52.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 73/112 or 65.2% of the time.
     The prediction of the index closing lower has been right 20/37 or 54.1% of the time.

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

Instead of the usual blog showing an intraday chart of the Dow, let's talk about pre- and post-holiday trading.

I researched pre- and post-holiday trading in the stocks that I follow. Memorial day is the last Monday in the month of May. The trading day before the holiday, in a bull market, the stocks I looked at closed higher 56.5% of the time. That's what happened to the Dow industrials, S&P 500 index, and Nasdaq composite this time.

The trading day after the memorial holiday showed stocks closing lower 51.6% of the time (or closing higher 48.4% of the time). That's a slim margin, so the results are about random with a slight tendency to close lower.

However, the probabilities above suggest a higher close in the Dow industrial average.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  16,128.63    
 Weekly S2  16,248.44  119.81   
 Monthly S1  16,367.45  119.01   
 Weekly S1  16,427.36  59.91   
 Daily S2  16,519.36  92.01   
 Weekly Pivot  16,520.21  0.85   Yes! The Weekly Pivot is close to the Daily S2.
 Low  16,544.49  24.28   
 Open  16,544.49  0.00   Yes! The Open is close to the Low.
 Monthly Pivot  16,551.48  6.99   
 Daily S1  16,562.82  11.34   
 61.8% Down from Intraday High  16,570.69  7.87   
 50% Down from Intraday High  16,578.78  8.09   
 38.2% Down from Intraday High  16,586.87  8.09   
 Daily Pivot  16,587.94  1.07   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  16,606.27  18.33   
 High  16,613.07  6.80   Yes! The High is close to the Close.
 Daily R1  16,631.40  18.33   
 Daily R2  16,656.52  25.13   
 Weekly R1  16,699.13  42.60   
 Monthly R1  16,790.30  91.17   
 Weekly R2  16,791.98  1.68   Yes! The Weekly R2 is close to the Monthly R1.
 Monthly R2  16,974.33  182.35   

Saturday 5/24/14. Ads and DisAds of Chart Patterns

When I started working on the introduction to Getting Started in Chart Patterns, Second Edition (pictured), I thought of adding sections on the advantages and disadvantages of chart patterns. To my dismay, the disadvantages (6) outnumbered the advantages (4).

I justified this imbalance by viewing the importance of each advantage or disadvantage. Clearly, having a chart pattern that works is great, but sometimes they fail.

One of the disadvantages is that "Stock placement can be tricky." That's not a serious problem with the chart pattern since it depends on the skill of the trader.

You can read the other items I found on pages 3 to 5 of the book.

Have a good and safe holiday weekend!

-- Thomas Bulkowski


Thursday 5/22/14. Trading Thursday: Nasdaq

The index climbed by 0.8% or 34.65 points. Since 02/05/1971 the index made 359 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 239 occasions.
     Average loss was -0.9% on 120 occasions.
Expect the index to close higher 66.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 60/102 or 58.8% of the time.
     The prediction of the index closing lower has been right 25/50 or 50.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

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

Circled in blue is a nice double bottom that lead to a wonderful move higher going into today's trading.

However, that strong upward move transitioned into a reversal pattern -- a double top at AB. The confirmed pattern (a close below the low between the two peaks, shown here as a red line) lead to a shallower drop. And yet the index hit the measure rule target. That's the height of the double top subtracted from the breakout price (the red line). I've found that measure to be an accurate one for day trading using chart patterns. It doesn't always work, but it's a valuable exit signal.

Want more information on these chart patterns? Read my book, Encyclopedia of Chart Patterns, Second Edition pictured.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,853.78    
 Weekly S2  3,988.37  134.59   
 Monthly S1  3,992.66  4.29   
 Weekly S1  4,059.96  67.30   
 Monthly Pivot  4,084.91  24.95   
 Daily S2  4,092.92  8.01   
 Low  4,103.61  10.69   
 Open  4,105.96  2.35   Yes! The Open is close to the Low.
 Weekly Pivot  4,107.54  1.58   Yes! The Weekly Pivot is close to the Open.
 Daily S1  4,112.23  4.69   
 61.8% Down from Intraday High  4,115.07  2.84   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  4,118.61  3.54   
 38.2% Down from Intraday High  4,122.15  3.54   
 Daily Pivot  4,122.92  0.77   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  4,131.54  8.62   
 High  4,133.61  2.07   Yes! The High is close to the Close.
 Daily R1  4,142.23  8.62   
 Daily R2  4,152.92  10.69   
 Weekly R1  4,179.13  26.21   
 Monthly R1  4,223.79  44.66   
 Weekly R2  4,226.71  2.92   Yes! The Weekly R2 is close to the Monthly R1.
 Monthly R2  4,316.04  89.33   

Tuesday 5/20/14. Trading Tuesday: Dow

The index climbed by 0.1% or 20.55 points. Since 10/01/1928 the index made 1239 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 635 occasions.
     Average loss was -0.7% on 604 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 73/111 or 65.8% of the time.
     The prediction of the index closing lower has been right 20/37 or 54.1% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

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

A symmetrical triangle at A shown here highlighted in red. The breakout from this chart pattern is upward but the index soon rounds over to form a throwback (B).

In that situation, on the daily charts, a throwback sees a stock resume the upward move 65% of the time. That is a hopeful signal for tomorrow's trading.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  15,718.00    
 Monthly S1  16,114.93  396.93   
 Weekly S2  16,210.23  95.30   
 Weekly S1  16,361.04  150.82   
 Daily S2  16,409.27  48.23   
 Monthly Pivot  16,425.22  15.95   
 Low  16,442.12  16.90   
 Daily S1  16,460.57  18.45   
 61.8% Down from Intraday High  16,474.26  13.70   
 50% Down from Intraday High  16,484.19  9.93   
 Open  16,490.35  6.16   Yes! The Open is close to the 50% Down from Intraday High.
 Daily Pivot  16,493.41  3.06   Yes! The Daily Pivot is close to the Open.
 38.2% Down from Intraday High  16,494.12  0.71   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  16,511.86  17.74   
 High  16,526.26  14.40   
 Daily R1  16,544.71  18.45   
 Weekly Pivot  16,548.28  3.57   Yes! The Weekly Pivot is close to the Daily R1.
 Daily R2  16,577.55  29.28   
 Weekly R1  16,699.09  121.54   
 Monthly R1  16,822.15  123.06   
 Weekly R2  16,886.33  64.18   
 Monthly R2  17,132.44  246.11   

Monday 5/19/14. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq on the daily scale.

I show a figure of the Nasdaq composite on the daily scale.

The red lines highlight a chart pattern called a symmetrical triangle. Those are formed by two converging trendlines. A breakout occurs when the index closes above the top red trendline or below the bottom one.

An upward breakout occurs 54% of the time according to statistics I gathered for my Encyclopedia of Chart Patterns, Second Edition book.

What does this say about the upcoming breakout direction?

Nothing. The market is going to do what it's going to do regardless of what the statistics say.

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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 112.13 points.
Tuesday: Up 19.97 points.
Wednesday: Down 101.47 points.
Thursday: Down 167.16 points.
Friday: Up 44.5 points.

For the Week...

The Dow industrials were down 92.03 points or 0.6%.
The Nasdaq composite was up 18.72 points or 0.5%.
The S&P 500 index was down 0.62 points or 0.0%.

Year to Date...

Dow Industrials
     1.5% down from the high of 16,735.51 on 05/13/2014.
     7.5% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     6.4% down from the high of 4,371.71 on 03/06/2014.
     3.7% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     1.3% down from the high of 1,902.17 on 05/13/2014.
     8.1% up from the low of 1,737.92 on 02/05/2014.

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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
Crude inventories10:30 W?My guess: Measures oil inventory.
FOMC Minutes2:00 W?Minutes of the prior Federal Reserve meeting.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Existing home sales10:00 ThCCounts sales of used homes.
Leading indicators10:00 ThD-Summary of already known reports.
New home sales10:00 FC+Shows sales of single-family homes.

Options Expiration

VIX options expire on Wednesday.

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Swing and Position Traders: Chart Pattern Indicator

As of 05/16/2014, the CPI had:

12 bearish patterns,
5 bullish patterns,
421 patterns waiting for breakout.
The CPI signal is 29.4%, which is bearish (<= 35%).

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  16,384  16,437  16,468  16,522  16,553 
Weekly  16,203  16,347  16,541  16,685  16,879 
Monthly  15,711  16,101  16,418  16,808  17,126 
S&P500 (^GSPC): Daily  1,860  1,869  1,874  1,882  1,887 
Weekly  1,841  1,859  1,881  1,899  1,921 
Monthly  1,779  1,828  1,865  1,915  1,952 
Nasdaq (^IXIC): Daily  4,028  4,060  4,075  4,106  4,122 
Weekly  3,975  4,033  4,094  4,152  4,213 
Monthly  3,840  3,965  4,071  4,196  4,302 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 30.3%   The trend may continue. 
 1 month down 19.7%   Expect a reversal soon. 
 S & P 500 (^GSPC) 2 weeks down 16.2%   Expect a reversal soon. 
 1 month down 20.7%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week up 43.0%   Expect a random direction. 
 3 months down 10.2%   Expect a reversal soon. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
23Triangle, symmetrical
8Double Top, Adam and Adam
7Dead-cat bounce
7Head-and-shoulders bottom
6Broadening top
6Head-and-shoulders top
4Diamond top
3Double Top, Eve and Eve
3Triangle, ascending
3Broadening wedge, descending

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

The 10 types of most frequently appearing chart patterns in the stocks, 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. Cement and Aggregates1. Biotechnology
2. Biotechnology2. Cement and Aggregates
3. Telecom. Equipment3. Trucking/Transp. Leasing
4. Trucking/Transp. Leasing4. Drug
5. Natural Gas (Diversified)5. Telecom. Equipment
50. Household Products50. Toiletries/Cosmetics
51. Retail Building Supply51. Retail Building Supply
52. Toiletries/Cosmetics52. E-Commerce
53. Short ETFs53. Retail (Special Lines)
54. Retail (Special Lines)54. Short ETFs

-- Thomas Bulkowski

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Saturday 5/17/14. Log versus Linear Scale

When looking at a stock chart, searching for chart patterns, use the logarithmic scale instead of the linear or arithmetic scale. Why? Because if a security makes a large price move, the log scale gives a clearer view of what happened.

However, if you're physically measuring the height (like holding up a ruler to the chart) or estimating distance, then use the linear scale.

Try this: On the log scale draw a straight trendline. On the linear scale, the same trendline will appear curved. I show an example of this in my book, Visual Guide to Chart Patterns (pictured above), pages 20-21.

Read chapter 3 for other facts about trendlines. The chapter also provides links to two videos that accompany the book. Those videos describe how to use trendlines to detect trend changes.


Thursday 5/15/14. Trading Thursday: Nasdaq

The index dropped by -0.7% or -29.54 points. Since 02/05/1971 the index made 247 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 114 occasions.
     Average loss was -1.1% on 133 occasions.
Expect the index to close lower 53.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 60/102 or 58.8% of the time.
     The prediction of the index closing lower has been right 24/49 or 49.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

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

A rectangle bottom appears at B. That area posed overhead resistance to today's trading. The index hit that resistance today at 10:00 and dropped from there.

The Nasdaq today formed a descending triangle at A.

This triangle broke out upward but the move didn't last long before the index collapsed and closed lower. To me, the strong drop near the end of the session suggests a rebound at tomorrow's open, but I could be wrong, of course. I still expect the index to move higher but it's been struggling of late. The above probabilities suggest a lower close, so who am I to argue?

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,838.12    
 Monthly S1  3,969.38  131.25   
 Weekly S2  3,969.38  0.01   Yes! The Weekly S2 is close to the Monthly S1.
 Weekly S1  4,035.01  65.62   
 Daily S2  4,070.43  35.42   
 Monthly Pivot  4,077.28  6.85   
 Daily S1  4,085.53  8.25   
 Weekly Pivot  4,086.67  1.14   Yes! The Weekly Pivot is close to the Daily S1.
 Low  4,093.83  7.16   
 Close  4,100.63  6.80   
 61.8% Down from Intraday High  4,108.54  7.91   
 Daily Pivot  4,108.93  0.39   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  4,113.08  4.15   
 38.2% Down from Intraday High  4,117.62  4.54   
 Open  4,122.08  4.46   
 Daily R1  4,124.03  1.95   Yes! The Daily R1 is close to the Open.
 High  4,132.33  8.30   
 Daily R2  4,147.43  15.10   
 Weekly R1  4,152.30  4.87   
 Weekly R2  4,203.96  51.67   
 Monthly R1  4,208.54  4.57   
 Monthly R2  4,316.44  107.91   

Tuesday 5/13/14. Trading Tuesday: Dow

The index climbed by 0.7% or 112.13 points. Since 10/01/1928 the index made 630 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 346 occasions.
     Average loss was -0.7% on 284 occasions.
Expect the index to close higher 54.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 72/110 or 65.5% of the time.
     The prediction of the index closing lower has been right 20/37 or 54.1% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

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

The index flat lined like a dead animal after the first 15 minutes of trading. I'm not sure what to make of it for tomorrow (Tuesday). Guess the above probabilities give a hint.

$ $ $

I found out why utility stocks have been getting killed in the last few days. According to Time magazine, the EPA will "issue rules to curb carbon emissions from existing power plants," in the next few weeks.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  15,836.95    
 Monthly S1  16,266.21  429.26   
 Weekly S2  16,292.99  26.78   
 Monthly Pivot  16,444.58  151.59   
 Weekly S1  16,494.23  49.65   
 Daily S2  16,541.69  47.46   
 Weekly Pivot  16,558.59  16.90   
 Low  16,584.82  26.23   
 Open  16,584.82  0.00   Yes! The Open is close to the Low.
 Daily S1  16,618.58  33.76   
 61.8% Down from Intraday High  16,630.67  12.09   
 50% Down from Intraday High  16,644.83  14.16   
 38.2% Down from Intraday High  16,658.99  14.16   
 Daily Pivot  16,661.71  2.72   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  16,695.47  33.76   
 High  16,704.84  9.37   Yes! The High is close to the Close.
 Daily R1  16,738.60  33.76   
 Weekly R1  16,759.83  21.23   
 Daily R2  16,781.73  21.90   
 Weekly R2  16,824.19  42.46   
 Monthly R1  16,873.84  49.65   
 Monthly R2  17,052.21  178.37   

Monday 5/12/14. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

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

I chose the transports this week because of the ascending triangle. I show that highlighted in red.

Price breaks out upward from ascending triangles 70% of the time, according to a study I conducted for my book, Encyclopedia of Chart Patterns, Second Edition.

In blue, I show a broadening top, which I've mentioned before. That chart pattern has not broken out yet, either.

My guess is that the index will breakout upward.

 

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 17.66 points.
Tuesday: Down 129.53 points.
Wednesday: Up 117.52 points.
Thursday: Up 32.43 points.
Friday: Up 32.37 points.

For the Week...

The Dow industrials were up 70.45 points or 0.4%.
The Nasdaq composite was down 52.03 points or 1.3%.
The S&P 500 index was down 2.66 points or 0.1%.

Year to Date...

Dow Industrials
     0.3% down from the high of 16,631.63 on 04/04/2014.
     8.1% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     6.9% down from the high of 4,371.71 on 03/06/2014.
     3.2% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     1.0% down from the high of 1,897.28 on 04/04/2014.
     8.1% up from the low of 1,737.92 on 02/05/2014.

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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
Treasury budget2:00 MDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 TA-Reports total retail sales (not services). Are people spending?
International trade8:30 TC+Import/export prices, trade balance. US economy vs others.
Business inventories10:00 TC-Reports manufacturing, wholesale, retail inventories.
Producer price index8:30 WB-Measures wholesale goods cost. An indication of future inflation.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Consumer price index8:30 ThB+Inflation report. Measures cost of goods and services.
Industrial production9:15 ThB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 ThB-Gauges economic activity, hints of inflation.
Housing starts8:30 FB-Number of homes beginning construction.
Building permits8:30 FB-Measures building permits for new construction.

Options Expiration

The following is courtesy of the Options Industry Council.

OptionDate
A.M. settled index options cease trading.Thursday
Expiring equity and P.M. settled index options cease trading. Expiring cash-settled currency options cease trading at 12:00 P.M. EST.Friday
Equity, index, and cash-settled currency options expireSaturday

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

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Swing and Position Traders: Chart Pattern Indicator

As of 05/09/2014, the CPI had:

17 bearish patterns,
11 bullish patterns,
313 patterns waiting for breakout.
The CPI signal is 39.3%, 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  16,467  16,525  16,557  16,615  16,647 
Weekly  16,256  16,419  16,521  16,685  16,787 
Monthly  15,800  16,191  16,407  16,799  17,015 
S&P500 (^GSPC): Daily  1,863  1,871  1,875  1,882  1,886 
Weekly  1,847  1,862  1,876  1,892  1,905 
Monthly  1,784  1,831  1,861  1,908  1,938 
Nasdaq (^IXIC): Daily  4,010  4,041  4,056  4,087  4,103 
Weekly  3,960  4,016  4,077  4,133  4,194 
Monthly  3,829  3,950  4,068  4,189  4,307 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 29.6%   The trend may continue. 
 4 months up 19.7%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week down 28.1%   The trend may continue. 
 1 month down 20.7%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 31.2%   The trend may continue. 
 3 months down 10.2%   Expect a reversal soon. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

I found 36 pipe bottoms last week, which is very bullish! Large numbers of pipe bottoms often signal the start of a short to intermediate-term move up before price drops back down, forming an unconfirmed double bottom.

 Found Chart Pattern Name
48Pipe bottom
17Triangle, symmetrical
7Broadening top
6Head-and-shoulders bottom
5Double Bottom, Eve and Eve
5Diamond top
5Double Top, Adam and Adam
5Dead-cat bounce
4Rectangle top
4Broadening wedge, descending

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

The 10 types of most frequently appearing chart patterns in the stocks, 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. Biotechnology1. Cement and Aggregates
2. Cement and Aggregates2. Drug
3. Trucking/Transp. Leasing3. Trucking/Transp. Leasing
4. Drug4. Biotechnology
5. Telecom. Equipment5. Aerospace/Defense
50. Toiletries/Cosmetics50. Household Products
51. Retail Building Supply51. Retail Building Supply
52. E-Commerce52. E-Commerce
53. Retail (Special Lines)53. Retail (Special Lines)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 5/8/14. Trading Thursday: Nasdaq

The index dropped by -0.3% or -13.09 points. Since 02/05/1971 the index made 450 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 236 occasions.
     Average loss was -0.9% on 214 occasions.
Expect the index to close higher 52.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 60/101 or 59.4% of the time.
     The prediction of the index closing lower has been right 24/49 or 49.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

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

A pair of chart patterns reflects indecision on the part of the index.

A double top at AB confirms as a valid chart pattern at C when the index closed below the valley between the two peaks. Following that, a double bottom appeared at DE. This also confirmed at F when the index closed above the red line.

Both patterns met their measure rule predictions. That means the height of each pattern projected from the price where the index crosses their respective red lines gives a price target that was met.

If you want more information on double tops and bottoms, read my book, Visual Guide to Chart Patterns (pictured). At the end of the chapters I have a visual exercise which is a lot of fun to take. Since the book is a visual guide, there are plenty of charts, in color, too.

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

-- Thomas Bulkowski

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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,759.87    
 Monthly S1  3,913.77  153.90   
 Weekly S2  3,941.74  27.97   
 Daily S2  3,989.94  48.19   
 Weekly S1  4,004.71  14.77   
 Low  4,021.05  16.34   
 Daily S1  4,028.80  7.75   
 61.8% Down from Intraday High  4,047.78  18.98   
 50% Down from Intraday High  4,056.04  8.26   
 Daily Pivot  4,059.92  3.88   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  4,064.30  4.38   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  4,067.67  3.37   Yes! The Close is close to the 38.2% Down from Intraday High.
 Weekly Pivot  4,077.13  9.46   
 Open  4,085.49  8.36   
 High  4,091.03  5.54   Yes! The High is close to the Open.
 Daily R1  4,098.78  7.75   
 Monthly Pivot  4,099.93  1.15   Yes! The Monthly Pivot is close to the Daily R1.
 Daily R2  4,129.90  29.97   
 Weekly R1  4,140.10  10.20   
 Weekly R2  4,212.52  72.43   
 Monthly R1  4,253.83  41.31   
 Monthly R2  4,439.99  186.16   

Tuesday 5/6/14. Trading Tuesday: Dow

The index climbed by 0.1% or 17.66 points. Since 10/01/1928 the index made 1237 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 635 occasions.
     Average loss was -0.7% on 602 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 72/109 or 66.1% of the time.
     The prediction of the index closing lower has been right 20/37 or 54.1% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

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

Today was one of those days in which not much happened. A V-bottom chart pattern appeared at A. These are difficult to trade but I found a way to enter such patterns.

You can read about it in my book (pictured), "Swing and Day Trading," page 211, Figure 9.2 as part of the opening gap setup.

If you like that book, please post a 5-star customer review on Amazon.com. -- Thanks

Also shown on the chart is a line of horizontal resistance or support (B), depending on which side of the red line the index approaches it. It's like the index is in a holding pattern, waiting for news to make a big move. Perhaps that will come on Tuesday.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  15,776.19    
 Monthly S1  16,153.37  377.18   
 Weekly S2  16,180.36  26.99   
 Daily S2  16,314.36  134.00   
 Weekly S1  16,355.45  41.10   
 Low  16,377.09  21.64   
 Monthly Pivot  16,392.50  15.41   Yes! The Monthly Pivot is close to the Low.
 Daily S1  16,422.45  29.95   
 61.8% Down from Intraday High  16,442.35  19.89   
 50% Down from Intraday High  16,462.51  20.16   
 38.2% Down from Intraday High  16,482.66  20.16   
 Daily Pivot  16,485.19  2.53   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Weekly Pivot  16,487.76  2.57   Yes! The Weekly Pivot is close to the Daily Pivot.
 Open  16,509.75  21.99   
 Close  16,530.55  20.80   
 High  16,547.92  17.37   
 Daily R1  16,593.28  45.36   
 Daily R2  16,656.02  62.73   
 Weekly R1  16,662.85  6.84   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  16,769.68  106.83   
 Weekly R2  16,795.16  25.48   
 Monthly R2  17,008.81  213.65   

Monday 5/5/14. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq on the daily scale.

The Nasdaq has been making a wonderful, well, not really wonderful descending broadening wedge.

I like the broadening appearance but the index hasn't really cooperated when touching the top trendline. I show the top line in both red and a closer and thinner line in blue.

Regardless of how you draw the chart pattern, it suggests that price is struggling to move to the top side of the pattern. However, I remain bullish and believe that the index will succeed in pushing its way upward.

$ $ $

 

 

If you want the complete picture of the broadening wedge, then look it up in my Encyclopedia of Chart Patterns, Second Edition book. You'll find it on page 98. The book is pictured on the right.

Incidentally, the breakout from this chart pattern is upward 79% of the time.

 

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 87.28 points.
Tuesday: Up 86.63 points.
Wednesday: Up 45.47 points.
Thursday: Down 21.97 points.
Friday: Down 45.98 points.

For the Week...

The Dow industrials were up 151.43 points or 0.9%.
The Nasdaq composite was up 48.34 points or 1.2%.
The S&P 500 index was up 17.74 points or 1.0%.

Year to Date...

Dow Industrials
     0.7% down from the high of 16,631.63 on 04/04/2014.
     7.6% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     5.7% down from the high of 4,371.71 on 03/06/2014.
     4.5% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     0.9% down from the high of 1,897.28 on 04/04/2014.
     8.2% up from the low of 1,737.92 on 02/05/2014.

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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
Trade balance8:30 TC+Signals balance of exports & imports.
Productivity & costs8:30 WD+Cost of producing a unit of output.
Crude inventories10:30 W?My guess: Measures oil inventory.
Consumer credit3:00 WD-Measures auto, credit card and other debt.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Wholesale inventories10:00 FD-Wholesale sales and inventory statistics.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 05/02/2014, the CPI had:

4 bearish patterns,
14 bullish patterns,
267 patterns waiting for breakout.
The CPI signal is 77.8%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  16,409  16,461  16,540  16,593  16,672 
Weekly  16,174  16,344  16,482  16,651  16,789 
Monthly  15,770  16,142  16,387  16,758  17,003 
S&P500 (^GSPC): Daily  1,871  1,876  1,884  1,889  1,896 
Weekly  1,834  1,857  1,874  1,898  1,915 
Monthly  1,781  1,831  1,864  1,914  1,947 
Nasdaq (^IXIC): Daily  4,099  4,112  4,128  4,141  4,157 
Weekly  3,960  4,042  4,096  4,178  4,231 
Monthly  3,779  3,951  4,119  4,291  4,459 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.3%   Expect a random direction. 
 1 month down 19.7%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week up 42.6%   Expect a random direction. 
 1 month down 20.7%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week up 43.1%   Expect a random direction. 
 1 month up 48.5%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

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

I found 36 pipe bottoms last week, which is very bullish! Large numbers of pipe bottoms often signal the start of a short to intermediate-term move up before price drops back down, forming an unconfirmed double bottom.

 Found Chart Pattern Name
45Pipe bottom
15Triangle, symmetrical
8Head-and-shoulders top
6Broadening wedge, descending
6Triple top
6Broadening top
5Double Bottom, Eve and Eve
5Diamond top
4Broadening top, right-angled and ascending
4Double Top, Adam and Adam

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

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

 

 

 

 

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

This WeekLast Week
1. Cement and Aggregates1. Cement and Aggregates
2. Drug2. Drug
3. Trucking/Transp. Leasing3. Shoe
4. Biotechnology4. Semiconductor
5. Aerospace/Defense5. Aerospace/Defense
50. Household Products50. Toiletries/Cosmetics
51. Retail Building Supply51. Retail Building Supply
52. E-Commerce52. E-Commerce
53. Retail (Special Lines)53. Retail (Special Lines)
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Saturday 5/3/14. Myth: Stocks that Decline Least Do Best

I had a financial consultant tell me stocks that decline least in a bear market recover most in a bull market. That's a commonly held belief, so I tested it.

I found that it's wrong. Stocks that decline most have a taller bounce. See page 7 of my book (pictured) "Fundamental Analysis and Position Trading" for the results of the test.

-- Thomas Bulkowski


Thursday 5/1/14. Trading Thursday: Nasdaq

The index climbed by 0.3% or 11.02 points. Since 02/05/1971 the index made 574 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 316 occasions.
     Average loss was -0.7% on 258 occasions.
Expect the index to close higher 55.1% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 59/100 or 59.0% of the time.
     The prediction of the index closing lower has been right 24/49 or 49.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

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

A rising wedge appears outlined in blue at A. The idea behind a rising wedge is that after a downward breakout, price will drop to the price at the start of the wedge. Although the breakout was upward, the index did drop that far but it took until today to achieve it (at about 10:00).

Following the wedge, a double top at BC isn't a double top. Any idea why?

The answer is that the index did not close below the confirmation line D. That line is drawn horizontally below the low between the two bottoms. Without a close below the line, you're just looking at squiggles on the price chart.

However, this type of double bottom does have a redeeming value. You can consider it a busted double top. I discuss busted chart patterns in my latest book, Getting Started in Chart Pattern, Second Edition (pictured). Consider buying a copy (or a dozen) so I can repay my advance.

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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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,736.63    
 Monthly S1  3,925.60  188.96   
 Weekly S2  4,010.88  85.28   
 Daily S2  4,054.92  44.04   
 Weekly S1  4,062.72  7.80   
 Low  4,070.62  7.90   
 Daily S1  4,084.74  14.12   
 Open  4,085.19  0.45   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  4,088.01  2.82   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  4,093.38  5.37   
 38.2% Down from Intraday High  4,098.75  5.37   
 Daily Pivot  4,100.44  1.69   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  4,114.56  14.12   
 High  4,116.14  1.58   Yes! The High is close to the Close.
 Weekly Pivot  4,119.94  3.80   Yes! The Weekly Pivot is close to the High.
 Daily R1  4,130.26  10.32   
 Monthly Pivot  4,134.99  4.73   
 Daily R2  4,145.96  10.97   
 Weekly R1  4,171.78  25.82   
 Weekly R2  4,229.00  57.22   
 Monthly R1  4,323.96  94.96   
 Monthly R2  4,533.35  209.40   

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