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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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Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.
Bulkowski's Blog: ThePatternSite.com
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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 03/27/2017
20,551 -45.74 -0.2%
8,935 6.33 0.1%
702 -3.50 -0.5%
5,840 11.63 0.2%
2,342 -2.39 -0.1%
YTD
4.0%
-1.2%
6.5%
8.5%
4.6%
Tom's Targets    Overview: 03/14/2017
20,100 or 21,250 by 04/15/2017
8,500 or 9,500 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,275 or 2,425 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

November 2013 Headlines


Archives


Saturday 11/30/13. Saturday Supplement

Picture of my books

I have four new books born this year that make great holiday gifts. Their pictures are on the right. They are:

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

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

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

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

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

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

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Tuesday 11/26/13. Trading Tuesday: Dow

The index climbed by 0.0% or 7.77 points. Since 10/01/1928 the index made 1190 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 630 occasions.
     Average loss was -0.7% on 560 occasions.
Expect the index to close higher 52.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 61/93 or 65.6% of the time.
     The prediction of the index closing lower has been right 18/30 or 60.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

A double top appears at AB and it confirms as a valid chart pattern when the index closes below the valley between the two peaks, at C. That doesn't leave much time for a trade to fulfill the measure rule target.

That's the height of the chart pattern subtracted from the breakout price (where the index crosses below the red line). Even so, the index did hit the target but it didn't stay down there that long.

If this were a chart pattern on the daily charts, I'd say that the index was pulling back. After a pullback, there's a 47% chance that it'll resume the downward trend. That means 53% of the time the index will climb. But that's for the daily charts. I suspect intraday patterns are not as reliable.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  15,074.07    
 Monthly S1  15,573.31  499.23   
 Weekly S2  15,798.82  225.51   
 Monthly Pivot  15,821.04  22.22   
 Weekly S1  15,935.68  114.64   
 Weekly Pivot  16,002.23  66.55   
 Daily S2  16,025.04  22.81   
 Daily S1  16,048.79  23.75   
 Low  16,055.46  6.67   
 Open  16,072.09  16.63   
 Close  16,072.54  0.45   Yes! The Close is close to the Open.
 61.8% Down from Intraday High  16,076.15  3.61   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  16,079.21  3.06   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  16,082.54  3.33   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  16,088.94  6.39   
 Daily R1  16,102.96  14.02   
 High  16,109.63  6.67   
 Daily R2  16,133.38  23.75   
 Weekly R1  16,139.09  5.71   
 Weekly R2  16,205.64  66.55   
 Monthly R1  16,320.28  114.64   
 Monthly R2  16,568.01  247.74   

Monday 11/25/13. Market Monday: The Week Ahead

My Prediction

Picture of the S and P 500 on the weekly scale.

I show the Standard and Poor's 500 index on the weekly scale.

Sometimes it pays to take a broader view, which is what the chart shows.

I drew two trendlines in red, one along the peaks and another along the valleys. The index is right in the middle of those lines, following an up-sloping channel.

Notice that the slope of the line is about 45 degrees. Of course, that will vary depending on the aspect ratio of your screen. I've found through testing trendlines that the most powerful ones are those that slope upward at 30 to 45 degrees.

At this point in time, I'm worried about a bear market but I'm still holding onto my positions and watching them closely. I sold one this week because it looked about to tumble. I made 112% on it. Nice.

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A Brief Look Back

Picture of a butterfly 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 14.32 points.
Tuesday: Down 8.99 points.
Wednesday: Down 66.21 points.
Thursday: Up 109.17 points.
Friday: Up 54.78 points.

For the Week...

The Dow industrials were up 103.07 points or 0.6%.
The Nasdaq composite was up 5.68 points or 0.1%.
The S&P 500 index was up 6.58 points or 0.4%.

Year to Date...

Dow Industrials
     0.0% down from the high of 16,068.78 on 11/22/2013.
     22.6% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.1% down from the high of 3,994.97 on 11/18/2013.
     29.7% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.0% down from the high of 1,804.84 on 11/22/2013.
     26.5% up from the low of 1,426.19 on 01/02/2013.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
Housing starts8:30 TB-Number of homes beginning construction.
Building permits8:30 TB-Measures building permits for new construction.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Initial jobless claims8:30 WC+Counts people filing for state unemployment benefits.
Durable goods orders8:30 WBMeasures orders, shipments of goods with lifespans >3 years.
Chicago purchasing managers index9:45 WBMonitors regional manufacturing activity.
Michigan sentiment9:55 WB-Consumer sentiment: Measures strength of consumer spending.
Leading indicators10:00 WD-Summary of already known reports.
Crude inventories10:30 W?My guess: Measures oil inventory.

Options Expiration

No options expire this week.

Markets closed for Turkey day on Thursday and close early on Friday.

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Swing and Position Traders: Chart Pattern Indicator

As of 11/22/2013, the CPI had:

7 bearish patterns,
52 bullish patterns,
333 patterns waiting for breakout.
The CPI signal is 88.1%, 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  15,944  16,004  16,037  16,097  16,129 
Weekly  15,796  15,931  16,000  16,134  16,203 
Monthly  15,071  15,568  15,818  16,315  16,565 
S&P 500 (^GSPC): Daily  1,791  1,798  1,801  1,808  1,812 
Weekly  1,768  1,786  1,796  1,814  1,823 
Monthly  1,713  1,759  1,782  1,828  1,851 
Nasdaq (^IXIC): Daily  3,967  3,979  3,985  3,998  4,004 
Weekly  3,883  3,937  3,966  4,021  4,049 
Monthly  3,807  3,899  3,947  4,039  4,087 
  • 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) 7 weeks up 4.2%   Expect a reversal soon. 
 3 months up 25.7%   The trend may continue. 
 S & P 500 (^GSPC) 7 weeks up 1.6%   Expect a reversal soon. 
 3 months up 33.4%   The trend may continue. 
 Nasdaq composite (^IXIC) 2 weeks up 29.0%   The trend may continue. 
 3 months up 29.6%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

 Found Chart Pattern Name
11Channel
10Triangle, symmetrical
8Rectangle top
8Head-and-shoulders top
7Broadening top
6Flag
6Double Bottom, Adam and Adam
6Pipe top
5Pipe bottom
5Diamond top

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. Shoe1. Shoe
2. Insurance (Life)2. Insurance (Life)
3. Internet3. Internet
4. Aerospace/Defense4. Aerospace/Defense
5. Air Transport5. Retail (Special Lines)
50. Cement and Aggregates50. Cement and Aggregates
51. Toiletries/Cosmetics51. Electric Utility (West)
52. Electric Utility (West)52. Toiletries/Cosmetics
53. Short ETFs53. Short ETFs
54. Homebuilding54. Homebuilding

-- Thomas Bulkowski

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Thursday 11/21/13. Trading Thursday: Nasdaq

The index dropped by -0.3% or -10.28 points. Since 02/05/1971 the index made 445 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 234 occasions.
     Average loss was -0.9% on 211 occasions.
Expect the index to close higher 52.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 52/84 or 61.9% of the time.
     The prediction of the index closing lower has been right 22/43 or 51.2% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

An ascending triangle appears early in the session. The nubbin at A should be discarded since it happened too early in development of the triangle to be a worry. Plus, the index didn't close above the top line then.

A downward breakout occurred at B when the index closed below the bottom trendline. The height of the triangle subtracted from the breakout price represents a target. The index hit the target and kept on going down. Perhaps the index has declined too far and tomorrow (Thursday) we'll see a snapback.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,651.62    
 Monthly S1  3,786.44  134.83   
 Weekly S2  3,848.86  62.41   
 Weekly S1  3,885.06  36.21   
 Monthly Pivot  3,886.21  1.14   Yes! The Monthly Pivot is close to the Weekly S1.
 Daily S2  3,887.85  1.64   Yes! The Daily S2 is close to the Monthly Pivot.
 Daily S1  3,904.56  16.71   
 Low  3,911.61  7.05   
 Close  3,921.27  9.66   
 61.8% Down from Intraday High  3,927.07  5.80   
 Daily Pivot  3,928.32  1.25   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,931.84  3.52   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Weekly Pivot  3,935.52  3.67   Yes! The Weekly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,936.62  1.10   Yes! The 38.2% Down from Intraday High is close to the Weekly Pivot.
 Open  3,940.98  4.36   
 Daily R1  3,945.03  4.05   
 High  3,952.08  7.05   
 Daily R2  3,968.79  16.71   
 Weekly R1  3,971.72  2.93   Yes! The Weekly R1 is close to the Daily R2.
 Monthly R1  4,021.03  49.31   
 Weekly R2  4,022.18  1.14   Yes! The Weekly R2 is close to the Monthly R1.
 Monthly R2  4,120.80  98.62   

Tuesday 11/19/13. Trading Tuesday: Dow

The index climbed by 0.1% or 14.32 points. Since 10/01/1928 the index made 1232 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 631 occasions.
     Average loss was -0.7% on 601 occasions.
Expect the index to close higher 51.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 61/92 or 66.3% of the time.
     The prediction of the index closing lower has been right 18/30 or 60.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

A large symmetrical triangle nearly fills the chart. Price breaks out upward at A but soon fades and turns the triangle into a busted symmetrical triangle.

The large move down is typical of some busted triangles, but I'm nervous for another reason. The weak move up in the markets seems to be warning of a strong down move that's coming. Periods of low volatility precede periods of high volatility, so brace yourself.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,816.86    
 Monthly S1  15,396.44  579.58   
 Weekly S2  15,579.35  182.91   
 Monthly Pivot  15,679.71  100.36   
 Weekly S1  15,777.69  97.98   
 Weekly Pivot  15,870.33  92.65   
 Daily S2  15,894.71  24.38   
 Daily S1  15,935.37  40.65   
 Low  15,942.17  6.80   Yes! The Low is close to the Daily S1.
 Open  15,962.72  20.55   
 61.8% Down from Intraday High  15,975.83  13.11   
 Close  15,976.02  0.19   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  15,982.82  6.80   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  15,986.22  3.40   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  15,996.62  10.40   
 Daily R1  16,023.48  26.85   
 High  16,030.28  6.80   Yes! The High is close to the Daily R1.
 Weekly R1  16,068.67  38.39   
 Daily R2  16,070.93  2.27   Yes! The Daily R2 is close to the Weekly R1.
 Weekly R2  16,161.31  90.38   
 Monthly R1  16,259.29  97.98   
 Monthly R2  16,542.56  283.27   

Monday 11/18/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

Shown is a picture of the Dow utilities on the daily scale.

A broadening top appears outlined in red. This is actually a nice looking broadening top. Price crosses the pattern plenty of times with several trendline touches, too.

The index hasn't broken out yet. However, I predict that the utility average will continue to do well and will eventually break out upward as the green line shows.

$ $ $

I released new research on counter trend moves. If you've ever wondered how your stock will behave after it goes down when the market index makes a big move up, then visit the link. That also applies to a stock moving up and the index dropping.

Top

A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 21.32 points.
Tuesday: Down 32.43 points.
Wednesday: Up 70.96 points.
Thursday: Up 54.59 points.
Friday: Up 85.48 points.

For the Week...

The Dow industrials were up 199.92 points or 1.3%.
The Nasdaq composite was up 66.74 points or 1.7%.
The S&P 500 index was up 27.57 points or 1.6%.

Year to Date...

Dow Industrials
     0.0% down from the high of 15,962.98 on 11/15/2013.
     21.8% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.0% down from the high of 3,985.97 on 11/15/2013.
     29.6% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.0% down from the high of 1,798.22 on 11/15/2013.
     26.1% up from the low of 1,426.19 on 01/02/2013.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
Retail sales8:30 WA-Reports total retail sales (not services). Are people spending?
Consumer price index8:30 WB+Inflation report. Measures cost of goods and services.
Existing home sales10:00 WCCounts sales of used homes.
Business inventories10:00 WC-Reports manufacturing, wholesale, retail inventories.
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.
Producer price index8:30 ThB-Measures wholesale goods cost. An indication of future inflation.
Leading indicators10:00 ThD-Summary of already known reports.

Options Expiration

VIX expires on Wednesday.

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Swing and Position Traders: Chart Pattern Indicator

As of 11/15/2013, the CPI had:

4 bearish patterns,
52 bullish patterns,
404 patterns waiting for breakout.
The CPI signal is 92.9%, 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  15,846  15,904  15,934  15,991  16,021 
Weekly  15,575  15,768  15,866  16,059  16,157 
Monthly  14,812  15,387  15,675  16,250  16,538 
S&P 500 (^GSPC): Daily  1,788  1,793  1,796  1,801  1,803 
Weekly  1,748  1,773  1,786  1,811  1,823 
Monthly  1,652  1,725  1,762  1,835  1,871 
Nasdaq (^IXIC): Daily  3,964  3,975  3,980  3,992  3,997 
Weekly  3,870  3,928  3,957  4,015  4,044 
Monthly  3,673  3,830  3,908  4,064  4,142 
  • 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) 6 weeks up 5.5%   Expect a reversal soon. 
 3 months up 25.7%   The trend may continue. 
 S & P 500 (^GSPC) 6 weeks up 5.3%   Expect a reversal soon. 
 3 months up 33.4%   The trend may continue. 
 Nasdaq composite (^IXIC) 1 week up 43.1%   Expect a random direction. 
 3 months up 29.6%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

 Found Chart Pattern Name
11Channel
11Triangle, symmetrical
11Rectangle top
9Head-and-shoulders top
7Double Top, Adam and Adam
7Scallop, ascending
7Head-and-shoulders bottom
7Pipe top
5Flag
5Scallop, ascending and inverted

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. Shoe1. Internet
2. Insurance (Life)2. Aerospace/Defense
3. Internet3. Human Resources
4. Aerospace/Defense4. Insurance (Life)
5. Retail (Special Lines)5. Information Services
50. Cement and Aggregates50. Investment Co. (Foreign)
51. Electric Utility (West)51. Electric Utility (West)
52. Toiletries/Cosmetics52. Toiletries/Cosmetics
53. Short ETFs53. Short ETFs
54. Homebuilding54. Homebuilding

-- Thomas Bulkowski

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Thursday 11/14/13. Trading Thursday: Nasdaq

The index climbed by 1.2% or 45.66 points. Since 02/05/1971 the index made 147 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 96 occasions.
     Average loss was -1.2% on 51 occasions.
Expect the index to close higher 65.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 51/83 or 61.4% of the time.
     The prediction of the index closing lower has been right 22/43 or 51.2% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

You have to search this chart to find tradable patterns. There's what looks like a double bottom at A (the first bottom is to the left of A). It acts as a continuation pattern, not a reversal.

I have highlighted a channel with the two red lines. Now that trading is done for the day, this channel is easy to see. It's the first thing that caught my eye. But trying to see it while trading would be difficult.

I think today is one of those days that we sit back and relax and do nothing. You don't have to trade every day.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,544.09    
 Monthly S1  3,754.84  210.74   
 Weekly S2  3,824.64  69.80   
 Monthly Pivot  3,860.77  36.13   
 Daily S2  3,877.22  16.45   
 Weekly S1  3,895.11  17.89   
 Low  3,899.31  4.20   Yes! The Low is close to the Weekly S1.
 Open  3,899.38  0.07   Yes! The Open is close to the Low.
 Daily S1  3,921.40  22.02   
 61.8% Down from Intraday High  3,924.63  3.23   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 Weekly Pivot  3,925.54  0.92   Yes! The Weekly Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,932.45  6.91   
 38.2% Down from Intraday High  3,940.26  7.82   
 Daily Pivot  3,943.49  3.23   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  3,965.58  22.09   
 High  3,965.58  0.00   Yes! The High is close to the Close.
 Daily R1  3,987.67  22.09   
 Weekly R1  3,996.01  8.34   
 Daily R2  4,009.76  13.75   
 Weekly R2  4,026.44  16.68   
 Monthly R1  4,071.52  45.08   
 Monthly R2  4,177.45  105.94   

Wednesday 11/13/13. New Research

I completed research on partial rises and declines and posted it at the associated links. It discusses whether a partial rise or decline effects post-breakout performance.

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Tuesday 11/12/13. Trading Tuesday: Dow

The index climbed by 0.1% or 21.32 points. Since 10/01/1928 the index made 1231 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 631 occasions.
     Average loss was -0.7% on 600 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 61/91 or 67.0% of the time.
     The prediction of the index closing lower has been right 18/30 or 60.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

If this were a stock on the daily chart, I'd be all over it. Why? Because the two red lines outline a long descending triangle. That's a flat base with a down-sloping top. It appears the triangle broke out upward near the day's end.

Unfortunately, the scale is 5-minute, so this may mean nothing tomorrow. Still the bias say price should move up at a good clip tomorrow, powering to a much higher close. I'm not so sure. The daily chart shows a bearish doji star, but that pattern is actually a bullish candle. Readers of my book Encyclopedia of Candlestick Charts know the truth. See page 266.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,355.15    
 Monthly S1  15,069.13  713.97   
 Weekly S2  15,425.49  356.36   
 Monthly Pivot  15,433.40  7.92   
 Weekly S1  15,604.29  170.89   
 Weekly Pivot  15,700.99  96.69   
 Daily S2  15,716.36  15.37   
 Low  15,737.22  20.86   
 Daily S1  15,749.73  12.51   
 61.8% Down from Intraday High  15,757.94  8.21   
 Open  15,759.28  1.34   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  15,764.33  5.05   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  15,770.59  6.25   
 38.2% Down from Intraday High  15,770.73  0.14   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  15,783.10  12.37   
 High  15,791.45  8.35   
 Daily R1  15,803.96  12.51   
 Daily R2  15,824.82  20.86   
 Weekly R1  15,879.79  54.97   
 Weekly R2  15,976.49  96.69   
 Monthly R1  16,147.38  170.89   
 Monthly R2  16,511.65  364.28   

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

My Prediction

Picture of the Dow industrials on the daily scale.

I show the Dow industrials on the daily chart.

The two blue lines are part of a longer rectangle top chart pattern.

I told a friend of mine that I thought the index would drop as part of a partial decline. I show what I expected to happen with the red line.

I still expect this to happen but the partial decline may not see as large a drop as I thought.

It looks like the index might just rise higher from here on, instead of suffering a more substantial drop before the rise.

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A Brief Look Back

Picture of a flag.

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 23.57 points.
Tuesday: Down 20.9 points.
Wednesday: Up 128.66 points.
Thursday: Down 152.9 points.
Friday: Up 167.8 points.

For the Week...

The Dow industrials were up 146.23 points or 0.9%.
The Nasdaq composite was down 2.81 points or 0.1%.
The S&P 500 index was up 8.97 points or 0.5%.

Year to Date...

Dow Industrials
     0.2% down from the high of 15,797.68 on 11/07/2013.
     20.3% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     1.2% down from the high of 3,966.71 on 10/30/2013.
     27.4% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.3% down from the high of 1,775.22 on 10/30/2013.
     24.1% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Treasury budget2:00 WDTracks budget deficit. Important in April (tax filing).
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Trade balance8:30 ThC+Signals balance of exports & imports.
Productivity & costs8:30 ThD+Cost of producing a unit of output.
Crude inventories11:00 Th?My guess: Measures oil inventory.
Industrial production9:15 FB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 FB-Gauges economic activity, hints of inflation.
Wholesale inventories10:00 FD-Wholesale sales and inventory statistics.

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

On 11/08/2013, the CPI had:

3 bearish patterns,
23 bullish patterns,
187 patterns waiting for breakout.
The CPI signal is 88.5%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  15,517  15,639  15,702  15,824  15,887 
Weekly  15,418  15,590  15,694  15,866  15,969 
Monthly  14,348  15,055  15,426  16,133  16,505 
S&P 500 (^GSPC): Daily  1,740  1,755  1,763  1,778  1,786 
Weekly  1,735  1,753  1,764  1,781  1,792 
Monthly  1,602  1,686  1,731  1,815  1,860 
Nasdaq (^IXIC): Daily  3,852  3,886  3,903  3,936  3,953 
Weekly  3,809  3,864  3,910  3,965  4,011 
Monthly  3,529  3,724  3,845  4,041  4,162 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 5 weeks up 8.6%   Expect a reversal soon. 
 3 months up 25.7%   The trend may continue. 
 S & P 500 (^GSPC) 5 weeks up 9.5%   Expect a reversal soon. 
 3 months up 33.4%   The trend may continue. 
 Nasdaq composite (^IXIC) 2 weeks down 18.3%   Expect a reversal soon. 
 1 month down 26.0%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

 Found Chart Pattern Name
17Scallop, ascending and inverted
12Rectangle top
9Head-and-shoulders bottom
9Triangle, symmetrical
8Pipe bottom
8Scallop, ascending
6Channel
6Double Top, Adam and Adam
5Dead-cat bounce
5Head-and-shoulders top

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. Internet1. Human Resources
2. Aerospace/Defense2. Internet
3. Human Resources3. Machinery
4. Insurance (Life)4. Aerospace/Defense
5. Information Services5. Air Transport
50. Investment Co. (Foreign)50. Electric Utility (West)
51. Electric Utility (West)51. Toiletries/Cosmetics
52. Toiletries/Cosmetics52. Electric Utility (East)
53. Short ETFs53. Homebuilding
54. Homebuilding54. Short ETFs

-- Thomas Bulkowski

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Saturday 11/9/13. Saturday Supplement

Picture of my books

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

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

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

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

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

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

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

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Thursday 11/7/13. Trading Thursday: Nasdaq

The index dropped by -0.2% or -7.91 points. Since 02/05/1971 the index made 440 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 227 occasions.
     Average loss was -1.0% on 213 occasions.
Expect the index to close higher 51.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 51/82 or 62.2% of the time.
     The prediction of the index closing lower has been right 22/43 or 51.2% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

The day when the Dow 30 stocks climbed 128 points, the Nasdaq tumbled and closed lower. The gains were limited to a few stocks, in other words.

The chart shows a rectangle bottom that stretched in a narrow band for most of the session. If you drew the rectangle narrower from after noon to before one, you'd have a downward breakout at A. The pattern to that point would be a symmetrical triangle with a downward breakout.

The index has yet to breakout from the rectangle. If you believe the above probabilities, tomorrow (Thursday) will show an up close -- an upward breakout from the rectangle.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,532.88    
 Monthly S1  3,732.42  199.53   
 Monthly Pivot  3,849.56  117.15   
 Weekly S2  3,871.78  22.21   
 Daily S2  3,901.22  29.44   
 Weekly S1  3,901.86  0.65   Yes! The Weekly S1 is close to the Daily S2.
 Daily S1  3,916.58  14.72   
 Low  3,920.91  4.33   
 Close  3,931.95  11.04   
 Weekly Pivot  3,934.29  2.34   Yes! The Weekly Pivot is close to the Close.
 61.8% Down from Intraday High  3,934.30  0.02   Yes! The 61.8% Down from Intraday High is close to the Weekly Pivot.
 Daily Pivot  3,936.28  1.97   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,938.44  2.16   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  3,942.58  4.14   
 Daily R1  3,951.64  9.07   
 Open  3,952.18  0.54   Yes! The Open is close to the Daily R1.
 High  3,955.97  3.79   
 Weekly R1  3,964.37  8.40   
 Daily R2  3,971.34  6.96   
 Weekly R2  3,996.80  25.46   
 Monthly R1  4,049.10  52.30   
 Monthly R2  4,166.24  117.15   

Tuesday 11/5/13. Trading Tuesday: Dow

The index climbed by 0.2% or 23.57 points. Since 10/01/1928 the index made 1222 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 668 occasions.
     Average loss was -0.6% on 554 occasions.
Expect the index to close higher 54.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 61/90 or 67.8% of the time.
     The prediction of the index closing lower has been right 18/30 or 60.0% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

I don't see much that's tradable on this chart. What I do see is a measured move up pattern. That is the ABCD pattern as shown on the chart.

The first leg is AB and the second leg is CD. The corrective phase is BC. What's interesting of the measured move is that price often retraces back to the corrective phase, BC. That happens here when the index dips into the blue corridor just after 3:00.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,358.28    
 Monthly S1  14,998.70  640.42   
 Monthly Pivot  15,359.85  361.15   
 Weekly S2  15,443.68  83.83   
 Weekly S1  15,541.40  97.72   
 Daily S2  15,558.41  17.01   
 Low  15,588.48  30.07   
 Daily S1  15,598.77  10.29   
 61.8% Down from Intraday High  15,615.38  16.61   
 Open  15,621.20  5.82   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  15,623.69  2.49   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  15,628.83  5.14   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Weekly Pivot  15,631.20  2.37   Yes! The Weekly Pivot is close to the Daily Pivot.
 38.2% Down from Intraday High  15,632.00  0.80   Yes! The 38.2% Down from Intraday High is close to the Weekly Pivot.
 Close  15,639.12  7.12   
 High  15,658.90  19.78   
 Daily R1  15,669.19  10.29   
 Daily R2  15,699.25  30.07   
 Weekly R1  15,728.92  29.67   
 Weekly R2  15,818.72  89.80   
 Monthly R1  16,000.27  181.55   
 Monthly R2  16,361.42  361.15   

Monday 11/4/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utilities on the daily scale.

Two diamonds appear on the chart. The first in June is a bottom and the July one is a top. Notice how both retrace back to the launch price (the congestion region from which the straight-line move began). A quick decline (rise) sometimes follows a quick rise (decline) and you see that with diamonds.

The pattern at A is a symmetrical triangle. It has an upward breakout, as the chart shows. That occurs when the index closes above the top trendline.

Spike B is a throwback to the breakout price. A stock will resume climbing 65% of the time. Not only is that important to know, it's what I expect to happen.

 

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Down 1.35 points.
Tuesday: Up 111.42 points.
Wednesday: Down 61.59 points.
Thursday: Down 73.01 points.
Friday: Up 69.8 points.

For the Week...

The Dow industrials were up 45.27 points or 0.3%.
The Nasdaq composite was down 21.32 points or 0.5%.
The S&P 500 index was up 1.87 points or 0.1%.

Year to Date...

Dow Industrials
     0.7% down from the high of 15,721.00 on 10/30/2013.
     19.2% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     1.1% down from the high of 3,966.71 on 10/30/2013.
     27.5% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     0.8% down from the high of 1,775.22 on 10/30/2013.
     23.5% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Factory orders10:00 MD+Durable/non-durable goods orders w/factory inventories.
Leading indicators10:00 WD-Summary of already known reports.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Consumer credit3:00 ThD-Measures auto, credit card and other debt.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Personal income & consumption8:30 FC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 FC+Covers durables, non-durables, and services.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 11/01/2013, the CPI had:

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

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  15,497  15,556  15,603  15,662  15,709 
Weekly  15,436  15,526  15,623  15,713  15,811 
Monthly  14,350  14,983  15,352  15,985  16,354 
S&P 500 (^GSPC): Daily  1,747  1,754  1,760  1,767  1,773 
Weekly  1,741  1,751  1,763  1,774  1,786 
Monthly  1,599  1,680  1,728  1,809  1,857 
Nasdaq (^IXIC): Daily  3,887  3,905  3,922  3,939  3,956 
Weekly  3,868  3,895  3,931  3,958  3,993 
Monthly  3,530  3,726  3,846  4,042  4,163 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 4 weeks up 15.7%   Expect a reversal soon. 
 3 months up 25.7%   The trend may continue. 
 S & P 500 (^GSPC) 4 weeks up 16.6%   Expect a reversal soon. 
 3 months up 33.4%   The trend may continue. 
 Nasdaq composite (^IXIC) 1 week down 30.7%   The trend may continue. 
 3 months up 29.6%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

 Found Chart Pattern Name
17Scallop, ascending and inverted
13Pipe bottom
11Rectangle top
10Triangle, symmetrical
8Channel
8Scallop, ascending
6Rising wedge
6Double Top, Adam and Adam
5Triangle, ascending
5Broadening top

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. Human Resources1. Internet
2. Internet2. Aerospace/Defense
3. Machinery3. Information Services
4. Aerospace/Defense4. Human Resources
5. Air Transport5. Machinery
50. Electric Utility (West)50. Electric Utility (Central)
51. Toiletries/Cosmetics51. Electric Utility (West)
52. Electric Utility (East)52. Electric Utility (East)
53. Homebuilding53. Homebuilding
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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