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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 03/24/2017
20,597 -59.86 -0.3%
8,929 -7.37 -0.1%
706 3.20 0.5%
5,829 11.05 0.2%
2,344 -1.98 -0.1%
YTD
4.2%
-1.3%
7.0%
8.3%
4.7%
Tom's Targets    Overview: 03/14/2017
21,250 or 20,600 by 04/15/2017
9,500 or 8,700 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,425 or 2,325 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

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September 2013 Headlines


Archives


Monday 9/30/13. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

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

I picked this index because of it hugging near the yearly high.

The circled area is a congestion region where the index is moving sideways. Notice how the high prices are trending lower and the ones on the bottom are trending upward. Since the pattern is short, it could be a flag but those require a flagpole. A flagpole is a straight-line move upward. This index doesn't show that.

Thus, the area is probably better classified as either a symmetrical triangle or just a congestion region.

Below that is a support area I highlight with two horizontal red lines. It could stop any downward move in the short-term.

Top

A Brief Look Back

Picture of my dog.

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 49.71 points.
Tuesday: Down 66.79 points.
Wednesday: Down 61.33 points.
Thursday: Up 55.04 points.
Friday: Down 70.06 points.

For the Week...

The Dow industrials were down 192.85 points or 1.2%.
The Nasdaq composite was up 6.86 points or 0.2%.
The S&P 500 index was down 18.16 points or 1.1%.

Year to Date...

Dow Industrials
     2.9% down from the high of 15,709.58 on 09/18/2013.
     16.4% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.5% down from the high of 3,798.76 on 09/20/2013.
     22.9% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     2.2% down from the high of 1,729.86 on 09/19/2013.
     18.6% up from the low of 1,426.19 on 01/02/2013.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
Chicago purchasing managers index9:45 MBMonitors regional manufacturing activity.
Construction spending10:00 TDCovers residential/non-residential/public spending on new construction.
Auto & truck sales2:00 TC-Monthly sales of domestically produced vehicles.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Factory orders10:00 FD+Durable/non-durable goods orders w/factory inventories.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

On 09/27/2013, the CPI had:

17 bearish patterns,
9 bullish patterns,
446 patterns waiting for breakout.
The CPI signal is 34.6%, which is bearish (<= 35%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  15,157  15,208  15,263  15,313  15,368 
Weekly  15,057  15,158  15,312  15,413  15,567 
Monthly  14,294  14,776  15,243  15,725  16,192 
S&P 500 (^GSPC): Daily  1,683  1,687  1,691  1,696  1,700 
Weekly  1,672  1,682  1,697  1,706  1,721 
Monthly  1,581  1,636  1,683  1,739  1,785 
Nasdaq (^IXIC): Daily  3,752  3,767  3,778  3,792  3,803 
Weekly  3,724  3,753  3,774  3,803  3,824 
Monthly  3,493  3,637  3,718  3,862  3,943 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 1 week down 29.2%   The trend may continue. 
 1 month up 51.8%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week down 27.6%   The trend may continue. 
 1 month up 53.4%   Expect a random direction. 
 Nasdaq composite (^IXIC) 4 weeks up 16.6%   Expect a reversal soon. 
 1 month up 48.2%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Top

Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
15Triangle, symmetrical
14Pipe bottom
7Triangle, descending
7Double Bottom, Adam and Eve
6Head-and-shoulders bottom
6Double Bottom, Adam and Adam
6Scallop, ascending
6Triple bottom
6Pennant
5Double Bottom, Eve 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, 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. Retail (Special Lines)1. Retail (Special Lines)
2. E-Commerce2. Aerospace/Defense
3. Aerospace/Defense3. Biotechnology
4. Shoe4. Internet
5. Internet5. E-Commerce
50. Electric Utility (East)50. Medical Supplies
51. Medical Supplies51. Building Materials
52. Metals and Mining (Div.)52. Metals and Mining (Div.)
53. Homebuilding53. Homebuilding
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

Top


Thursday 9/26/13. Trading Thursday: Nasdaq

The index dropped by -0.2% or -7.15 points. Since 02/05/1971 the index made 438 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 226 occasions.
     Average loss was -1.0% on 212 occasions.
Expect the index to close higher 51.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 48/78 or 61.5% of the time.
     The prediction of the index closing lower has been right 21/40 or 52.5% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

This chart shows a channel outlined in red.

They happen more than I show on Friday's list of patterns. It's not a pattern I look for. In this case, the channel breaks out downward at A when the index closes below the bottom trend line.

What is the measure rule for channels? I haven't figured that out yet. Often it's the height of the pattern projected from the breakout price. With a slanting channel, it's more difficult to gauge.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,485.95    
 Monthly S1  3,623.53  137.57   
 Weekly S2  3,671.15  47.63   
 Monthly Pivot  3,711.14  39.99   
 Weekly S1  3,716.13  4.98   
 Daily S2  3,738.34  22.21   
 Daily S1  3,749.72  11.38   
 Low  3,754.94  5.22   
 Weekly Pivot  3,757.44  2.50   Yes! The Weekly Pivot is close to the Low.
 Close  3,761.10  3.66   
 61.8% Down from Intraday High  3,765.63  4.53   
 Daily Pivot  3,766.32  0.69   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  3,768.93  2.61   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  3,772.23  3.30   
 Open  3,772.59  0.36   Yes! The Open is close to the 38.2% Down from Intraday High.
 Daily R1  3,777.70  5.11   
 High  3,782.92  5.22   
 Daily R2  3,794.30  11.38   
 Weekly R1  3,802.42  8.12   
 Weekly R2  3,843.73  41.32   
 Monthly R1  3,848.72  4.98   
 Monthly R2  3,936.33  87.62   

Tuesday 9/24/13. Trading Tuesday: Dow

The index dropped by -0.3% or -49.71 points. Since 10/01/1928 the index made 971 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 460 occasions.
     Average loss was -0.7% on 511 occasions.
Expect the index to close lower 52.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 58/86 or 67.4% of the time.
     The prediction of the index closing lower has been right 16/28 or 57.1% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

I highlight a head-and-shoulders top chart pattern in red. The pattern confirms as a valid one near A when the index closes below the red neckline.

Notice the height of the pattern. By the time it confirms, it's too late in the trading session to expect such a large move down (roughly, the height of the pattern projected down from A). That's why I don't depend on making much money when I day trade a head-and-shoulders.

You can say the same about many tall chart patterns. Intraday, they won't fulfill their measure rule target. Avoid them.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,341.29    
 Monthly S1  14,871.33  530.05   
 Weekly S2  15,169.22  297.89   
 Weekly S1  15,285.30  116.08   
 Monthly Pivot  15,290.46  5.16   Yes! The Monthly Pivot is close to the Weekly S1.
 Daily S2  15,313.49  23.04   
 Daily S1  15,357.44  43.94   
 Low  15,368.25  10.81   
 Close  15,401.38  33.13   
 61.8% Down from Intraday High  15,405.95  4.57   Yes! The 61.8% Down from Intraday High is close to the Close.
 Daily Pivot  15,412.19  6.24   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  15,417.60  5.41   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  15,429.25  11.65   
 Open  15,452.31  23.06   
 Daily R1  15,456.14  3.83   Yes! The Daily R1 is close to the Open.
 High  15,466.95  10.81   
 Weekly Pivot  15,497.44  30.49   
 Daily R2  15,510.89  13.45   
 Weekly R1  15,613.52  102.63   
 Monthly R1  15,820.50  206.98   
 Weekly R2  15,825.66  5.16   Yes! The Weekly R2 is close to the Monthly R1.
 Monthly R2  16,239.63  413.97   

Monday 9/23/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

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

The index on Friday backtracked when it met overhead resistance setup by prior peaks.

Does that suggest the index is going lower, much lower? I think the answer is yes but it's only a guess. Anything can happen, of course.

I expect the index to retrace but only about half the prior up move and then will breakout to new highs.

 

 

 

Top

A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 118.72 points.
Tuesday: Up 34.95 points.
Wednesday: Up 147.21 points.
Thursday: Down 40.39 points.
Friday: Down 185.46 points.

For the Week...

The Dow industrials were up 75.03 points or 0.5%.
The Nasdaq composite was up 52.55 points or 1.4%.
The S&P 500 index was up 21.92 points or 1.3%.

Year to Date...

Dow Industrials
     1.6% down from the high of 15,709.58 on 09/18/2013.
     17.9% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.6% down from the high of 3,798.76 on 09/20/2013.
     22.7% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     1.2% down from the high of 1,729.86 on 09/19/2013.
     19.9% up from the low of 1,426.19 on 01/02/2013.

Top

Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Durable goods orders8:30 WBMeasures orders, shipments of goods with lifespans >3 years.
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.
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.
Michigan sentiment9:55 FB-Consumer sentiment: Measures strength of consumer spending.

Options Expiration

No options expire this week.

Top

Swing and Position Traders: Chart Pattern Indicator

As of 09/20/2013, the CPI had:

9 bearish patterns,
21 bullish patterns,
189 patterns waiting for breakout.
The CPI signal is 70.0%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  15,311  15,381  15,518  15,588  15,725 
Weekly  15,186  15,318  15,514  15,647  15,842 
Monthly  14,358  14,904  15,307  15,854  16,256 
S&P 500 (^GSPC): Daily  1,698  1,704  1,715  1,720  1,731 
Weekly  1,672  1,691  1,710  1,729  1,749 
Monthly  1,587  1,648  1,689  1,751  1,791 
Nasdaq (^IXIC): Daily  3,758  3,766  3,783  3,791  3,807 
Weekly  3,676  3,725  3,762  3,812  3,848 
Monthly  3,490  3,633  3,716  3,858  3,941 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

Top

Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 3 weeks up 22.3%   Expect a reversal soon. 
 1 month up 51.8%   Expect a random direction. 
 S & P 500 (^GSPC) 3 weeks up 22.5%   Expect a reversal soon. 
 1 month up 53.4%   Expect a random direction. 
 Nasdaq composite (^IXIC) 3 weeks up 21.6%   Expect a reversal soon. 
 1 month up 48.2%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

Top

Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
16Pipe bottom
14Triangle, symmetrical
9Triangle, descending
7Triple bottom
7Double Bottom, Adam and Eve
6Head-and-shoulders top
6Falling wedge
5Double Bottom, Eve and Adam
5Scallop, ascending
5Head-and-shoulders bottom

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

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

 

 

 

 

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

This WeekLast Week
1. Retail (Special Lines)1. Retail (Special Lines)
2. Aerospace/Defense2. Aerospace/Defense
3. Biotechnology3. Biotechnology
4. Internet4. Insurance (Life)
5. E-Commerce5. Shoe
50. Medical Supplies50. Electric Utility (West)
51. Building Materials51. Building Materials
52. Metals and Mining (Div.)52. Metals and Mining (Div.)
53. Homebuilding53. Homebuilding
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

Top


Thursday 9/19/13. Trading Thursday: Nasdaq

The index climbed by 1.0% or 37.94 points. Since 02/05/1971 the index made 197 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 133 occasions.
     Average loss was -0.9% on 64 occasions.
Expect the index to close higher 67.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 47/77 or 61.0% of the time.
     The prediction of the index closing lower has been right 21/40 or 52.5% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

The first thing I noticed when looking at this chart was the dramatic rise at 2:00. That's when the markets reacted to the Federal Reserve.

A double bottom appears in the session before 2:00. The rapid rise met the predicted price target of the double bottom. The predicted price is the height of the pattern added to the top of it. That's called the measure rule. It varies from pattern to pattern but it's usually the height added to or subtracted from the breakout price.

The horizontal red line on the chart shows the confirmation price for the double bottom. When the index closes above that line, it confirms the pattern as a valid one.

# # #

I released details of my trade in Assurant. If you want to know how I made 69%, click on the link.

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

-- Thomas Bulkowski

Top

© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,538.08    
 Monthly S1  3,660.86  122.78   
 Weekly S2  3,673.48  12.62   
 Monthly Pivot  3,696.35  22.87   
 Daily S2  3,717.67  21.32   
 Weekly S1  3,728.56  10.89   
 Weekly Pivot  3,730.20  1.64   Yes! The Weekly Pivot is close to the Weekly S1.
 Low  3,737.69  7.49   
 Daily S1  3,750.65  12.96   
 Open  3,751.29  0.64   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  3,757.94  6.65   
 50% Down from Intraday High  3,764.20  6.26   
 38.2% Down from Intraday High  3,770.45  6.26   
 Daily Pivot  3,770.68  0.23   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  3,783.64  12.96   
 Weekly R1  3,785.28  1.64   Yes! The Weekly R1 is close to the Close.
 Weekly R2  3,786.92  1.64   Yes! The Weekly R2 is close to the Weekly R1.
 High  3,790.70  3.78   Yes! The High is close to the Weekly R2.
 Daily R1  3,803.66  12.96   
 Monthly R1  3,819.13  15.47   
 Daily R2  3,823.69  4.56   Yes! The Daily R2 is close to the Monthly R1.
 Monthly R2  3,854.62  30.93   

Tuesday 9/17/13. Trading Tuesday: Dow

The index climbed by 0.8% or 118.72 points. Since 10/01/1928 the index made 550 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% 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 57/85 or 67.1% of the time.
     The prediction of the index closing lower has been right 16/28 or 57.1% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

After a strong move up in the opening minutes, the index coasted higher until noon and then eased lower.

A triple top appears at 123, confirmed when the index closes below the red line at A.

This triple top wasn't tall so it was easy for the index to drop far enough to reach the measure rule target. That is the height of the pattern from highest peak to lowest valley between the three peaks projected downward from the lowest valley (the red line).

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,506.97    
 Weekly S2  14,813.87  306.90   
 Monthly S1  15,000.87  187.01   
 Weekly S1  15,154.32  153.45   
 Monthly Pivot  15,254.32  99.99   
 Weekly Pivot  15,267.65  13.33   Yes! The Weekly Pivot is close to the Monthly Pivot.
 Daily S2  15,306.83  39.18   
 Low  15,381.36  74.53   
 Open  15,381.36  0.00   Yes! The Open is close to the Low.
 Daily S1  15,400.80  19.44   
 61.8% Down from Intraday High  15,445.73  44.93   
 50% Down from Intraday High  15,465.62  19.88   
 Daily Pivot  15,475.34  9.72   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  15,485.50  10.16   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  15,494.78  9.28   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  15,549.87  55.09   
 Daily R1  15,569.31  19.44   
 Weekly R1  15,608.10  38.79   
 Daily R2  15,643.85  35.74   
 Weekly R2  15,721.43  77.58   
 Monthly R1  15,748.22  26.80   
 Monthly R2  16,001.67  253.44   

Monday 9/16/13. Market Monday: The Week Ahead

My Prediction

Picture of the Dow transports on the daily scale.

I show the Dow transports on the daily scale.

A falling wedge appears in red. Notice that the two trendlines converge but both slope downward. That's the way the pattern is supposed to unfold.

What's unique about the index is a throwback that is happening at A. That occurs after the breakout from a chart pattern, often within days of it, when price returns to the breakout price or trendline (or comes close).

After that, price resumes moving higher 65% of the time, according to research I've done.

 

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A Brief Look Back

Picture of birds from my garden.

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

Monday: Up 140.62 points.
Tuesday: Up 127.94 points.
Wednesday: Up 135.54 points.
Thursday: Down 25.96 points.
Friday: Up 75.42 points.

For the Week...

The Dow industrials were up 453.56 points or 3.0%.
The Nasdaq composite was up 62.17 points or 1.7%.
The S&P 500 index was up 32.82 points or 2.0%.

Year to Date...

Dow Industrials
     1.8% down from the high of 15,658.43 on 08/02/2013.
     17.3% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.3% down from the high of 3,731.84 on 09/12/2013.
     21.0% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     1.3% down from the high of 1,709.67 on 08/02/2013.
     18.4% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Industrial production9:15 MB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 MB-Gauges economic activity, hints of inflation.
Consumer price index8:30 TB+Inflation report. Measures cost of goods and services.
Housing starts8:30 WB-Number of homes beginning construction.
Building permits8:30 WB-Measures building permits for new construction.
Crude inventories10:30 W?My guess: Measures oil inventory.
FOMC Rate decision2:00 W?The Federal Reserves reports on interest rate changes.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Existing home sales10:00 ThCCounts sales of used homes.
Leading indicators10:00 ThD-Summary of already known reports.

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 09/13/2013, the CPI had:

1 bearish patterns,
26 bullish patterns,
307 patterns waiting for breakout.
The CPI signal is 96.3%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  15,289  15,332  15,357  15,400  15,425 
Weekly  14,774  15,075  15,228  15,529  15,682 
Monthly  14,467  14,922  15,215  15,669  15,962 
S&P 500 (^GSPC): Daily  1,680  1,684  1,686  1,690  1,693 
Weekly  1,645  1,667  1,678  1,700  1,711 
Monthly  1,600  1,644  1,672  1,716  1,744 
Nasdaq (^IXIC): Daily  3,693  3,708  3,716  3,731  3,739 
Weekly  3,653  3,688  3,710  3,744  3,766 
Monthly  3,518  3,620  3,676  3,778  3,834 
  • 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) 2 weeks up 30.9%   The trend may continue. 
 1 month up 51.8%   Expect a random direction. 
 S & P 500 (^GSPC) 2 weeks up 30.6%   The trend may continue. 
 1 month up 53.4%   Expect a random direction. 
 Nasdaq composite (^IXIC) 2 weeks up 28.6%   The trend may continue. 
 1 month up 48.2%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
19Triangle, symmetrical
14Pipe bottom
9Triangle, descending
9Head-and-shoulders top
8Falling wedge
6Double Bottom, Adam and Eve
5Double Bottom, Eve and Adam
5Triple bottom
4Triple top
4Scallop, 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. Retail (Special Lines)1. Retail (Special Lines)
2. Aerospace/Defense2. Aerospace/Defense
3. Biotechnology3. Insurance (Life)
4. Insurance (Life)4. Shoe
5. Shoe5. Biotechnology
50. Electric Utility (West)50. Investment Co. (Foreign)
51. Building Materials51. Cement and Aggregates
52. Metals and Mining (Div.)52. Building Materials
53. Homebuilding53. Short ETFs
54. Short ETFs54. Homebuilding

-- Thomas Bulkowski

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Saturday 9/14/13. Saturday Supplement

Picture of my books

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

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

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

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

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

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

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

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Thursday 9/12/13. Trading Thursday: Nasdaq

The index dropped by -0.1% or -4.01 points. Since 02/05/1971 the index made 510 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 277 occasions.
     Average loss was -1.0% on 233 occasions.
Expect the index to close higher 54.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 47/76 or 61.8% of the time.
     The prediction of the index closing lower has been right 21/40 or 52.5% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

I show a cup with handle pattern in red that is not a cup with handle. It doesn't obey the many guidelines set out for that pattern.

Since this is an intraday trade, those guidelines don't apply (such as requiring a 30% rise going into the left cup lip). The breakout after the handle sees price rise, but not much. That's one of the reason's I don't like cups. They fail too often. Also, being so tall, it is difficult for the index to climb to the predicted price target. It's probably a intraday pattern worth ignoring.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,543.64    
 Weekly S2  3,581.78  38.15   
 Monthly S1  3,634.32  52.54   
 Weekly S1  3,653.40  19.07   
 Monthly Pivot  3,664.26  10.86   
 Weekly Pivot  3,665.23  0.98   Yes! The Weekly Pivot is close to the Monthly Pivot.
 Daily S2  3,696.24  31.00   
 Low  3,704.22  7.98   
 Daily S1  3,710.62  6.40   
 Open  3,710.79  0.17   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  3,712.77  1.98   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  3,715.41  2.64   
 38.2% Down from Intraday High  3,718.04  2.64   
 Daily Pivot  3,718.61  0.56   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  3,725.01  6.40   
 High  3,726.59  1.58   Yes! The High is close to the Close.
 Daily R1  3,732.99  6.40   
 Weekly R1  3,736.85  3.85   
 Daily R2  3,740.98  4.13   
 Weekly R2  3,748.68  7.71   
 Monthly R1  3,754.94  6.26   
 Monthly R2  3,784.88  29.93   

Tuesday 9/10/13. Trading Tuesday: Dow

The index climbed by 0.9% or 140.62 points. Since 10/01/1928 the index made 479 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 284 occasions.
     Average loss was -0.7% on 195 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 56/84 or 66.7% of the time.
     The prediction of the index closing lower has been right 16/28 or 57.1% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

The chart shows a broadening formation, right-angled and ascending chart pattern (highlighted in red). Trading these patterns is difficult because the breakout can be hard to find since the top trendline slopes upward.

However, at A, a partial decline predicts an upward breakout, which occurs.

At B, an ascending scallop appears. Since the bowl is so long, it suggests an end to the upward trend is near.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,262.63    
 Monthly S1  14,662.88  400.24   
 Weekly S2  14,717.79  54.91   
 Daily S2  14,865.02  147.23   
 Weekly S1  14,890.45  25.43   
 Low  14,927.19  36.74   
 Open  14,927.19  0.00   Yes! The Open is close to the Low.
 Weekly Pivot  14,950.15  22.96   
 Daily S1  14,964.07  13.92   Yes! The Daily S1 is close to the Weekly Pivot.
 61.8% Down from Intraday High  14,988.78  24.71   
 50% Down from Intraday High  15,007.80  19.02   
 Daily Pivot  15,026.24  18.44   
 38.2% Down from Intraday High  15,026.82  0.58   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  15,063.12  36.30   
 High  15,088.41  25.29   
 Weekly R1  15,122.81  34.40   
 Daily R1  15,125.29  2.48   Yes! The Daily R1 is close to the Weekly R1.
 Monthly Pivot  15,160.65  35.36   
 Weekly R2  15,182.51  21.85   
 Daily R2  15,187.46  4.95   Yes! The Daily R2 is close to the Weekly R2.
 Monthly R1  15,560.90  373.44   
 Monthly R2  16,058.67  497.78   

Monday 9/9/13. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

I show an interesting picture of the Nasdaq composite on the daily scale.

The horizontal red line acts as a support line. It works well, too. As the Dow dropped, the Nasdaq moved higher this past week.

Ignore that line and look at the similarity between the red and blue patterns. The AB pattern shows a descending broadening wedge just as pattern C shows. C broke out upward but then soon collapsed in a fast move down.

Is this what we have to look forward to? We may find out this week.

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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: Up 23.65 points.
Wednesday: Up 96.91 points.
Thursday: Up 6.61 points.
Friday: Down 14.98 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 112.19 points or 0.8%.
The Nasdaq composite was up 70.14 points or 2.0%.
The S&P 500 index was up 22.2 points or 1.4%.

Year to Date...

Dow Industrials
     4.7% down from the high of 15,658.43 on 08/02/2013.
     13.9% up from the low of 13,104.30 on 01/02/2013.
Nasdaq
     0.9% down from the high of 3,694.19 on 08/05/2013.
     19.0% up from the low of 3,076.60 on 01/08/2013.
S&P 500
     3.2% down from the high of 1,709.67 on 08/02/2013.
     16.1% up from the low of 1,426.19 on 01/02/2013.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Consumer credit3:00 MD-Measures auto, credit card and other debt.
Wholesale inventories10:00 WD-Wholesale sales and inventory statistics.
Crude inventories10:30 W?My guess: Measures oil inventory.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
International trade8:30 ThC+Import/export prices, trade balance. US economy vs others.
Treasury budget2:00 ThDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 FA-Reports total retail sales (not services). Are people spending?
Producer price index8:30 FB-Measures wholesale goods cost. An indication of future 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

On 09/06/2013, the CPI had:

7 bearish patterns,
17 bullish patterns,
263 patterns waiting for breakout.
The CPI signal is 70.8%, which is bullish (>= 65%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  14,687  14,805  14,907  15,025  15,128 
Weekly  14,671  14,797  14,903  15,029  15,136 
Monthly  14,216  14,569  15,114  15,467  16,012 
S&P 500 (^GSPC): Daily  1,629  1,642  1,654  1,666  1,678 
Weekly  1,620  1,637  1,651  1,669  1,683 
Monthly  1,582  1,619  1,664  1,701  1,746 
Nasdaq (^IXIC): Daily  3,594  3,627  3,652  3,685  3,710 
Weekly  3,560  3,610  3,644  3,694  3,727 
Monthly  3,522  3,591  3,643  3,712  3,763 
  • 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 43.9%   Expect a random direction. 
 1 month up 51.8%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week up 43.5%   Expect a random direction. 
 1 month up 53.4%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 42.7%   Expect a random direction. 
 1 month up 48.2%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
19Head-and-shoulders top
15Triangle, symmetrical
8Channel
6Double Top, Adam and Adam
6Triangle, descending
6Falling wedge
5Dead-cat bounce
5Pipe top
4Triple top
3Double Bottom, Eve and Adam

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

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

 

 

 

 

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

This WeekLast Week
1. Retail (Special Lines)1. Retail (Special Lines)
2. Aerospace/Defense2. Insurance (Life)
3. Insurance (Life)3. Aerospace/Defense
4. Shoe4. Shoe
5. Biotechnology5. Biotechnology
50. Investment Co. (Foreign)50. Metals and Mining (Div.)
51. Cement and Aggregates51. Investment Co. (Foreign)
52. Building Materials52. Medical Supplies
53. Short ETFs53. Homebuilding
54. Homebuilding54. Short ETFs

-- Thomas Bulkowski

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Saturday 9/7/13. Price Mountain Update

I released new information on price mountains. How long does it take price to top a price mountain? Click the link to find out.

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Thursday 9/5/13. Trading Thursday: Nasdaq

The index climbed by 1.0% or 36.43 points. Since 02/05/1971 the index made 196 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 132 occasions.
     Average loss was -0.9% on 64 occasions.
Expect the index to close higher 67.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 46/75 or 61.3% of the time.
     The prediction of the index closing lower has been right 21/40 or 52.5% of the time.

Picture of the Nasdaq composite on the 5 minute scale.

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

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

A long rectangle top appears around noon and lasted well into the session. It's unclear whether there was an upward breakout at A. A breakout would be a close above the top or bottom of the rectangle.

Since a possible breakout occurred so late in the session, the pattern should not have been traded.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  3,518.31    
 Weekly S2  3,524.96  6.65   
 Monthly S1  3,583.68  58.72   
 Weekly S1  3,587.00  3.32   Yes! The Weekly S1 is close to the Monthly S1.
 Daily S2  3,598.12  11.12   
 Low  3,612.22  14.10   
 Open  3,619.06  6.84   
 Daily S1  3,623.58  4.52   
 61.8% Down from Intraday High  3,627.33  3.75   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  3,632.00  4.67   
 Weekly Pivot  3,635.61  3.61   Yes! The Weekly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  3,636.67  1.06   Yes! The 38.2% Down from Intraday High is close to the Weekly Pivot.
 Daily Pivot  3,637.68  1.01   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Monthly Pivot  3,638.93  1.25   Yes! The Monthly Pivot is close to the Daily Pivot.
 Close  3,649.04  10.11   
 High  3,651.78  2.74   Yes! The High is close to the Close.
 Daily R1  3,663.14  11.36   
 Daily R2  3,677.24  14.10   
 Weekly R1  3,697.65  20.41   
 Monthly R1  3,704.30  6.65   
 Weekly R2  3,746.26  41.96   
 Monthly R2  3,759.55  13.29   

Tuesday 9/3/13. Trading Tuesday: Dow

The index dropped by -0.2% or -30.64 points. Since 10/01/1928 the index made 1112 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 553 occasions.
     Average loss was -0.7% on 559 occasions.
Expect the index to close lower 50.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 56/84 or 66.7% of the time.
     The prediction of the index closing lower has been right 16/27 or 59.3% of the time.

Picture of the Dow industrials on the 5 minute scale.

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

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

A large potential double bottom (AB) appears near the end of the session. However, this is an unconfirmed pattern, meaning it's not really a double bottom at all...so far (the index needs to close above the red line, C). It's just squiggles on the chart.

What does this mean for Tuesday's trading? Nothing. Why? Because the index will jump higher or lower on Tuesday and will tend to trade independently of what happened on Friday. I think that support and resistance levels on the daily chart influences intraday trading more than does the prior day's intraday movements.

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

-- Thomas Bulkowski

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© 2013 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  14,178.36    
 Monthly S1  14,494.34  315.97   
 Weekly S2  14,584.00  89.66   
 Weekly S1  14,697.15  113.16   
 Daily S2  14,721.08  23.92   
 Low  14,762.35  41.27   
 Daily S1  14,765.69  3.34   Yes! The Daily S1 is close to the Low.
 61.8% Down from Intraday High  14,795.16  29.47   
 50% Down from Intraday High  14,805.29  10.13   
 Daily Pivot  14,806.97  1.67   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  14,810.31  3.34   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  14,815.43  5.12   Yes! The 38.2% Down from Intraday High is close to the Close.
 Open  14,844.10  28.67   
 High  14,848.24  4.14   Yes! The High is close to the Open.
 Daily R1  14,851.58  3.34   Yes! The Daily R1 is close to the High.
 Weekly Pivot  14,873.57  21.98   
 Daily R2  14,892.86  19.29   
 Weekly R1  14,986.72  93.87   
 Monthly Pivot  15,076.38  89.66   
 Weekly R2  15,163.14  86.75   
 Monthly R1  15,392.36  229.22   
 Monthly R2  15,974.40  582.05   

Monday 9/2/13. Book Reviews by Alan Battista.

Alan Battista, of Stockineer.com, has taken the time to review four of my books and posted his reviews on his blog. If you are interested in the books, then click on the link(s). If you're not interested in the books, click on the link(s) anyway and visit his website. Perhaps you may like what you see.

Stockineer.com

You can read more information about my books here.

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