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

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/20/2017
21,612 -28.97 -0.1%
9,483 -92.64 -1.0%
720 5.10 0.7%
6,390 4.96 0.1%
2,473 -0.38 0.0%
YTD
9.4%
4.9%
9.1%
18.7%
10.5%
Tom's Targets    Overview: 07/14/2017
21,850 or 21,000 by 08/01/2017
9,950 or 9,400 by 08/01/2017
725 or 685 by 08/01/2017
6,450 or 6,175 by 08/01/2017
2,525 or 2,400 by 08/01/2017

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September 2012 Headlines


Archives


Friday 9/28/12. Bicycle Accident

Picture of bike shoe and clipless pedal.

I'm relatively new to clipless pedals on my bicycle (purchased in mid August), so an accident involving them was bound to happen. Let me explain.

Pictured is the bicycle pedal at BC and my shoe. The tongue on the shoe (circled at A slips into the loop at B. When you push down, the shoe clips into the pedal at C and D. D is a tongue that snaps into an inverted L shaped bracket on springs at C.

To unclip your foot from the pedal, you slide it to the left or right. In an emergency, enough force will pull the D tongue from the inverted L spring/clip and free the foot. In normal pedaling, that won't happen, so you can pull up on your leg, pulling the pedal up as well and giving you more power when you pedal.

The problem is when you come to a stop sign. You have to remember to unclip your foot from the pedals. Clipping into the pedals and unclipping from them takes practice before it becomes instinctive.

I spent about an hour practicing before my first ride. I didn't want to fall over at a stop sign and injure myself.

This morning I had such an accident and it was the type that the bike shop owner warned me about. I was cruising at 20 mph approaching a stop sign. When I'm riding alone, I always obey the traffic signals, so I coasted to a stop. Three cars were at the four way stop sign, crossing.

As I approached the stop sign, I unclipped my left foot, just as you should, preparing for the left foot to touch the pavement. And then I tipped over to the right. Oops. I couldn't free my right foot in time and just tipped over, slamming into the pavement. I'm sure the people in the cars waiting had a good laugh. They just drove on without stopping or asking if I was all right. Sigh.

An accident of this nature feels like squatting on top of a couch and rolling over to the floor. The drop is similar when you hit your shoulder and right arm. I scraped my forearm and my shoulder handled the impact without breaking anything. And yet my shoulder feels sore. I'll ice it down and I popped a few aspirin when I arrived home.

I've been worried about this type of thing happening ever since I got the pedals and it's one of the reasons I didn't have them installed sooner. I was sure I'd snap my collarbone, since I've either broken or fractured both sides.

Now I know what it feels like to tip over when coming to a stop. If you want to see this happen, watch the movie Wimbledon. The brother of the tennis star rides his bike to a betting shop and can't unclip in time. He falls over just like I did. Not fun. The three inch scrape on my right arm will take some time to mend and hopefully the shoulder will feel fine soon.

I wonder how many more times this will happen? The solution is to unclip from both pedals (but keeping one foot in the loop at B while the other shoe is unclipped completely) at a stop but that's awkward to do.

-- Thomas Bulkowski

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Thursday 9/27/12. Trading Thursday: Nasdaq

The index dropped by -0.8% or -24.03 points. Since 02/05/1971 the index made 220 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 106 occasions.
     Average loss was -1.4% on 114 occasions.
Expect the index to close lower 51.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 25/42 or 59.5% of the time.
     The prediction of the index closing lower has been right 14/26 or 53.8% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

A v-bottom, at A, appears early in the session. Those are difficult to trade. A double top (BC) appears late in the session. By the time it confirmed at D, there was not enough time to profit from the meager decline. Does that suggest more of a down move ahead?

The probabilities say yes.

The last two days have marked the breakout move from a horizontal congestion region that I've been expecting. Today, the index bounced upward. However, that is probably just a pause before the index resumes dropping. Thus, I'm looking for a lower close on Thursday.

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

-- Thomas Bulkowski

Top

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,953.60    
 Monthly S1  3,023.65  70.05   
 Daily S2  3,061.91  38.26   
 Daily S1  3,077.81  15.89   
 Low  3,080.28  2.47   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  3,093.37  13.09   
 Close  3,093.70  0.33   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  3,096.17  2.47   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  3,097.41  1.24   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Weekly S1  3,101.13  3.72   
 38.2% Down from Intraday High  3,101.45  0.32   Yes! The 38.2% Down from Intraday High is close to the Weekly S1.
 Weekly S2  3,108.56  7.11   
 Monthly Pivot  3,110.29  1.73   Yes! The Monthly Pivot is close to the Weekly S2.
 Daily R1  3,112.07  1.78   Yes! The Daily R1 is close to the Monthly Pivot.
 Open  3,113.40  1.33   Yes! The Open is close to the Daily R1.
 High  3,114.54  1.14   Yes! The High is close to the Open.
 Daily R2  3,130.43  15.89   
 Weekly R1  3,141.60  11.17   
 Weekly Pivot  3,149.03  7.43   
 Monthly R1  3,180.34  31.31   
 Weekly R2  3,189.50  9.16   
 Monthly R2  3,266.98  77.48   

Tuesday 9/25/12. Trading Tuesday: Dow

The index dropped by -0.2% or -20.55 points. Since 10/01/1928 the index made 1096 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 543 occasions.
     Average loss was -0.7% on 553 occasions.
Expect the index to close lower 50.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 31/50 or 62.0% of the time.
     The prediction of the index closing lower has been right 8/14 or 57.1% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

The chart shows a double bottom at A and B that confirmed when price closed above the red line at C. Following that, a descending triangle appeared. The triangle was unusual since it broke out upward and led to a nice straight-line run upward (normally, they break out downward).

The index hit the price target of the double bottom and also that of the triangle. In other words, the height of each pattern added to the top gives a target.

Looking ahead, the index almost completed a throwback to the top of the triangle. That suggests the index will recover to close higher tomorrow (Tuesday).

On the 10-day, 5 min scale, the index has been moving sideways for seven trading days. One of these days, it'll shoot off one way or the other. The daily chart isn't much help, either. The index is pausing, trying to make up its mind on direction.

Thus, I'll default to the above probabilities which show a lower close on Tuesday.

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

-- Thomas Bulkowski

Top

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,720.27    
 Monthly S1  13,139.59  419.33   
 Monthly Pivot  13,396.42  256.82   
 Weekly S2  13,425.57  29.16   
 Daily S2  13,480.61  55.04   
 Weekly S1  13,492.25  11.63   
 Daily S1  13,519.77  27.52   
 Low  13,521.68  1.91   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  13,552.32  30.64   
 Close  13,558.92  6.60   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  13,560.83  1.91   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  13,561.79  0.96   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 Weekly Pivot  13,569.67  7.88   Yes! The Weekly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  13,571.26  1.58   Yes! The 38.2% Down from Intraday High is close to the Weekly Pivot.
 Open  13,577.85  6.59   Yes! The Open is close to the 38.2% Down from Intraday High.
 Daily R1  13,599.99  22.14   
 High  13,601.90  1.91   Yes! The High is close to the Daily R1.
 Weekly R1  13,636.35  34.45   
 Daily R2  13,641.05  4.71   Yes! The Daily R2 is close to the Weekly R1.
 Weekly R2  13,713.77  72.72   
 Monthly R1  13,815.74  101.97   
 Monthly R2  14,072.57  256.82   

Monday 9/24/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

The picture shows the Dow transports on the daily scale. I show this because of the strong move down.

Friday's drop was on high volume. The other indices also show a high volume spike. Is this a selling climax? Could be.

The red line shows a line of support but I drew it from Friday's low to the left. It matches or nears other lows through May.

Will the index continue dropping and is it a message to the other indices to continue dropping? No one knows the answer, of course. I am hoping that Friday's drop on high volume marks a turning point. I still look for the index to rise in the coming weeks.

To be fair, the index could continue down. The transports tend to have strong trends like the chart shows. The mid August peak to valley drop is another example. Following that is a straight-line run back up. And yet the index doesn't go anywhere but sideways.

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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 40.27 points.
Tuesday: Up 11.54 points.
Wednesday: Up 13.32 points.
Thursday: Up 18.97 points.
Friday: Down 17.46 points.

For the Week...

The Dow industrials were down 13.9 points or 0.1%.
The Nasdaq composite was down 3.99 points or 0.1%.
The S&P 500 index was down 5.62 points or 0.4%.

Year to Date...

Dow Industrials
     0.5% down from the high of 13,653.24 on 09/14/2012.
     12.8% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     0.5% down from the high of 3,196.93 on 09/21/2012.
     21.0% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     1.0% down from the high of 1,474.51 on 09/14/2012.
     16.0% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
New home sales10:00 WC+Shows sales of single-family homes.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Durable goods orders8:30 ThBMeasures orders, shipments of goods with lifespans >3 years.
Gross domestic product8:30 ThBMeasures economic activity; GDP deflator measures inflation.
Personal income & consumption8:30 FC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 FC+Covers durables, non-durables, and services.
Chicago purchasing managers index9:45 FBMonitors regional manufacturing activity.
Michigan sentiment9:55 FB-Consumer sentiment: Measures strength of consumer spending.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 09/21/2012, the CPI had:

10 bearish patterns,
18 bullish patterns,
331 patterns waiting for breakout.
The CPI signal is 64.3%, 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  13,524  13,552  13,599  13,627  13,675 
Weekly  13,432  13,506  13,577  13,650  13,721 
Monthly  12,727  13,153  13,403  13,829  14,079 
S&P 500 (^GSPC): Daily  1,455  1,457  1,462  1,465  1,470 
Weekly  1,442  1,451  1,459  1,468  1,476 
Monthly  1,366  1,413  1,444  1,491  1,522 
Nasdaq (^IXIC): Daily  3,166  3,173  3,185  3,192  3,204 
Weekly  3,137  3,159  3,178  3,199  3,218 
Monthly  2,982  3,081  3,139  3,238  3,296 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 30.4%  The trend may continue.
 4 months up 17.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week down 30.7%  The trend may continue.
 4 months up 24.9%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week down 33.6%  The trend may continue.
 4 months up 20.1%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
18Pipe bottom
17Triangle, symmetrical
11Rising wedge
10Triangle, ascending
7Head-and-shoulders bottom
5Rectangle top
4Diamond top
4Triangle, descending
4Channel
2Double Bottom, Adam and Eve

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

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

 

 

 

 

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

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Chemical (Specialty)2. Chemical (Specialty)
3. Biotechnology3. Chemical (Basic)
4. Chemical (Basic)4. Retail Building Supply
5. Retail Building Supply5. Biotechnology
48. Trucking/Transp. Leasing48. Trucking/Transp. Leasing
49. Furn/Home Furnishings49. Short ETFs
50. Semiconductor50. Furn/Home Furnishings
51. Semiconductor Cap Equip.51. Semiconductor

-- Thomas Bulkowski

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Thursday 9/20/12. Trading Thursday: Nasdaq

The index climbed by 0.2% or 4.82 points. Since 02/05/1971 the index made 583 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 346 occasions.
     Average loss was -0.9% on 237 occasions.
Expect the index to close higher 59.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 25/41 or 61.0% of the time.
     The prediction of the index closing lower has been right 14/26 or 53.8% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

This chart is an unusual because it shows a rare v-bottom with an extension. Take a position when the index closes above the extension (handle).

Looking at the 10-day, 5-minute chart shows what looks like a cup with handle. The handle could be forming tomorrow (Thursday). I don't have a good feel for the direction of the close, but my guesses are random anyway. No one can know the future, including me. The probabilities say that the index will close higher, so that's good enough for me.

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

-- Thomas Bulkowski

Top

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,929.25    
 Monthly S1  3,055.94  126.68   
 Weekly S2  3,062.19  6.25   
 Weekly S1  3,122.40  60.22   
 Monthly Pivot  3,125.80  3.40   
 Weekly Pivot  3,159.04  33.23   
 Daily S2  3,161.69  2.66   
 Low  3,170.29  8.60   
 Daily S1  3,172.16  1.87   Yes! The Daily S1 is close to the Low.
 61.8% Down from Intraday High  3,177.57  5.41   
 Open  3,179.04  1.47   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,179.82  0.78   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  3,180.75  0.93   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,182.07  1.32   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  3,182.62  0.55   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  3,189.35  6.73   
 Daily R1  3,191.22  1.87   Yes! The Daily R1 is close to the High.
 Daily R2  3,199.81  8.60   
 Weekly R1  3,219.25  19.44   
 Monthly R1  3,252.49  33.23   
 Weekly R2  3,255.89  3.40   
 Monthly R2  3,322.35  66.47   

Tuesday 9/18/12. Trading Tuesday: Dow

The index dropped by -0.3% or -40.27 points. Since 10/01/1928 the index made 956 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 450 occasions.
     Average loss was -0.7% on 506 occasions.
Expect the index to close lower 52.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 31/50 or 62.0% of the time.
     The prediction of the index closing lower has been right 8/13 or 61.5% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

A descending triangle appears early in the session with a downward breakout at A. The height of the pattern subtracted from the bottom red line gives a target. By looking at the chart, it appears that the index reached the target before the close.

Using the 10-day, 5 min scale, the index shows it resting on support setup by a congestion area two trading days ago. It looks to me like the index will close lower (the index has been sloping downward since it peaked two days ago).

Looking at the daily chart suggests that a retrace back to 13,400 is about to take place. Whether that actually happens, we'll have to wait and see. For now, though, I'm looking for a lower close tomorrow.

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

-- Thomas Bulkowski

Top

© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,718.33    
 Weekly S2  13,084.06  365.73   
 Monthly S1  13,135.71  51.65   
 Weekly S1  13,318.58  182.87   
 Monthly Pivot  13,394.48  75.90   
 Weekly Pivot  13,485.91  91.43   
 Daily S2  13,491.16  5.25   Yes! The Daily S2 is close to the Weekly Pivot.
 Daily S1  13,522.13  30.97   
 Low  13,526.67  4.54   Yes! The Low is close to the Daily S1.
 61.8% Down from Intraday High  13,552.07  25.40   
 Close  13,553.10  1.03   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  13,557.64  4.54   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  13,559.91  2.27   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  13,567.75  7.84   
 Open  13,588.57  20.82   
 Daily R1  13,588.61  0.04   Yes! The Daily R1 is close to the Open.
 High  13,593.15  4.54   Yes! The High is close to the Daily R1.
 Daily R2  13,624.12  30.97   
 Weekly R1  13,720.43  96.31   
 Monthly R1  13,811.86  91.43   
 Weekly R2  13,887.76  75.90   
 Monthly R2  14,070.63  182.87   

Monday 9/17/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the weekly scale.

I show the Dow industrials on the weekly scale to show how the index has behaved over the longer term.

Last year the index formed a head-and-shoulders top chart pattern (LS = left shoulder, RS = right shoulder) that confirmed when the index closed below the red neckline.

The downward breakout from this reversal pattern saw the index make a strong plunge in just a few weeks followed by a few months of consolidation from August to October 2011.

More recently, this week in fact, the index has climbed out of another congestion region and is making new highs. This breakout is not an all-time high. Rather, 2007 saw the index make a higher peak, about 500 points above where it is now.

Looking forward, I expect the index to coast higher, eventually rounding over in a throwback. After that completes, I expect the index to resume the upward trend.

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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 52.35 points.
Tuesday: Up 69.07 points.
Wednesday: Up 9.99 points.
Thursday: Up 206.51 points.
Friday: Up 53.51 points.

For the Week...

The Dow industrials were up 286.73 points or 2.2%.
The Nasdaq composite was up 47.53 points or 1.5%.
The S&P 500 index was up 27.85 points or 1.9%.

Year to Date...

Dow Industrials
     0.4% down from the high of 13,653.24 on 09/14/2012.
     12.9% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     0.4% down from the high of 3,195.67 on 09/14/2012.
     21.2% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     0.6% down from the high of 1,474.51 on 09/14/2012.
     16.4% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Housing starts8:30 WB-Number of homes beginning construction.
Building permits8:30 WB-Measures building permits for new construction.
Existing home sales10:00 WCCounts sales of used homes.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Leading indicators10:00 ThD-Summary of already known reports.

Options Expiration

The following is courtesy of the Options Industry Council.

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

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

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Swing and Position Traders: Chart Pattern Indicator

As of 09/14/2012, the CPI had:

2 bearish patterns,
58 bullish patterns,
138 patterns waiting for breakout.
The CPI signal is 96.7%, 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  13,474  13,534  13,594  13,653  13,713 
Weekly  13,097  13,345  13,499  13,747  13,901 
Monthly  12,732  13,163  13,408  13,839  14,084 
S&P 500 (^GSPC): Daily  1,452  1,459  1,467  1,473  1,481 
Weekly  1,411  1,438  1,456  1,484  1,502 
Monthly  1,366  1,416  1,445  1,495  1,524 
Nasdaq (^IXIC): Daily  3,150  3,167  3,181  3,198  3,213 
Weekly  3,063  3,123  3,159  3,220  3,256 
Monthly  2,930  3,057  3,126  3,253  3,323 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 2 weeks up 30.2%  The trend may continue.
 4 months up 17.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 2 weeks up 29.5%  The trend may continue.
 4 months up 24.9%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 2 weeks up 27.5%  The trend may continue.
 4 months up 20.1%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
19Rising wedge
18Triangle, symmetrical
15Pipe bottom
9Triangle, ascending
5Head-and-shoulders bottom
4Diamond top
4Channel
4Triangle, descending
4Rectangle top
3Pennant

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

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

 

 

 

 

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

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Chemical (Specialty)2. Chemical (Specialty)
3. Chemical (Basic)3. Retail Building Supply
4. Retail Building Supply4. Chemical (Basic)
5. Biotechnology5. Biotechnology
48. Trucking/Transp. Leasing48. Furn/Home Furnishings
49. Short ETFs49. Semiconductor
50. Furn/Home Furnishings50. Short ETFs
51. Semiconductor51. Petroleum (Producing)

-- Thomas Bulkowski

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Thursday 9/13/12. Trading Thursday: Nasdaq

The index climbed by 0.3% or 9.78 points. Since 02/05/1971 the index made 550 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 304 occasions.
     Average loss was -0.7% on 246 occasions.
Expect the index to close higher 55.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 24/40 or 60.0% of the time.
     The prediction of the index closing lower has been right 14/26 or 53.8% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

Early in the day's session, a head-and-shoulders bottom appears. That pattern confirmed as a valid one when the index closed above the blue neckline at D. Based on the height of the pattern, the predicted target wasn't reached.

Another pattern appears later in the session. A double top, at A and B, confirmed when the index closed below the bottom of it at C. This time, the index came closer to reaching its predicted target.

The index moved higher going into the close but that seems to me to be hitting overhead resistance, at least intraday. The Nasdaq on the daily charts show it wobbling at overhead resistance. Intraday, the index has moved sideways for a few days. Eventually, it will breakout in one direction or another soon. Thus, I'll vote for a higher close based on the above probabilities and not what the price patterns say.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, 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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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,872.78    
 Monthly S1  2,993.54  120.77   
 Weekly S2  2,998.68  5.14   
 Weekly S1  3,056.50  57.81   
 Monthly Pivot  3,066.58  10.08   
 Daily S2  3,089.78  23.21   
 Weekly Pivot  3,098.05  8.27   
 Low  3,098.82  0.77   Yes! The Low is close to the Weekly Pivot.
 Daily S1  3,102.05  3.23   
 61.8% Down from Intraday High  3,106.96  4.91   
 50% Down from Intraday High  3,109.47  2.51   
 Daily Pivot  3,111.08  1.61   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,111.98  0.90   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  3,114.31  2.33   
 Open  3,115.33  1.02   Yes! The Open is close to the Close.
 High  3,120.12  4.79   
 Daily R1  3,123.35  3.23   
 Daily R2  3,132.38  9.04   
 Weekly R1  3,155.87  23.48   
 Monthly R1  3,187.34  31.48   
 Weekly R2  3,197.42  10.08   
 Monthly R2  3,260.38  62.95   

Tuesday 9/11/12. Trading Tuesday: Dow

The index dropped by -0.4% or -52.35 points. Since 10/01/1928 the index made 848 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 427 occasions.
     Average loss was -0.7% on 421 occasions.
Expect the index to close higher 50.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 30/49 or 61.2% of the time.
     The prediction of the index closing lower has been right 8/13 or 61.5% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

The index formed a double top at A and B, but the difference in price might throw a viewer off. The pattern confirms when the index closes below the red line at C.

Using the height of the chart pattern, from A to D and projecting that down from D, gives a target that is approximately E. The index hit and passed it, making a strong push lower in the final half hour. Does this mean a lower close tomorrow? The probabilities say no.

The daily chart suggests that weakness is upon us. The overhead resistance appears set to push the indices lower. On the 10-day chart, 5-minute scale, the index has reached minor underlying support setup by trading three days ago. This could begin the retrace I've been expecting of the big move up last week. Thus, I expect a lower close on Tuesday.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, 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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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,710.68    
 Weekly S2  12,840.70  130.02   
 Monthly S1  12,982.49  141.78   
 Weekly S1  13,047.50  65.01   
 Monthly Pivot  13,156.62  109.13   
 Weekly Pivot  13,183.88  27.26   
 Daily S2  13,203.88  20.00   
 Daily S1  13,229.09  25.20   
 Low  13,251.39  22.30   
 Close  13,254.29  2.90   Yes! The Close is close to the Low.
 Daily Pivot  13,276.59  22.30   
 61.8% Down from Intraday High  13,279.17  2.57   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  13,287.75  8.58   
 38.2% Down from Intraday High  13,296.33  8.58   
 Daily R1  13,301.80  5.47   Yes! The Daily R1 is close to the 38.2% Down from Intraday High.
 Open  13,308.56  6.76   Yes! The Open is close to the Daily R1.
 High  13,324.10  15.54   
 Daily R2  13,349.30  25.20   
 Weekly R1  13,390.68  41.37   
 Monthly R1  13,428.43  37.75   
 Weekly R2  13,527.06  98.64   
 Monthly R2  13,602.56  75.50   

Monday 9/10/12. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utilities on the daily chart.

The index has bounced off support, which I show as the red line. The loose congestion area circled in blue was strong enough to stop the straight-line run downward.

Those of us that own utility stocks have been suffering for the past month ever since the index peaked in August and started making a straight-line drop.

The big question now is, what's next? Will the index continue to rebound like it has for the last two days, or will it form a measured move down chart pattern. That pattern shows a strong move down then a pause, followed by a resumption of the down move that approximates the first leg down. If that happens, it will be bad news for utility stock owners.

My hope is that the support area is strong enough to support the index and utility stocks are cheap enough to attract buyers and keep the index moving up.

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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.

Tuesday: Down 54.9 points.
Wednesday: Up 11.54 points.
Thursday: Up 244.52 points.
Friday: Up 14.64 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 215.8 points or 1.6%.
The Nasdaq composite was up 69.46 points or 2.3%.
The S&P 500 index was up 31.34 points or 2.2%.

Year to Date...

Dow Industrials
     0.2% down from the high of 13,338.66 on 05/01/2012.
     10.6% up from the low of 12,035.09 on 06/04/2012.
Nasdaq
     0.1% down from the high of 3,139.61 on 09/07/2012.
     19.4% up from the low of 2,627.23 on 01/04/2012.
S&P 500
     0.0% down from the high of 1,437.92 on 09/07/2012.
     14.2% up from the low of 1,258.86 on 01/03/2012.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer credit3:00 MD-Measures auto, credit card and other debt.
Trade balance8:30 TC+Signals balance of exports & imports.
International trade8:30 WC+Import/export prices, trade balance. US economy vs others.
Wholesale inventories10:00 WD-Wholesale sales and inventory statistics.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Producer price index8:30 ThB-Measures wholesale goods cost. An indication of future inflation.
FOMC Rate decision12:30 Th?The Federal Reserves reports on interest rate changes.
Treasury budget2:00 ThDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 FA-Reports total retail sales (not services). Are people spending?
Consumer price index8:30 FB+Inflation report. Measures cost of goods and services.
Industrial production9:15 FB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 FB-Gauges economic activity, hints of inflation.
Business inventories10:00 FC-Reports manufacturing, wholesale, retail inventories.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 09/07/2012, the CPI had:

1 bearish patterns,
13 bullish patterns,
176 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  13,244  13,275  13,298  13,329  13,352 
Weekly  12,858  13,082  13,201  13,426  13,545 
Monthly  12,728  13,017  13,174  13,463  13,620 
S&P 500 (^GSPC): Daily  1,429  1,434  1,436  1,440  1,442 
Weekly  1,383  1,410  1,424  1,452  1,465 
Monthly  1,341  1,390  1,414  1,462  1,486 
Nasdaq (^IXIC): Daily  3,123  3,130  3,135  3,141  3,146 
Weekly  3,006  3,071  3,105  3,171  3,205 
Monthly  2,880  3,008  3,074  3,202  3,268 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week up 43.5%  Expect a random direction.
 4 months up 17.5%  Expect a reversal soon.
 S & P 500 (^GSPC) 1 week up 42.5%  Expect a random direction.
 4 months up 24.9%  Expect a reversal soon.
 Nasdaq composite (^IXIC) 1 week up 41.2%  Expect a random direction.
 4 months up 20.1%  Expect a reversal soon.

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
19Rising wedge
18Triangle, symmetrical
9Triangle, ascending
6Head-and-shoulders bottom
5Channel
5Flag
5Pennant
4Triangle, descending
4Rectangle top
3Broadening wedge, 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, indexes, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

 

 

 

 

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

This WeekLast Week
1. Homebuilding1. Homebuilding
2. Chemical (Specialty)2. Retail Building Supply
3. Retail Building Supply3. Computers and Peripherals
4. Chemical (Basic)4. Chemical (Basic)
5. Biotechnology5. Biotechnology
48. Furn/Home Furnishings48. Precision Instrument
49. Semiconductor49. Semiconductor
50. Short ETFs50. Furn/Home Furnishings
51. Petroleum (Producing)51. Petroleum (Producing)

-- Thomas Bulkowski

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Thursday 9/6/12. Trading Thursday: Nasdaq

The index dropped by -0.2% or -5.79 points. Since 02/05/1971 the index made 423 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 215 occasions.
     Average loss was -1.0% on 208 occasions.
Expect the index to close higher 50.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 23/39 or 59.0% of the time.
     The prediction of the index closing lower has been right 14/26 or 53.8% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

The index has formed a descending triangle chart pattern, outline here by red lines. Since the bottom trendline has a slight tilt upward, you can also call it a symmetrical triangle. I prefer descending because the bottom line is nearly horizontal and the pattern gives a good hint at the breakout direction: downward.

The probabilities say Thursday's close will be upward, but the triangle breaks out downward most often (at least on the daily charts). Looking at the daily chart, it shows the index still mired in a consolidation region but with hints of an upward breakout.

The 10-day, 5 minute scale shows price moving horizontally, too. There's no clear trend. So, I'm going to refrain from guessing the direction of tomorrow's close.

$ $ $

Picture of my dog.

Yesterday, I baked myself some French fries and turned off the oven 5 minutes before the timer went off. Five minutes later, when I opened the door, I discovered a blinding white light on the bottom element (burner). It was as bright as the sun (probably brighter) and looked like someone was welding it.

I found that odd because I had already turned off the power to the oven. I went outside and turned off the circuit breaker, too, just in case power was still going to the unit. When I checked the oven again, the element was still burning, sometimes red and sometimes white hot. It reminded me of chemistry class in high school where the teacher lit a piece of magnesium, I think, and it glowed just as brightly.

Anyway, this flame traveled almost half way around the element and then went out.

This morning, I found a replacement element (~$30) for the 26 year old oven and the woman told me that when the elements burn out, that's what can happen. I'll try the oven again tomorrow night with another run at the French fries. I'm carbo-loading for a possible bike run with the big boys (we'll, they're skinny but wicked fast) soon.

$ $ $

Took my dog to the vet today, too. She threw up twice in the last three days (pictured). I had the same problem almost a year ago. Would they just give me the antibiotics instead of charging me up the wahzoo for a complete workup? No. Cost: $119. But I saved $5 (coupon). Maybe I should have switched to Geico.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, 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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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  2,810.53    
 Monthly S1  2,939.90  129.37   
 Weekly S2  3,019.05  79.15   
 Monthly Pivot  3,020.22  1.17   Yes! The Monthly Pivot is close to the Weekly S2.
 Weekly S1  3,044.16  23.94   
 Daily S2  3,051.31  7.15   
 Daily S1  3,060.29  8.98   
 Low  3,062.54  2.25   
 Weekly Pivot  3,065.70  3.16   
 Close  3,069.27  3.57   
 61.8% Down from Intraday High  3,070.26  0.99   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  3,071.52  1.26   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 Open  3,072.58  1.06   Yes! The Open is close to the Daily Pivot.
 50% Down from Intraday High  3,072.65  0.06   Yes! The 50% Down from Intraday High is close to the Open.
 38.2% Down from Intraday High  3,075.03  2.38   
 Daily R1  3,080.50  5.47   
 High  3,082.75  2.25   
 Weekly R1  3,090.81  8.06   
 Daily R2  3,091.73  0.92   Yes! The Daily R2 is close to the Weekly R1.
 Weekly R2  3,112.35  20.62   
 Monthly R1  3,149.59  37.24   
 Monthly R2  3,229.91  80.32   

Tuesday 9/4/12. Trading Tuesday: Dow

The index climbed by 0.7% or 90.13 points. Since 10/01/1928 the index made 613 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 336 occasions.
     Average loss was -0.7% on 277 occasions.
Expect the index to close higher 54.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 30/48 or 62.5% of the time.
     The prediction of the index closing lower has been right 8/13 or 61.5% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

The only pattern I see on the chart is a double top that appears at A and B. The pattern confirms as a valid one at C, when the index closes below the bottom of the pattern.

After confirmation, what followed was a large move down that was far enough to be a profitable one for those traders having the courage to short the index after pattern confirmation.

The holiday research I conducted says that the index (S&P) closes higher 67.8% of the time the trading day after Labor day. That trend agrees with the above probabilities for the Dow.

The daily chart suggests the index is going to continue lower. The 10-day, 5 minute chart shows the index forming a symmetrical triangle with an unknown breakout direction (Friday's trading only). There's overhead resistance setup by four prior trading days. That also suggests a downward move.

The charts say the index will close lower on Tuesday and the probabilities say it will close higher. I think I'll stick with the probabilities and look for a higher close.

$ $ $

I released a trade I made years ago and wrote an article about for Active Trader magazine. They accepted the story for publication but never paid for it and never published it. Thus, I decided to publish it on this website at the link.

The following table shows where Fibonacci retrace values of the day's high-low range are plus pivot points, 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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© 2012 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  12,514.97    
 Monthly S1  12,802.91  287.93   
 Weekly S2  12,884.71  81.81   
 Daily S2  12,932.55  47.84   
 Weekly S1  12,987.78  55.22   
 Low  13,002.64  14.86   Yes! The Low is close to the Weekly S1.
 Open  13,002.72  0.08   Yes! The Open is close to the Low.
 Daily S1  13,011.70  8.98   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  13,059.65  47.95   
 Monthly Pivot  13,066.83  7.19   Yes! The Monthly Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  13,077.25  10.42   Yes! The 50% Down from Intraday High is close to the Monthly Pivot.
 Daily Pivot  13,081.78  4.53   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Weekly Pivot  13,081.97  0.19   Yes! The Weekly Pivot is close to the Daily Pivot.
 Close  13,090.84  8.87   Yes! The Close is close to the Weekly Pivot.
 38.2% Down from Intraday High  13,094.86  4.02   Yes! The 38.2% Down from Intraday High is close to the Close.
 High  13,151.87  57.01   
 Daily R1  13,160.93  9.06   Yes! The Daily R1 is close to the High.
 Weekly R1  13,185.04  24.11   
 Daily R2  13,231.01  45.98   
 Weekly R2  13,279.23  48.22   
 Monthly R1  13,354.77  75.53   
 Monthly R2  13,618.69  263.93   

Saturday 9/1/12. Another Bike Ride!

I woke up Saturday morning at 5:00 something and began preparations for my 33 mile bike ride with the Bonzai group of riders like I've been doing on and off the past several weekends. The winds were about 10 mph, which is about a gazillion mph higher than I like but within safe riding parameters. By that, I mean this coming weekends' 15-25 mph range is too high to ride safely and without killing my knees trying to push against such a force.

There were 2 people doing to 20 mile, 2 doing the 33 mile and the other 4 doing the 55. I was in the 33 group but knew I had to keep pace with the 50s or be left behind (which is embarrassing).

Picture of a lizard in my back yard.

Wow. These guys are fast. We started and pegged the speedometer at 20 mph right out of the gate. When the hills came, we powered up those too.

At the stop lights, I looked around and was pleased to see that everyone else was sweating as much as me, but I knew that once we split from the 50s and I headed back, I'd be toast. I'm not used to the large up and down "rollers" they have on this trek. When we're going at 20 mph for an hour, my legs turn to jelly and I'll fade on the hills.

Fortunately, when we got to the park where the 50s go straight and the 33s turn back, the other rider, Bryan, was either hurting as much as I or knew I was near death. We rode back at 15.5 mph and spent the last 15 miles chatting and I let him carve the way through the winds. Thanks for that, Bryan.

Near the end, my chain fell off (switching to the lower chainring which is the gear where your pedals are) but this time I was able to put it back on quickly. We took his route back to the start, bypassing the tall overpass, congestion, and hazardous intersection.

I felt proud that I was able to keep pace with the 50s and still survive. Fortunately, we didn't try to drill it going back, so that was nice too. I just wish we had more people wanting to do the 33 mile route (especially women. Sigh). They tend to go at 17 mph, which appears to be my sweat spot until I can get accustomed to the longer distances and rollers.

And one other thing. Apparently hunting season opened and the killers were out in full force. At the start, I heard lots of popping and it reminded me of my uncle and his air cannon that he used to scare away birds from his corn field. This time, though, it was hunters, shooting at birds and maybe other people. Fortunately, as a moving target I didn't feel that threatened but Bryan was nervous.

If you're a bird, I'd lay low until season closes. One area we passed was packed with 20-30 cars. Wow. Some of them were standing by the road, guns in hand, decoys flapping on the nearby pond.

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