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

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

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October 2017 Headlines


Archives


Monday 10/23/17. Market Monday: The Week Ahead

My Prediction

Picture of the S and P 500 index on the daily scale.

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

I drew two red lines, paralleling price action. They slope upward and form a channel.

I'm not sure what more there is to say. This index is broad enough that it means the general market has made a good gain this week. Indeed, the rise since the low in mid August has been wonderful.

Today's (Friday's) gap up out of a congestion region is probably a breakaway gap, but it could also be an area gap.

If it's a break away, then look for a continued rise.

Of course, I'm still making noises that the market is overbought and there are signs of weakness. But the markets continue to rise. One day, I'll be right and we'll see the markets drop. Until then, enjoy the ride upward. Be sure to bring your parachute and bottled oxygen.

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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 85.24 points.
Tuesday: Up 40.48 points.
Wednesday: Up 160.16 points.
Thursday: Up 5.44 points.
Friday: Up 165.59 points.

For the Week...

The Dow industrials were up 456.91 points or 2.0%.
The Nasdaq composite was up 23.25 points or 0.4%.
The S&P 500 index was up 22.04 points or 0.9%.

Year to Date...

Dow Industrials
     0.0% down from the high of 23,328.84 on 10/20/2017.
     18.6% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     0.2% down from the high of 6,640.03 on 10/20/2017.
     22.8% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     0.0% down from the high of 2,575.44 on 10/20/2017.
     14.7% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 10/20/2017, the CPI had:

8 bearish patterns,
42 bullish patterns,
242 patterns waiting for breakout.
The CPI signal is 84.0%, 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  23,159  23,244  23,286  23,371  23,413 
Weekly  22,740  23,034  23,182  23,476  23,623 
Monthly  21,849  22,589  22,959  23,699  24,069 
S&P500 (^GSPC): Daily  2,565  2,570  2,573  2,578  2,581 
Weekly  2,539  2,557  2,566  2,584  2,594 
Monthly  2,459  2,517  2,546  2,604  2,634 
Nasdaq (^IXIC): Daily  6,614  6,621  6,631  6,638  6,648 
Weekly  6,528  6,578  6,609  6,660  6,691 
Monthly  6,242  6,435  6,538  6,731  6,834 
  • 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 8.0%   Expect a reversal soon. 
 7 months up 2.6%   Expect a reversal soon. 
 S & P 500 (^GSPC) 6 weeks up 6.4%   Expect a reversal soon. 
 7 months up 7.7%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 4 weeks up 20.6%   Expect a reversal soon. 
 4 months up 20.6%   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.

Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
14Triangle, symmetrical
7Double Bottom, Adam and Adam
6Pipe bottom
5Rising wedge
3Pennant
3Pipe top
3Triple top
3Double Top, Eve and Adam
3Head-and-shoulders bottom
3Triangle, ascending

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. Semiconductor1. Semiconductor
2. Semiconductor Cap Equip.2. Semiconductor Cap Equip.
3. Computer Software and Svcs3. Machinery
4. Machinery4. Electronics
5. Aerospace/Defense5. Aerospace/Defense
50. Retail Store50. Drug
51. Retail (Special Lines)51. Retail (Special Lines)
52. Household Products52. Household Products
53. Food Processing53. Food Processing
54. Advertising54. Advertising
55. Petroleum (Producing)55. Oilfield Svcs/Equipment
56. Short ETFs56. Short ETFs
57. Oilfield Svcs/Equipment57. Petroleum (Producing)

-- Thomas Bulkowski

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Friday 10/20/17. Pattern Trading Setups for the Weekend.

Go to Table.

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

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

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

There were 15 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 595 stocks searched, or 2.5%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

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

Excluding ETFs, there were 7 bullish chart patterns this week and 4 bearish ones with any remaining (1) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

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

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
ATSGTriangle, symmetrical      09/25/201710/19/2017Air Transport
CEDouble Top, Adam and Adam      10/09/201710/16/2017Chemical (Basic)
CHDBroadening wedge, descending      09/26/201710/13/2017Household Products
HLTriangle, symmetrical      08/02/201710/16/2017Metals and Mining (Div.)
NWPXRising wedge      08/10/201710/13/2017Building Materials
ORIRectangle top      09/18/201710/19/2017Insurance (Prop/Casualty)
PKGTriangle, symmetrical      09/20/201710/19/2017Packaging and Container
PETSHead-and-shoulders bottom      09/19/201710/16/2017Medical Services
PCGDead-cat bounce      10/12/201710/16/2017Electric Utility (West)
SIGIBroadening top      10/09/201710/19/2017Insurance (Prop/Casualty)
TDCHead-and-shoulders top      09/19/201710/16/2017Computer Software and Svcs
VMCTriangle, symmetrical      08/25/201710/19/2017Cement and Aggregates
IYETriangle, symmetrical      09/25/201710/17/2017Petroleum (Integrated)
EWZDiamond top      09/11/201710/16/2017Investment Co. (Foreign)
EWPBroadening wedge, descending      09/19/201710/19/2017Investment Co. (Foreign)
USOPipe bottom      10/02/201710/09/2017Petroleum (Producing)

 

Weekly screen for chart patterns ending between 10/12/2017 and 10/19/2017. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Air Transport Services Group (ATSG)
Industry: Air Transport
Industry RS rank: 30 out of 56
Stock RS rank: 30 out of 587
10/19/17 close: $24.52
1 Month avg volatility: $0.86. Volatility stop (for upward breakout): $22.19 or 9.5% below the close.
Change YTD: 53.63%
Volume: 201,300 shares. 3 month avg: 455,643 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/25/2017 to 10/19/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Celanese Corp (CE)
Industry: Chemical (Basic)
Industry RS rank: 27 out of 56
Stock RS rank: 140 out of 587
10/19/17 close: $105.29
1 Month avg volatility: $1.69. Volatility stop (for downward breakout): $108.68 or 3.2% above the close.
Change YTD: 33.72%
Volume: 872,500 shares. 3 month avg: 854,017 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Double Top, Adam and Adam reversal pattern from 10/09/2017 to 10/16/2017
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 8%.
Pullbacks occur 61% of the time.
Price hits measure rule target 72% of the time.

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Church and Dwight Co Inc (CHD)
Industry: Household Products
Industry RS rank: 51 out of 56
Stock RS rank: 488 out of 587
10/19/17 close: $47.28
1 Month avg volatility: $0.65. Volatility stop (for upward breakout): $45.62 or 3.5% below the close.
Change YTD: 6.99%
Volume: 1,273,000 shares. 3 month avg: 1,390,375 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Broadening wedge, descending reversal pattern from 09/26/2017 to 10/13/2017
Breakout is upward 79% of the time.
Average rise: 33%.
Break-even failure rate: 6%.
Throwbacks occur 53% of the time.
Price hits measure rule target 79% of the time.

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Hecla Mining Co. (HL)
Industry: Metals and Mining (Div.)
Industry RS rank: 21 out of 56
Stock RS rank: 499 out of 587
10/19/17 close: $5.06
1 Month avg volatility: $0.14. Volatility stop (for upward breakout): $4.72 or 6.7% below the close.
Change YTD: -3.44%
Volume: 2,368,200 shares. 3 month avg: 3,919,829 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 08/02/2017 to 10/16/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Northwest Pipe Co (NWPX)
Industry: Building Materials
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 35 out of 56
Stock RS rank: 10 out of 587
10/19/17 close: $20.39
1 Month avg volatility: $0.59. Volatility stop (for downward breakout): $21.63 or 6.1% above the close.
Change YTD: 18.41%
Volume: 18,100 shares. 3 month avg: 44,585 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Rising wedge reversal pattern from 08/10/2017 to 10/13/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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Old Republic International Corp (ORI)
Industry: Insurance (Prop/Casualty)
Industry RS rank: 37 out of 56
Stock RS rank: 440 out of 587
10/19/17 close: $19.69
1 Month avg volatility: $0.21. Volatility stop (for upward breakout): $19.06 or 3.2% below the close.
Change YTD: 3.63%
Volume: 653,500 shares. 3 month avg: 1,226,680 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Rectangle top continuation pattern from 09/18/2017 to 10/19/2017
Breakout is upward 68% of the time.
Average rise: 39%.
Break-even failure rate: 9%.
Throwbacks occur 64% of the time.
Price hits measure rule target 80% of the time.

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Packaging Corp of America (PKG)
Industry: Packaging and Container
Industry RS rank: 17 out of 56
Stock RS rank: 97 out of 587
10/19/17 close: $116.60
1 Month avg volatility: $1.58. Volatility stop (for upward breakout): $112.52 or 3.5% below the close.
Change YTD: 37.47%
Volume: 386,300 shares. 3 month avg: 1,223,677 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/20/2017 to 10/19/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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PetMed Express Inc. (PETS)
Industry: Medical Services
Industry RS rank: 31 out of 56
Stock RS rank: 11 out of 587
10/19/17 close: $35.87
1 Month avg volatility: $1.20. Volatility stop (for upward breakout): $32.96 or 8.1% below the close.
Change YTD: 55.48%
Volume: 637,900 shares. 3 month avg: 1,207,837 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Head-and-shoulders bottom reversal pattern from 09/19/2017 to 10/16/2017
Breakout is upward 100% of the time.
Average rise: 38%.
Break-even failure rate: 3%.
Throwbacks occur 45% of the time.
Price hits measure rule target 74% of the time.

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PG and E (PCG)
Industry: Electric Utility (West)
Industry RS rank: 45 out of 56
Stock RS rank: 540 out of 587
10/19/17 close: $57.00
1 Month avg volatility: $1.79. Volatility stop (for downward breakout): $61.13 or 7.3% above the close.
Change YTD: -6.20%
Volume: 9,863,800 shares. 3 month avg: 3,795,972 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Dead-cat bounce continuation pattern from 10/12/2017 to 10/16/2017
Breakout is downward 67% of the time.
Average decline: 18%.

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Selective Insurance Group Inc (SIGI)
Industry: Insurance (Prop/Casualty)
Industry RS rank: 37 out of 56
Stock RS rank: 153 out of 587
10/19/17 close: $55.50
1 Month avg volatility: $0.97. Volatility stop (for downward breakout): $57.49 or 3.6% above the close.
Change YTD: 28.92%
Volume: 93,600 shares. 3 month avg: 188,049 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening top reversal pattern from 10/09/2017 to 10/19/2017
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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Teradata Corp (TDC)
Industry: Computer Software and Svcs
Industry RS rank: 4 out of 56
Stock RS rank: 393 out of 587
10/19/17 close: $32.31
1 Month avg volatility: $0.51. Volatility stop (for downward breakout): $33.34 or 3.2% above the close.
Change YTD: 18.92%
Volume: 547,900 shares. 3 month avg: 1,532,977 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Head-and-shoulders top reversal pattern from 09/19/2017 to 10/16/2017
Breakout is downward 100% of the time.
Average decline: 22%.
Break-even failure rate: 4%.
Pullbacks occur 50% of the time.
Price hits measure rule target 55% of the time.

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Vulcan Materials (VMC)
Industry: Cement and Aggregates
Industry RS rank: 41 out of 56
Stock RS rank: 402 out of 587
10/19/17 close: $120.04
1 Month avg volatility: $2.17. Volatility stop (for upward breakout): $111.81 or 6.9% below the close.
Change YTD: -4.08%
Volume: 1,419,200 shares. 3 month avg: 1,252,435 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 08/25/2017 to 10/19/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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DJ US Energy sector (iShares) (IYE)
Industry: Petroleum (Integrated)
Industry RS rank: 32 out of 56
Stock RS rank: 437 out of 587
10/19/17 close: $36.89
1 Month avg volatility: $0.31. Volatility stop (for upward breakout): $36.10 or 2.1% below the close.
Change YTD: -11.19%
Volume: 180,100 shares. 3 month avg: 346,508 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/25/2017 to 10/17/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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MSCI Brazil Index fund (EWZ)
Industry: Investment Co. (Foreign)
Industry RS rank: 18 out of 56
Stock RS rank: 183 out of 587
10/19/17 close: $42.50
1 Month avg volatility: $0.63. Volatility stop (for downward breakout): $43.75 or 2.9% above the close.
Change YTD: 27.47%
Volume: 13,723,200 shares. 3 month avg: 16,460,734 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Diamond top reversal pattern from 09/11/2017 to 10/16/2017
Breakout is downward 69% of the time.
Average decline: 21%.
Break-even failure rate: 6%.
Pullbacks occur 57% of the time.
Price hits measure rule target 76% of the time.

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MSCI Spain Index (EWP)
Industry: Investment Co. (Foreign)
Industry RS rank: 18 out of 56
Stock RS rank: 292 out of 587
10/19/17 close: $33.19
1 Month avg volatility: $0.27. Volatility stop (for upward breakout): $32.59 or 1.8% below the close.
Change YTD: 25.20%
Volume: 1,699,400 shares. 3 month avg: 1,876,502 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening wedge, descending reversal pattern from 09/19/2017 to 10/19/2017
Breakout is upward 79% of the time.
Average rise: 33%.
Break-even failure rate: 6%.
Throwbacks occur 53% of the time.
Price hits measure rule target 79% of the time.

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United States Oil (USO)
Industry: Petroleum (Producing)
Industry RS rank: 54 out of 56
Stock RS rank: 453 out of 587
10/19/17 close: $10.35
1 Month avg volatility: $0.14. Volatility stop (for upward breakout): $10.03 or 3.1% below the close.
Change YTD: -11.69%
Volume: 11,552,300 shares. 3 month avg: 21,101,972 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe bottom reversal pattern from 10/02/2017 to 10/09/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Thursday 10/19/17. Intraday Market Direction: Dow

The index climbed by 0.0% or 0.56 points. Since 02/05/1971 the index made 638 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 362 occasions.
     Average loss was -0.9% on 276 occasions.
Expect the index to close higher 56.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 138/243 or 56.8% of the time.
     The prediction of the index closing lower has been right 42/82 or 51.2% of the time.

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

Picture of the Dow on the 5 minute scale.

$ $ $

I show a picture of the Dow (should have been the Nasdaq composite on the 5-minute scale.

The chart pattern indicator is still bearish for the second day in a row. The 160 point climb in the Dow today (Wednesday) seemed confined to the Dow industrials.

The chart shows the Dow gapped upward and also trended at a slightly steeper slope. That means higher momentum. I find that odd, given what the CPI says and what my portfolio did today.

I'm still bullish but cautious. I expect the markets to tumble...

$ $ $

I released a new article on learning to become an experienced and profitable trader. If you've ever asked me to be your mentor, the article is worth a read. If describes an example of how I swing trade. Don't forget the popcorn.

$ $ $

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

-- Thomas Bulkowski

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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  6,255.63    
 Monthly S1  6,439.93  184.29   
 Monthly Pivot  6,528.25  88.33   
 Weekly S2  6,546.06  17.81   
 Weekly S1  6,585.14  39.08   
 Weekly Pivot  6,600.86  15.72   
 Daily S2  6,602.46  1.60   Yes! The Daily S2 is close to the Weekly Pivot.
 Daily S1  6,613.34  10.88   
 Low  6,613.55  0.21   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  6,621.94  8.39   
 Close  6,624.22  2.28   
 Daily Pivot  6,624.43  0.21   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  6,624.54  0.10   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  6,627.13  2.59   
 Open  6,634.26  7.13   
 Daily R1  6,635.31  1.05   Yes! The Daily R1 is close to the Open.
 High  6,635.52  0.21   Yes! The High is close to the Daily R1.
 Weekly R1  6,639.94  4.42   
 Daily R2  6,646.40  6.46   
 Weekly R2  6,655.66  9.26   
 Monthly R1  6,712.55  56.89   
 Monthly R2  6,800.87  88.33   

Wednesday 10/18/17. A Look At Indicators

Picture of the chart pattern indicator

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

The chart pattern indicator has turned bearish today. Even as the index climbs, the indicator is trending lower. Go figure. That's called divergence and I've been warning about it for some time.

The problem with divergence is that it can occur and price will ignore it and just keep on diverging. The theory says that sooner or later (mostly later), the index will follow the indicator lower.

For example, look at the July to August period. The indicator dropped but the index climbed until it stopped climbing and turned down to reach a low in mid August.

In CPI's case, divergence has meant the indicator has moved up instead of the index dropping.

Regardless, this bearish signal makes me nervous.

Picture of the percent down indicators

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

Shown as a red line on the above chart...
On Monday, 21% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 20%.
The fewest was 14% on 12/09/2016.
And the most was 36% on 11/03/2016.
Shown as a blue line on the above chart...
The 497 stocks in my database are down an average of 11% from their yearly high.
A week ago, the average was 11%.
The peak was 9% on 12/09/2016.
And the bottom was 18% on 11/03/2016.

The red line is the more sensitive of the two and it shows a dramatic drop from the October peak. It's another indicator which is diverging from the index.

Together with the CPI chart, it tells me most stocks are weaker than people expect. It's like standing on a thin layer of ice. If you walk carefully you'll be fine. Jump or pound your foot, and forget. You're going for a swim.

-- Thomas Bulkowski

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Tuesday 10/17/17. Intraday Market Direction: Dow

The index climbed by 0.4% or 85.24 points. Since 10/01/1928 the index made 1067 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 560 occasions.
     Average loss was -0.5% on 507 occasions.
Expect the index to close higher 52.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 148/250 or 59.2% of the time.
     The prediction of the index closing lower has been right 32/65 or 49.2% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

$ $ $

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

There's nothing much to report from this picture. The Dow just continues its steady move higher, following the outline of a red channel.

End of story.

$ $ $

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

-- Thomas Bulkowski

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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  21,619.15    
 Monthly S1  22,288.06  668.90   
 Monthly Pivot  22,596.69  308.64   
 Weekly S2  22,701.27  104.58   
 Weekly S1  22,829.12  127.84   
 Daily S2  22,861.73  32.62   
 Weekly Pivot  22,867.22  5.49   Yes! The Weekly Pivot is close to the Daily S2.
 Low  22,887.12  19.90   
 Open  22,892.92  5.80   Yes! The Open is close to the Low.
 Daily S1  22,909.35  16.43   
 61.8% Down from Intraday High  22,915.01  5.66   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  22,923.62  8.61   
 38.2% Down from Intraday High  22,932.23  8.62   
 Daily Pivot  22,934.73  2.50   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  22,956.96  22.23   
 High  22,960.12  3.16   Yes! The High is close to the Close.
 Daily R1  22,982.35  22.23   
 Weekly R1  22,995.07  12.72   
 Daily R2  23,007.73  12.67   
 Weekly R2  23,033.17  25.44   
 Monthly R1  23,265.60  232.42   
 Monthly R2  23,574.23  308.64   

Monday 10/16/17. Is Market Going Down Fast?

Picture of the Dow and prediction.

This is a chart of the forecast I do from time to time, quarterly this year.

Notice that peak A comes well before B, and it's higher than B, too. Bad timing.

The index dipped and has recovered up to C, nearly matching the prediction.

Here's where the ride gets scary. Notice how the market drops, and fast, too, after C.

That's about a 1,500 point drop in a month. Ouch.

This forecast isn't guessing. It's based on what has happened in prior years. Click the above link for more details. However, just because it's a mechanical forecast doesn't make it right.

So we'll just have to see what happens in the next four weeks.

-- Thomas Bulkowski


Friday 10/13/17. Pattern Trading Setups for the Weekend.

Go to Table.

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

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

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

There were 11 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 595 stocks searched, or 1.8%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

Excluding ETFs, there were 5 bullish chart patterns this week and 4 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

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

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
AMEDPipe top      09/25/201710/02/2017Medical Services
CAGTriangle, symmetrical      08/30/201710/11/2017Food Processing
ITTriangle, symmetrical      09/11/201710/12/2017Information Services
GESPipe top      09/25/201710/02/2017Apparel
JBLUTriangle, symmetrical      09/01/201710/09/2017Air Transport
KMBDiamond bottom      09/27/201710/12/2017Household Products
MASPennant      10/02/201710/10/2017Building Materials
RESPipe top      09/25/201710/02/2017Oilfield Svcs/Equipment
SYMCTriple top      09/13/201710/06/2017Computer Software and Svcs
TECHTriangle, symmetrical      08/28/201710/10/2017Biotechnology
WMBTriangle, symmetrical      09/08/201710/12/2017Natural Gas (Distributor)

 

Weekly screen for chart patterns ending between 10/05/2017 and 10/12/2017. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Amedisys Inc (AMED)
Industry: Medical Services
Industry RS rank: 31 out of 56
Stock RS rank: 499 out of 587
10/12/17 close: $48.00
1 Month avg volatility: $1.96. Volatility stop (for downward breakout): $52.75 or 9.9% above the close.
Change YTD: 12.60%
Volume: 631,500 shares. 3 month avg: 418,069 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Pipe top reversal pattern from 09/25/2017 to 10/02/2017
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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ConAgra Brands Inc (CAG)
Industry: Food Processing
Industry RS rank: 51 out of 56
Stock RS rank: 528 out of 587
10/12/17 close: $34.59
1 Month avg volatility: $0.59. Volatility stop (for upward breakout): $32.62 or 5.7% below the close.
Change YTD: -12.54%
Volume: 3,692,900 shares. 3 month avg: 3,926,203 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 08/30/2017 to 10/11/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Gartner Inc (IT)
Industry: Information Services
Industry RS rank: 43 out of 56
Stock RS rank: 237 out of 587
10/12/17 close: $123.58
1 Month avg volatility: $1.55. Volatility stop (for upward breakout): $120.33 or 2.6% below the close.
Change YTD: 22.27%
Volume: 455,100 shares. 3 month avg: 548,038 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/11/2017 to 10/12/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Guess Inc. (GES)
Industry: Apparel
Industry RS rank: 42 out of 56
Stock RS rank: 33 out of 587
10/12/17 close: $15.74
1 Month avg volatility: $0.43. Volatility stop (for downward breakout): $16.78 or 6.6% above the close.
Change YTD: 30.08%
Volume: 1,181,500 shares. 3 month avg: 1,375,795 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pipe top reversal pattern from 09/25/2017 to 10/02/2017
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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JetBlue Airways Corporation (JBLU)
Industry: Air Transport
Industry RS rank: 28 out of 56
Stock RS rank: 458 out of 587
10/12/17 close: $20.34
1 Month avg volatility: $0.43. Volatility stop (for upward breakout): $19.39 or 4.7% below the close.
Change YTD: -9.28%
Volume: 7,425,200 shares. 3 month avg: 6,184,245 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/01/2017 to 10/09/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Kimberly-Clark Corp (KMB)
Industry: Household Products
Industry RS rank: 50 out of 56
Stock RS rank: 515 out of 587
10/12/17 close: $117.56
1 Month avg volatility: $1.59. Volatility stop (for upward breakout): $113.47 or 3.5% below the close.
Change YTD: 3.01%
Volume: 1,870,800 shares. 3 month avg: 1,601,157 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Diamond bottom reversal pattern from 09/27/2017 to 10/12/2017
Breakout is upward 69% of the time.
Average rise: 36%.
Break-even failure rate: 4%.
Throwbacks occur 53% of the time.
Price hits measure rule target 81% of the time.

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Masco Corp. (MAS)
Industry: Building Materials
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 33 out of 56
Stock RS rank: 181 out of 587
10/12/17 close: $39.04
1 Month avg volatility: $0.44. Volatility stop (for upward breakout): $37.85 or 3.0% below the close.
Change YTD: 23.47%
Volume: 2,381,800 shares. 3 month avg: 1,985,289 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pennant continuation pattern from 10/02/2017 to 10/10/2017
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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RPC Inc (RES)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 54 out of 56
Stock RS rank: 159 out of 587
10/12/17 close: $22.77
1 Month avg volatility: $0.60. Volatility stop (for downward breakout): $24.19 or 6.2% above the close.
Change YTD: 14.94%
Volume: 1,212,200 shares. 3 month avg: 1,547,885 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Pipe top reversal pattern from 09/25/2017 to 10/02/2017
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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Symantec Corp (SYMC)
Industry: Computer Software and Svcs
Industry RS rank: 7 out of 56
Stock RS rank: 348 out of 587
10/12/17 close: $31.90
1 Month avg volatility: $0.67. Volatility stop (for downward breakout): $33.54 or 5.2% above the close.
Change YTD: 33.53%
Volume: 3,760,200 shares. 3 month avg: 6,833,917 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triple top reversal pattern from 09/13/2017 to 10/06/2017
Breakout is downward 100% of the time.
Average decline: 19%.
Break-even failure rate: 10%.
Pullbacks occur 61% of the time.
Price hits measure rule target 40% of the time.

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Techne Corporation (TECH)
Industry: Biotechnology
Industry RS rank: 10 out of 56
Stock RS rank: 106 out of 587
10/12/17 close: $123.93
1 Month avg volatility: $1.66. Volatility stop (for upward breakout): $119.84 or 3.3% below the close.
Change YTD: 20.52%
Volume: 124,000 shares. 3 month avg: 141,080 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 08/28/2017 to 10/10/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Williams Companies Inc. (WMB)
Industry: Natural Gas (Distributor)
Industry RS rank: 46 out of 56
Stock RS rank: 421 out of 587
10/12/17 close: $30.17
1 Month avg volatility: $0.40. Volatility stop (for upward breakout): $29.15 or 3.4% below the close.
Change YTD: -3.11%
Volume: 2,546,400 shares. 3 month avg: 4,127,080 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 09/08/2017 to 10/12/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Thursday 10/12/17. Intraday Market Direction: Nasdaq

The index climbed by 0.2% or 16.3 points. Since 02/05/1971 the index made 655 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 379 occasions.
     Average loss was -0.7% on 276 occasions.
Expect the index to close higher 57.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 138/242 or 57.0% of the time.
     The prediction of the index closing lower has been right 42/82 or 51.2% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

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

Yesterday a head-and-shoulders bottom chart pattern appeared. I show that as L-H-R, left shoulder, head, and right shoulder, respectively.

The index hasn't climbed far enough to fulfill the target set up by the measure rule for this pattern. Roughly, that's the height of the pattern added to the breakout price.

Today, a rectangle top appeared between the two horizontal red lines. The index has yet to meet its measure rule prediction for this pattern, too.

If the index continues to climb, then look for it to reach both measure rules. But this reluctance to climb could also be a warning of a coming bearish reversal. So the index might drop just as easily as rise.

$ $ $

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

-- Thomas Bulkowski

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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  6,253.85    
 Monthly S1  6,428.70  174.85   
 Weekly S2  6,453.25  24.55   
 Monthly Pivot  6,509.44  56.19   
 Weekly S1  6,528.40  18.96   
 Weekly Pivot  6,559.29  30.89   
 Daily S2  6,569.03  9.74   
 Low  6,577.99  8.96   
 Daily S1  6,586.29  8.30   
 Open  6,586.73  0.44   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  6,588.01  1.28   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  6,591.10  3.09   
 38.2% Down from Intraday High  6,594.19  3.09   
 Daily Pivot  6,595.25  1.06   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  6,603.55  8.30   
 High  6,604.21  0.66   Yes! The High is close to the Close.
 Daily R1  6,612.51  8.30   
 Daily R2  6,621.47  8.96   
 Weekly R1  6,634.44  12.97   
 Weekly R2  6,665.33  30.89   
 Monthly R1  6,684.29  18.96   
 Monthly R2  6,765.03  80.74   

Wednesday 10/11/17. A Look At Indicators

Picture of the chart pattern indicator

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

The large dip in the indicator I saw yesterday and predicted it would suck the markets down today has disappeared. Rather, the indicator dipped but then recovered as the indices pulled the breakouts from Nr7s upward.

I show that dip as point A on the chart. Large moves in the index will cause large moves in the indicator, too. I guess I was surprised yesterday at the sharp drop in the indicator.

Picture of the percent down indicators

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

Shown as a red line on the above chart...
On Monday, 20% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 18%.
The fewest was 14% on 12/09/2016.
And the most was 36% on 11/03/2016.
Shown as a blue line on the above chart...
The 497 stocks in my database are down an average of 11% from their yearly high.
A week ago, the average was 11%.
The peak was 9% on 12/09/2016.
And the bottom was 18% on 11/03/2016.

The more sensitive red line shows it dropping from a week ago, and making a large drop indeed: two percentage points. Maybe that's why the CPI also dipped.

The red line is bearish. The blue line is neutral (vs a week ago, for both). And the CPI is recovering and still bullish. I think that covers all three directions: up, down, and sideways.

Maybe this means a continuation of the up move...

-- Thomas Bulkowski

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Tuesday 10/10/17. Intraday Market Direction: Dow

The index dropped by -0.1% or -12.6 points. Since 10/01/1928 the index made 1304 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 675 occasions.
     Average loss was -0.7% on 629 occasions.
Expect the index to close higher 51.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 147/249 or 59.0% of the time.
     The prediction of the index closing lower has been right 32/65 or 49.2% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

$ $ $

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

I didn't think there was much to show on this chart until I drew my red trendlines. It forms a pattern. Do you know it's name?

It's a broadening formation, right-angled and ascending.

Yes, that's a mouthful.

Accord to the statistics in my Encyclopedia of Chart Patterns, Second Edition book, 73% of them breakout downward.

That's not as startling as the next figure.

Picture of the CPI.

This picture is a portion of the chart showing the chart pattern indicator.

I usually show the full chart on Wednesday's (in a blog post) and Friday's (elsewhere on the website. Click the link for the location).

What I noticed was the huge downturn in the indicator. I show that plunge circled in blue on the chart. Maybe it's cyan.

But also notice that the indicator is still bullish. That's denoted by the vertical green line. If the indicator had turned bearish, you'd see a vertical red line today.

I think these two charts are bearish, so I'm looking for the market to drop over the next two days, maybe more.

Of course, I could be wrong and the index might soar instead. But bearish is the way I'm leaning.

$ $ $

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

-- Thomas Bulkowski

Top

© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  21,348.50    
 Monthly S1  22,054.79  706.28   
 Weekly S2  22,290.33  235.54   
 Monthly Pivot  22,415.91  125.58   
 Weekly S1  22,525.70  109.79   
 Weekly Pivot  22,651.37  125.67   
 Daily S2  22,703.95  52.58   
 Daily S1  22,732.51  28.56   
 Low  22,739.38  6.87   
 Close  22,761.07  21.69   
 61.8% Down from Intraday High  22,763.82  2.75   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  22,767.94  4.12   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  22,771.38  3.44   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  22,778.93  7.55   
 Open  22,779.73  0.80   Yes! The Open is close to the 38.2% Down from Intraday High.
 Daily R1  22,796.50  16.77   
 High  22,803.37  6.87   
 Daily R2  22,831.93  28.56   
 Weekly R1  22,886.74  54.81   
 Weekly R2  23,012.41  125.67   
 Monthly R1  23,122.20  109.79   
 Monthly R2  23,483.32  361.13   

Monday 10/9/17. Market Monday: The Week Ahead

My Prediction

Picture of the nasdaq on the daily scale.

I show the Nasdaq composite on the daily scale.

The one thing I noticed is how price is trending upward in the chart on the right.

So I drew two lines, the red ones. The bottom one has three touches, so it's more important than the top one, which has two touches.

However, the top trendline gives us a clue as to future price movement. The top red line is a indication of overhead resistance.

At A, the index still has a bit more of an upward move before it touches the trendline. But after that, we can expect the index to drop. It might not, but that's the way to plan.

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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 152.51 points.
Tuesday: Up 84.07 points.
Wednesday: Up 19.97 points.
Thursday: Up 113.75 points.
Friday: Down 1.72 points.

For the Week...

The Dow industrials were up 368.58 points or 1.6%.
The Nasdaq composite was up 94.22 points or 1.5%.
The S&P 500 index was up 29.97 points or 1.2%.

Year to Date...

Dow Industrials
     0.0% down from the high of 22,777.04 on 10/05/2017.
     15.7% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     0.0% down from the high of 6,590.18 on 10/06/2017.
     22.1% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     0.1% down from the high of 2,552.51 on 10/05/2017.
     13.5% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 10/06/2017, the CPI had:

20 bearish patterns,
51 bullish patterns,
346 patterns waiting for breakout.
The CPI signal is 71.8%, 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  22,717  22,745  22,759  22,788  22,802 
Weekly  22,295  22,534  22,656  22,895  23,017 
Monthly  21,353  22,063  22,420  23,131  23,488 
S&P500 (^GSPC): Daily  2,542  2,546  2,548  2,551  2,553 
Weekly  2,509  2,529  2,541  2,561  2,573 
Monthly  2,410  2,480  2,516  2,586  2,622 
Nasdaq (^IXIC): Daily  6,559  6,575  6,582  6,598  6,606 
Weekly  6,449  6,519  6,555  6,626  6,661 
Monthly  6,249  6,420  6,505  6,675  6,761 
  • 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 17.6%   Expect a reversal soon. 
 7 months up 2.6%   Expect a reversal soon. 
 S & P 500 (^GSPC) 4 weeks up 17.1%   Expect a reversal soon. 
 7 months up 7.7%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 2 weeks up 33.5%   The trend may continue. 
 4 months up 20.6%   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.

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 7 days.

 Found Chart Pattern Name
16Double Bottom, Adam and Adam
12Head-and-shoulders bottom
10Triangle, symmetrical
10Double Top, Adam and Adam
8Pipe bottom
7Triple bottom
7Rising wedge
6Triangle, ascending
6Double Bottom, Eve and Adam
4Head-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. Semiconductor1. Semiconductor Cap Equip.
2. Semiconductor Cap Equip.2. Semiconductor
3. Aerospace/Defense3. Trucking/Transp. Leasing
4. Electronics4. Aerospace/Defense
5. Computer Software and Svcs5. Machinery
50. Household Products50. Natural Gas (Diversified)
51. Natural Gas (Diversified)51. Drug
52. Food Processing52. Household Products
53. Advertising53. Food Processing
54. Short ETFs54. Short ETFs
55. Oilfield Svcs/Equipment55. Advertising
56. Petroleum (Producing)56. Oilfield Svcs/Equipment
57. Medical Supplies57. Petroleum (Producing)

-- Thomas Bulkowski

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Friday 10/6/17. Pattern Trading Setups for the Weekend.

Go to Table.

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

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

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

There were 8 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 596 stocks searched, or 1.3%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

I found 2 pipe bottom chart patterns, which is neutral. High numbers of pipe bottoms can signal a bullish move (I see many of them just before a bear market ends or during a bear market rally. Often it means the first bottom of a double bottom has formed. Thus, expect a move down to the second bottom).

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

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

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
AJRDFlag      09/27/201710/05/2017Diversified Co.
AMATFlag      10/02/201710/05/2017Semiconductor Cap Equip.
CHSRising wedge      08/25/201710/05/2017Apparel
CAGTriangle, symmetrical      08/30/201710/05/2017Food Processing
COSTRising wedge      08/16/201710/05/2017Retail Store
FLEXBroadening top      09/12/201709/29/2017Electronics
NVTAPipe bottom      09/18/201709/25/2017Medical Services
KLICPennant      10/03/201710/05/2017Semiconductor Cap Equip.
NWLPipe bottom      09/18/201709/25/2017Household Products
IXCDiamond top      09/26/201710/05/2017Investment Co. (Foreign)

 

Weekly screen for chart patterns ending between 09/28/2017 and 10/05/2017. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Aerojet Rocketdyne (AJRD)
Industry: Diversified Co.
Industry RS rank: 12 out of 56
Stock RS rank: 10 out of 588
10/5/17 close: $34.84
1 Month avg volatility: $1.01. Volatility stop (for upward breakout): $32.72 or 6.1% below the close.
Change YTD: 94.09%
Volume: 316,800 shares. 3 month avg: 800,169 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Flag continuation pattern from 09/27/2017 to 10/05/2017
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Applied Materials (AMAT)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 3 out of 56
Stock RS rank: 58 out of 588
10/5/17 close: $51.43
1 Month avg volatility: $1.21. Volatility stop (for upward breakout): $48.35 or 6.0% below the close.
Change YTD: 59.37%
Volume: 9,335,000 shares. 3 month avg: 10,490,491 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Flag continuation pattern from 10/02/2017 to 10/05/2017
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Chicos FAS Inc. (CHS)
Industry: Apparel
Industry RS rank: 20 out of 56
Stock RS rank: 577 out of 588
10/5/17 close: $8.89
1 Month avg volatility: $0.25. Volatility stop (for downward breakout): $9.46 or 6.4% above the close.
Change YTD: -38.22%
Volume: 1,815,300 shares. 3 month avg: 3,022,685 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Rising wedge reversal pattern from 08/25/2017 to 10/05/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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ConAgra Brands Inc (CAG)
Industry: Food Processing
Industry RS rank: 52 out of 56
Stock RS rank: 549 out of 588
10/5/17 close: $34.10
1 Month avg volatility: $0.59. Volatility stop (for upward breakout): $32.66 or 4.2% below the close.
Change YTD: -13.78%
Volume: 2,714,300 shares. 3 month avg: 4,290,028 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 08/30/2017 to 10/05/2017
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Costco Wholesale Corp (COST)
Industry: Retail Store
Industry RS rank: 47 out of 56
Stock RS rank: 428 out of 588
10/5/17 close: $167.07
1 Month avg volatility: $2.01. Volatility stop (for downward breakout): $171.14 or 2.4% above the close.
Change YTD: 4.35%
Volume: 4,167,200 shares. 3 month avg: 3,551,286 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Rising wedge reversal pattern from 08/16/2017 to 10/05/2017
Breakout is downward 69% of the time.
Average decline: 14%.
Break-even failure rate: 24%.
Pullbacks occur 63% of the time.
Price hits measure rule target 46% of the time.

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Flextronics International Ltd (FLEX)
Industry: Electronics
Industry RS rank: 2 out of 56
Stock RS rank: 388 out of 588
10/5/17 close: $16.91
1 Month avg volatility: $0.24. Volatility stop (for downward breakout): $17.46 or 3.2% above the close.
Change YTD: 17.68%
Volume: 2,022,500 shares. 3 month avg: 3,226,712 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Broadening top reversal pattern from 09/12/2017 to 09/29/2017
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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Invitae Corp (NVTA)
Industry: Medical Services
Industry RS rank: 18 out of 56
Stock RS rank: 516 out of 588
10/5/17 close: $9.65
1 Month avg volatility: $0.25. Volatility stop (for upward breakout): $9.06 or 6.1% below the close.
Change YTD: 21.54%
Volume: 278,100 shares. 3 month avg: 292,009 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Pipe bottom reversal pattern from 09/18/2017 to 09/25/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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Kulicke and Soffa (KLIC)
Industry: Semiconductor Cap Equip.
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 3 out of 56
Stock RS rank: 265 out of 588
10/5/17 close: $22.03
1 Month avg volatility: $0.51. Volatility stop (for upward breakout): $20.85 or 5.3% below the close.
Change YTD: 38.12%
Volume: 331,700 shares. 3 month avg: 551,045 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pennant continuation pattern from 10/03/2017 to 10/05/2017
Breakout is upward 61% of the time.
Average rise: 25%.
Break-even failure rate: 2%.
Throwbacks occur 47% of the time.
Price hits measure rule target 60% of the time.

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Newell Rubbermaid Inc (NWL)
Industry: Household Products
Industry RS rank: 51 out of 56
Stock RS rank: 479 out of 588
10/5/17 close: $43.80
1 Month avg volatility: $0.91. Volatility stop (for upward breakout): $41.08 or 6.2% below the close.
Change YTD: -1.90%
Volume: 5,915,800 shares. 3 month avg: 4,318,922 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Pipe bottom reversal pattern from 09/18/2017 to 09/25/2017
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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S and P Global Energy Sector Index fund (IXC)
Industry: Investment Co. (Foreign)
Industry RS rank: 26 out of 56
Stock RS rank: 407 out of 588
10/5/17 close: $33.95
1 Month avg volatility: $0.23. Volatility stop (for downward breakout): $34.45 or 1.5% above the close.
Change YTD: -2.44%
Volume: 445,700 shares. 3 month avg: 198,366 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Diamond top reversal pattern from 09/26/2017 to 10/05/2017
Breakout is downward 69% of the time.
Average decline: 21%.
Break-even failure rate: 6%.
Pullbacks occur 57% of the time.
Price hits measure rule target 76% of the time.

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Thursday 10/5/17. Intraday Market Direction: Nasdaq

The index climbed by 0.0% or 2.92 points. Since 02/05/1971 the index made 636 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 360 occasions.
     Average loss was -0.9% on 276 occasions.
Expect the index to close higher 56.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 137/241 or 56.8% of the time.
     The prediction of the index closing lower has been right 42/82 or 51.2% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

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

This is an unusual pic, different from all of the others I've posted over the years. Why?

Because I show a curving channel.

Trendlines show momentum. When price rises above an up-sloping trendline, momentum is increasing. When it turns back toward the trendline, upward momentum drops and downward momentum gathers steam.

In this case, you can see momentum turn at the bottom trendline at A. And that leaves price starting to move sideways.

Most of the time (based on what I've read, not from hard facts), the security will drop after a horizontal topping pattern. In excitable times, whatever that is, a security will breakout upward and resume trending higher, often following almost the same slope.

To me, though, the index looks tired, as if it needs a retrace to recoup strength.

$ $ $

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

-- Thomas Bulkowski

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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  6,151.20    
 Weekly S2  6,304.84  153.64   
 Monthly S1  6,342.91  38.08   
 Weekly S1  6,419.73  76.82   
 Monthly Pivot  6,420.45  0.71   Yes! The Monthly Pivot is close to the Weekly S1.
 Weekly Pivot  6,458.86  38.41   
 Daily S2  6,498.06  39.21   
 Low  6,513.12  15.06   
 Daily S1  6,516.35  3.23   Yes! The Daily S1 is close to the Low.
 Open  6,521.96  5.61   
 61.8% Down from Intraday High  6,525.86  3.90   
 50% Down from Intraday High  6,529.79  3.93   
 Daily Pivot  6,531.40  1.61   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  6,533.72  2.32   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  6,534.63  0.91   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  6,546.46  11.83   
 Daily R1  6,549.69  3.23   Yes! The Daily R1 is close to the High.
 Daily R2  6,564.74  15.06   
 Weekly R1  6,573.75  9.01   
 Monthly R1  6,612.16  38.41   
 Weekly R2  6,612.88  0.71   Yes! The Weekly R2 is close to the Monthly R1.
 Monthly R2  6,689.70  76.82   

Wednesday 10/4/17. A Look At Indicators

Picture of the chart pattern indicator

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

Nothing much has changed on this picture for weeks now, so I've nothing important to say about the chart. It's bullish. And the indicator remains pegged at or near 100, the top of its scale.

Picture of the percent down indicators

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

Shown as a red line on the above chart...
On Monday, 18% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 21%.
The fewest was 14% on 12/09/2016.
And the most was 36% on 11/03/2016.
Shown as a blue line on the above chart...
The 498 stocks in my database are down an average of 11% from their yearly high.
A week ago, the average was 12%.
The peak was 9% on 12/09/2016.
And the bottom was 18% on 11/03/2016.

The two lines continue to show improvement, much to my surprise. September is typically the weakest performing month of the year but it did well this time around.

I don't know what else to say except the trend will end sometime. Just don't bet on when that will happen.

-- Thomas Bulkowski

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Tuesday 10/3/17. Intraday Market Direction: Dow

The index climbed by 0.7% or 152.51 points. Since 10/01/1928 the index made 653 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 359 occasions.
     Average loss was -0.7% on 294 occasions.
Expect the index to close higher 55.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 146/248 or 58.9% of the time.
     The prediction of the index closing lower has been right 32/65 or 49.2% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

$ $ $

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

An upward breakout from a symmetrical triangle saw the index make a nice gain. That should have made me happy, but the move was overshadowed by the gun violence in Las Vegas.

Fact: If no one had guns, there'd be no gun violence. Therefore, the more guns, the more gun violence.

What is congress doing? They are working on NRA-backed legislation to make buying a gun silencer easier!

One solution is to get people to turn in their guns. "Australia's [new, stringent] gun laws [and a gun buy-back program in 1997] stopped mass shootings and reduced homicides, study finds" after a massacre there in 1996, according to The Guardian. "Between 1995 and 2006, gun-related homicides and suicides in the country [Australia] dropped by 59 percent and 65 percent, respectively," according to The Atlantic.

According to tonight's national news, the US has 5% of the world's population, but 30% of mass shootings.

According to Time magazine (October 24, 2016 issue), they said as of 2009 (eight years ago!), "there were 310 million firearms [and a 2009 population of 306.8 million people or more than one gun per person] in the US" and "Firearms were responsible for 71% of all murders" in 2015.

$ $ $

I released version 6.6 of Patternz. It has a manual scoring system now (as well as the automatic one) and it has an auto-retry feature on the update form. If a quote isn't updated by one quote provider, it'll try another.

$ $ $

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

-- Thomas Bulkowski

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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  21,470.97    
 Monthly S1  22,014.28  543.32   
 Weekly S2  22,207.59  193.31   
 Monthly Pivot  22,216.90  9.30   Yes! The Monthly Pivot is close to the Weekly S2.
 Daily S2  22,367.61  150.72   
 Weekly S1  22,382.60  14.98   
 Weekly Pivot  22,394.11  11.52   Yes! The Weekly Pivot is close to the Weekly S1.
 Low  22,416.00  21.89   
 Open  22,432.47  16.47   
 Daily S1  22,462.61  30.14   
 61.8% Down from Intraday High  22,470.77  8.16   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  22,487.69  16.92   
 38.2% Down from Intraday High  22,504.61  16.92   
 Daily Pivot  22,510.99  6.38   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  22,557.60  46.61   
 High  22,559.38  1.78   Yes! The High is close to the Close.
 Weekly R1  22,569.12  9.74   Yes! The Weekly R1 is close to the High.
 Weekly R2  22,580.63  11.52   Yes! The Weekly R2 is close to the Weekly R1.
 Daily R1  22,605.99  25.35   
 Daily R2  22,654.37  48.39   
 Monthly R1  22,760.21  105.84   
 Monthly R2  22,962.83  202.61   

Monday 10/2/17. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

I show a chart of the Dow industrials on the daily scale.

Nothing much of interest shows on this chart.

I drew a channel in red by connecting the valleys on the bottom and drew another red line connecting the two recent peaks.

The channel is flawed, in my view, because there's not enough trendline touches on the top.

One of the ideas that this chart highlights, though, is point A.

That dip is what I call a partial decline. It suggests more of an upward move ahead, but we'll have to see what happens.

Clearly the index is struggling to move higher. Some of the other indices have broken out to new highs.

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Down 53.5 points.
Tuesday: Down 11.77 points.
Wednesday: Up 56.39 points.
Thursday: Up 40.49 points.
Friday: Up 23.89 points.

For the Week...

The Dow industrials were up 55.5 points or 0.2%.
The Nasdaq composite was up 69.04 points or 1.1%.
The S&P 500 index was up 17.14 points or 0.7%.

Year to Date...

Dow Industrials
     0.1% down from the high of 22,419.51 on 09/21/2017.
     13.9% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     0.0% down from the high of 6,497.98 on 09/29/2017.
     20.3% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     0.0% down from the high of 2,519.44 on 09/29/2017.
     12.2% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 09/29/2017, the CPI had:

3 bearish patterns,
10 bullish patterns,
215 patterns waiting for breakout.
The CPI signal is 76.9%, 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  22,309  22,357  22,381  22,429  22,454 
Weekly  22,157  22,281  22,343  22,467  22,530 
Monthly  21,420  21,913  22,166  22,659  22,912 
S&P500 (^GSPC): Daily  2,504  2,512  2,516  2,523  2,527 
Weekly  2,478  2,498  2,509  2,530  2,540 
Monthly  2,398  2,459  2,489  2,550  2,580 
Nasdaq (^IXIC): Daily  6,440  6,468  6,483  6,511  6,526 
Weekly  6,292  6,394  6,446  6,548  6,600 
Monthly  6,138  6,317  6,408  6,586  6,677 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 3 weeks up 22.6%   Expect a reversal soon. 
 6 months up 7.1%   Expect a reversal soon. 
 S & P 500 (^GSPC) 3 weeks up 22.1%   Expect a reversal soon. 
 6 months up 14.6%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week up 45.3%   Expect a random direction. 
 3 months up 29.8%   The trend may continue. 

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

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

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

Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
14Double Top, Adam and Adam
14Double Bottom, Adam and Adam
11Triple bottom
9Head-and-shoulders bottom
9Triangle, symmetrical
7Pipe bottom
6Double Bottom, Eve and Adam
6Triangle, ascending
5Rising wedge
4Broadening 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. Semiconductor Cap Equip.1. Semiconductor
2. Semiconductor2. Semiconductor Cap Equip.
3. Trucking/Transp. Leasing3. Aerospace/Defense
4. Aerospace/Defense4. Machinery
5. Machinery5. Computer Software and Svcs
50. Natural Gas (Diversified)50. Furn/Home Furnishings
51. Drug51. Drug
52. Household Products52. Household Products
53. Food Processing53. Food Processing
54. Short ETFs54. Short ETFs
55. Advertising55. Advertising
56. Oilfield Svcs/Equipment56. Petroleum (Producing)
57. Petroleum (Producing)57. Oilfield Svcs/Equipment

-- Thomas Bulkowski

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