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

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Busted
Patterns
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 12/11/2017
24,386 56.87 0.2%
10,371 -31.68 -0.3%
763 4.90 0.6%
6,875 35.00 0.5%
2,660 8.49 0.3%
YTD
23.4%
14.7%
15.6%
27.7%
18.8%
Tom's Targets    Overview: 11/30/2017
24,600 or 23,500 by 12/15/2017
9,900 or 10,500 by 12/15/2017
800 or 750 by 12/15/2017
7,100 or 6,700 by 12/15/2017
2,725 or 2,575 by 12/15/2017

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September 2014 Headlines


Archives


Tuesday 9/30/14. Intraday Market Direction: Dow

The index dropped by -0.2% or -41.93 points. Since 10/01/1928 the index made 1129 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 564 occasions.
     Average loss was -0.7% on 565 occasions.
Expect the index to close lower 50.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 81/127 or 63.8% of the time.
     The prediction of the index closing lower has been right 21/39 or 53.8% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

$ $ $

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

This chart is an study in support and resistance.

First, there is an unconfirmed double bottom at AB. It will confirm if the index closes above C, the highest peak between the two bottoms. That would mean a rise of about 80 points.

Next come overhead resistance setup by prior peaks or valleys. E is a close peak. If the index moves up, it would be about a 180 point day. That kind of move is a stretch for a 1-day move.

Further away is D. That's about 280 points away. That kind of a move is still doable in a day, but more likely it will take a few days.

What of a downward move? The index could drop to the level of AB, or about 120 points.

The above probabilities can't decide on a direction, really (50% for down). A rise or drop of 0.6% would be about triple today's move of 40, so that means 120 points, either up or down. Since I'm bullish, I'll vote for an upward move that closes above C tomorrow.

$ $ $

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

© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  16,706.87    
 Weekly S2  16,766.22  59.35   
 Daily S2  16,864.52  98.30   
 Monthly S1  16,889.05  24.53   
 Weekly S1  16,918.72  29.67   
 Low  16,934.43  15.71   Yes! The Low is close to the Weekly S1.
 Daily S1  16,967.87  33.44   
 61.8% Down from Intraday High  17,000.62  32.75   
 50% Down from Intraday High  17,021.06  20.45   
 Daily Pivot  17,037.78  16.72   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  17,041.50  3.72   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  17,071.22  29.72   
 Weekly Pivot  17,098.30  27.08   
 High  17,107.69  9.39   Yes! The High is close to the Weekly Pivot.
 Open  17,107.69  0.00   Yes! The Open is close to the High.
 Monthly Pivot  17,119.84  12.15   Yes! The Monthly Pivot is close to the Open.
 Daily R1  17,141.13  21.29   
 Daily R2  17,211.04  69.91   
 Weekly R1  17,250.80  39.76   
 Monthly R1  17,302.02  51.21   
 Weekly R2  17,430.38  128.37   
 Monthly R2  17,532.81  102.43   

Monday 9/29/14. Market Monday: The Week Ahead

My Prediction

Picture of the S and p index on the daily scale.

This chart shows a broadening top chart pattern. Those breakout upward 55% of the time.

Will it break out upward?

That's hard to tell. The chart pattern indicator is still bearish, so that would suggest a downward breakout. My feeling is that this downturn is just a temporary set back common to September.

October has been a nervous month with large drops, too, so there could be more of a downward move ahead. However, I'm still bullish. The index has already bounced off the bottom of the broadening top, suggesting an swing upward.

 

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Down 107.06 points.
Tuesday: Down 116.81 points.
Wednesday: Up 154.19 points.
Thursday: Down 264.26 points.
Friday: Up 167.35 points.

For the Week...

The Dow industrials were down 166.59 points or 1.0%.
The Nasdaq composite was down 67.6 points or 1.5%.
The S&P 500 index was down 27.55 points or 1.4%.

Year to Date...

Dow Industrials
     1.4% down from the high of 17,350.64 on 09/19/2014.
     11.6% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     2.1% down from the high of 4,610.57 on 09/19/2014.
     14.3% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     1.8% down from the high of 2,019.26 on 09/19/2014.
     14.1% up from the low of 1,737.92 on 02/05/2014.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Personal income & consumption8:30 MC+Measures sources of income to predict future demand.
Personal consumption expenditures8:30 MC+Covers durables, non-durables, and services.
Chicago purchasing managers index9:45 TBMonitors regional manufacturing activity.
Consumer confidence10:00 TB-Surveys 5,000 households for trends.
Construction spending10:00 WDCovers residential/non-residential/public spending on new construction.
Crude inventories10:30 W?My guess: Measures oil inventory.
Auto & truck sales2:00 WC-Monthly sales of domestically produced vehicles.
Initial jobless claims8:30 ThC+Counts people filing for state unemployment benefits.
Factory orders10:00 ThD+Durable/non-durable goods orders w/factory inventories.
4 Employment reports8:30 FANonfarm payrolls, unemployment rate, avg workweek, hourly earnings.
Trade balance8:30 FC+Signals balance of exports & imports.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 09/26/2014, the CPI had:

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

The chart pattern indicator is bearish 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  16,870  16,991  17,070  17,191  17,270 
Weekly  16,780  16,947  17,112  17,279  17,444 
Monthly  16,721  16,917  17,134  17,330  17,547 
S&P500 (^GSPC): Daily  1,958  1,971  1,978  1,991  1,999 
Weekly  1,943  1,963  1,986  2,006  2,029 
Monthly  1,936  1,959  1,989  2,013  2,043 
Nasdaq (^IXIC): Daily  4,461  4,487  4,501  4,527  4,541 
Weekly  4,414  4,463  4,516  4,565  4,618 
Monthly  4,386  4,449  4,530  4,593  4,674 
  • 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 29.6%   The trend may continue. 
 2 months up 40.5%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week down 27.5%   The trend may continue. 
 1 month down 20.4%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 30.1%   The trend may continue. 
 1 month down 25.6%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
12Head-and-shoulders top
11Scallop, ascending and inverted
11Triangle, symmetrical
7Rectangle top
7Pipe top
6Rising wedge
5Double Top, Adam and Adam
5Broadening top
5Double Top, Eve and Adam
4Falling wedge

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

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

 

 

 

 

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

This WeekLast Week
1. Biotechnology1. Shoe
2. Shoe2. Air Transport
3. Air Transport3. Natural Gas (Distributor)
4. Semiconductor Cap Equip.4. Retail Store
5. Retail Store5. Long ETFs
50. Human Resources50. Human Resources
51. Oilfield Svcs/Equipment51. Toiletries/Cosmetics
52. Toiletries/Cosmetics52. Information Services
53. Retail Building Supply53. Retail Building Supply
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 9/25/14. Intraday Market Direction: Nasdaq

The index climbed by 1.0% or 46.53 points. Since 02/05/1971 the index made 205 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 140 occasions.
     Average loss was -0.9% on 65 occasions.
Expect the index to close higher 68.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 69/120 or 57.5% of the time.
     The prediction of the index closing lower has been right 26/51 or 51.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

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

This chart shows an interesting pictorial of support at A and B. The index dropped to those levels and then rebounded. Think of it as a floor beneath price. That floor could have a trap-door, of course.

If the index closes above C, then it will confirm the AB pattern as a double bottom. The drop into this double bottom isn't much (you can't see it on this chart).

Based on the high probability of a higher close on Thursday and what I view as the market heading toward confirmation of that double bottom, I expect the index to move up, too.

$ $ $

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

-- Thomas Bulkowski

Top

© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,347.53    
 Weekly S2  4,444.52  96.99   
 Monthly S1  4,451.38  6.86   
 Daily S2  4,480.40  29.02   
 Weekly S1  4,499.87  19.47   
 Low  4,500.13  0.26   Yes! The Low is close to the Weekly S1.
 Open  4,514.92  14.79   
 Daily S1  4,517.81  2.89   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High  4,521.96  4.15   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  4,528.70  6.74   
 Monthly Pivot  4,530.97  2.27   Yes! The Monthly Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  4,535.44  4.47   Yes! The 38.2% Down from Intraday High is close to the Monthly Pivot.
 Daily Pivot  4,537.54  2.10   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  4,555.22  17.68   
 Weekly Pivot  4,555.22  0.00   Yes! The Weekly Pivot is close to the Close.
 High  4,557.27  2.05   Yes! The High is close to the Weekly Pivot.
 Daily R1  4,574.95  17.68   
 Daily R2  4,594.68  19.73   
 Weekly R1  4,610.57  15.89   
 Monthly R1  4,634.82  24.25   
 Weekly R2  4,665.92  31.10   
 Monthly R2  4,714.41  48.49   

Wednesday 9/24/14. Market Direction: CPI

Picture of the chart pattern indicator

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

The chart shows bearish divergence between the indicator and the S&P index. That suggests the downturn in which September is famous for still has more to go.

It's possible that what we are seeing is the index forming a head-and-shoulders top. The left shoulder is the peak in July, the head is the peak a few days ago, and the right shoulder has yet to form. On this chart, that suggests a drop to about 300 on the right scale or 1930 on the left (forming the right armpit about even with the left one).

Picture of the chart pattern indicator

This is another view of the CPI only it shows signal changes.

On this chart, notice that you get two clusters of red columns before a change to green (the January, March, and July periods show this). Thus, although the index could continue lower, this chart suggests a recovery, based on those color changes.

Since this is the first time I've recognized that pattern, I don't know if it's real or not, but history says it's valid. With September winding down, it looks like the chart could be headed up going into October.

-- Thomas Bulkowski

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Tuesday 9/23/14. Intraday Market Direction: Dow

The index dropped by -0.6% or -107.06 points. Since 10/01/1928 the index made 639 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 330 occasions.
     Average loss was -0.7% on 309 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 81/126 or 64.3% of the time.
     The prediction of the index closing lower has been right 21/39 or 53.8% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

$ $ $

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

If you are an Elliott wave follower, this 10-day view could show an ABC correction of the primary move. The first wave (A), slopes downward. Wave B cuts it off and begins a rise. The last wave (C), in progress now, slopes back down.

When the correction ends, it suggests a move higher. That direction agrees with the above probabilities and that's what I expect to happen. However, I can't say it will begin on Tuesday. It looks as if wave C needs to move lower before it begins heading up. Still, I'm looking for the index to begin moving up sometime this week.

$ $ $

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

© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  16,257.69    
 Monthly S1  16,715.19  457.49   
 Weekly S2  16,758.97  43.79   
 Weekly S1  16,965.83  206.85   
 Monthly Pivot  17,032.91  67.09   
 Daily S2  17,084.79  51.87   
 Daily S1  17,128.73  43.95   
 Weekly Pivot  17,158.23  29.50   
 Low  17,159.36  1.13   Yes! The Low is close to the Weekly Pivot.
 Close  17,172.68  13.32   
 Daily Pivot  17,203.31  30.63   
 61.8% Down from Intraday High  17,204.63  1.33   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  17,218.62  13.98   
 38.2% Down from Intraday High  17,232.61  13.99   
 Daily R1  17,247.25  14.65   
 Open  17,271.71  24.46   
 High  17,277.88  6.17   Yes! The High is close to the Open.
 Daily R2  17,321.83  43.95   
 Weekly R1  17,365.09  43.26   
 Monthly R1  17,490.41  125.32   
 Weekly R2  17,557.49  67.09   
 Monthly R2  17,808.13  250.64   

Monday 9/22/14. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

Many of the stocks in my portfolio took a hit Friday so it made me nervous.

The CPI has turned negative (bearish) again. That could change, of course, with a strong move upward.

So I show a chart of the Dow industrials on the daily scale. The index is shooting upward but be cautious about taking new positions here. This move up could be a fake out.

The good news is that the index has sliced cleanly through overhead resistance (A). The bad news is I'm writing this on Friday night and I'm still on vacation. Talk about resentment...

So, make my life easier by clicking on an ad that interests you or clicking on a picture of one of my books to get to Amazon.com. Then, while there, buy something. Anything. Any time you buy something from Amazon, please do so through this website by clicking on my book picture to take you there. They pay for the referral but only if you buy something. Ad clicks and referrals help pay for this website to remain free.

Besides, the holidays are coming and you'll probably want to stock up on my books, too. Makes 8 great gifts. They double as firewood in case you run low, too. But the e-book versions don't burn as well.  

Top

A Brief Look Back

Picture of a flower from my garden.

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

Monday: Up 43.63 points.
Tuesday: Up 100.83 points.
Wednesday: Up 24.88 points.
Thursday: Up 109.14 points.
Friday: Up 13.75 points.

For the Week...

The Dow industrials were up 292.23 points or 1.7%.
The Nasdaq composite was up 12.19 points or 0.3%.
The S&P 500 index was up 24.86 points or 1.3%.

Year to Date...

Dow Industrials
     0.4% down from the high of 17,350.64 on 09/19/2014.
     12.6% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     0.7% down from the high of 4,610.57 on 09/19/2014.
     16.1% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     0.4% down from the high of 2,019.26 on 09/19/2014.
     15.7% up from the low of 1,737.92 on 02/05/2014.

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
Existing home sales10:00 MCCounts sales of used homes.
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 FBMeasures economic activity; GDP deflator measures inflation.
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 09/19/2014, the CPI had:

29 bearish patterns,
14 bullish patterns,
282 patterns waiting for breakout.
The CPI signal is 32.6%, which is bearish (<= 35%).

The chart pattern indicator is bearish 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  17,203  17,241  17,296  17,334  17,389 
Weekly  16,795  17,037  17,194  17,436  17,593 
Monthly  16,293  16,787  17,069  17,562  17,844 
S&P500 (^GSPC): Daily  1,999  2,005  2,012  2,018  2,025 
Weekly  1,962  1,986  2,003  2,027  2,043 
Monthly  1,913  1,962  1,990  2,039  2,068 
Nasdaq (^IXIC): Daily  4,537  4,559  4,585  4,606  4,632 
Weekly  4,453  4,516  4,563  4,627  4,674 
Monthly  4,356  4,468  4,539  4,651  4,723 
  • 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 43.6%   Expect a random direction. 
 2 months up 40.5%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week up 42.9%   Expect a random direction. 
 2 months up 42.4%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 44.1%   Expect a random direction. 
 1 month down 25.6%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
11Scallop, ascending and inverted
9Triangle, symmetrical
6Rectangle top
5Rising wedge
4Triangle, descending
4Broadening bottom
3Diamond top
3Falling wedge
3Pipe top
3Head-and-shoulders top

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

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

 

 

 

 

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

This WeekLast Week
1. Shoe1. Shoe
2. Air Transport2. Semiconductor Cap Equip.
3. Natural Gas (Distributor)3. Natural Gas (Distributor)
4. Retail Store4. Long ETFs
5. Long ETFs5. Computers and Peripherals
50. Human Resources50. Homebuilding
51. Toiletries/Cosmetics51. Internet
52. Information Services52. Toiletries/Cosmetics
53. Retail Building Supply53. Retail Building Supply
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Friday 9/19/14. More Pictures

Picture of my entryway brickwork

I was able to prolong my work on the entryway for another day. I countersunk the nail heads. If I didn't do that, they would drip this black stuff down the wood in several months. It could be I'm using the wrong nails, but countersinking and staining the wood should limit the problem.

I attached a handle to my gate lock so that you pull up on the handle and the catch releases. Unfortunately the latch will stay in the up position, so I have to find a store that sells springs to finish the job.

This reminds me of a security measure. If you have an automatic garage door opener, you probably have an emergency release cord with a handle on the end of the cord. Remove the handle (but leave the cord).

Why? Because thieves will use a coat hanger to snag the rope and open your door from the outside (they thread the wire through the door leaves), according to the local police. If you remove the handle and any rope knots, they won't be able to grab on.

Anyway, the above picture shows the pavers I put down around my sewer clean outs and my water shutoff valve. The valve is what's surrounded in black plastic since the valve is about a foot or so below ground, I wanted easy access, and wanted to keep out any soil.

-- Thomas Bulkowski


Thursday 9/18/14. My Pix

The index climbed by 0.2% or 9.43 points. Since 02/05/1971 the index made 608 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 357 occasions.
     Average loss was -0.9% on 251 occasions.
Expect the index to close higher 58.7% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 68/119 or 57.1% of the time.
     The prediction of the index closing lower has been right 26/51 or 51.0% of the time.

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

Picture of my entryway

I'm still on vacation and will return to making finance posts on Monday. Here is a pic of what I've been doing.

Above is the entryway I've been telling you about. I still have some work to do on it. There are two gates to the thing, on the left and middle. I spent most of the day working on "cleats." On the arch, the cleats are the four discolored pieces of wood. I wanted to surround those with 1"x2" borders. But the look wasn't what I thought and it was getting dangerous cutting the pieces. Plus, with complex angles, it was taking forever to get each piece right. After spending about 5 hours on it, I tore it down in about 15 minutes and left what you see here.

That decision sure beats cutting off my fingers on the miter saw (two episodes of kickback on 4" pieces. A near miss. I learned a lesson: Always move the miter saw from near you to far away (forward). If you bring the blade down in a chopping motion, it'll pick up the wood and try to fling it).

Picture of my bridge

People have asked me to provide pictures of some of my woodwork. Most of them are on facebook but for those who don't visit that page, here are some quick pics.

Above is a pic of the first arched bridge I built. Yes, that's a cow crossing.

Picture of my entryway

This is a pic of the second arched bridge I built. It has two planter boxes hung off the sides. I think it's a better version.

Picture of my pergola

This picture is of my pergola. I built it 12 years ago, I think but I replaced the roof this year. I arched it instead of the awful flat roof it had.

If you want more detailed pictures, visit my facebook page.

$ $ $

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

-- Thomas Bulkowski

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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,217.80    
 Monthly S1  4,389.99  172.20   
 Monthly Pivot  4,500.07  110.07   
 Weekly S2  4,513.05  12.98   
 Daily S2  4,518.28  5.23   
 Weekly S1  4,537.62  19.34   
 Low  4,539.36  1.74   Yes! The Low is close to the Weekly S1.
 Daily S1  4,540.23  0.87   Yes! The Daily S1 is close to the Low.
 Open  4,553.96  13.73   
 61.8% Down from Intraday High  4,555.80  1.84   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  4,560.88  5.08   
 Daily Pivot  4,561.32  0.44   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  4,562.19  0.87   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  4,565.96  3.77   Yes! The 38.2% Down from Intraday High is close to the Close.
 Weekly Pivot  4,569.01  3.05   Yes! The Weekly Pivot is close to the 38.2% Down from Intraday High.
 High  4,582.40  13.39   
 Daily R1  4,583.27  0.87   Yes! The Daily R1 is close to the High.
 Weekly R1  4,593.58  10.31   
 Daily R2  4,604.36  10.78   
 Weekly R2  4,624.97  20.61   
 Monthly R1  4,672.26  47.29   
 Monthly R2  4,782.34  110.07   

Wednesday 9/17/14. Market Direction: CPI

Picture of the chart pattern indicator

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

I'm still on vacation but the CPI is a meaningful post, so bear with me.

This chart shows how the chart pattern indicator responds to a large move in the index. If the index continues to move higher, I expect the CPI to respond by climbing into bullish territory. Right now, it's in neutral, between 35 and 65 (circled). This obeys my prior prediction that the index wouldn't drop far before turning.

Picture of the chart pattern indicator

This is another view of the CPI only it shows signal changes.

This is a clearer view of the signal changes. Notice that the most recent signal is neutral. Most often the CPI will coast to bullish but a bearish turn is not unheard of.

I expect a recovery

$ $ $

My entryway is coming along. Another day will do it for the structure but the pavers at the base still need work. That'll probably take two more days and a lot more pavers than I have.

As I was working on my arch, I thought, "This looks like sh*t." But now that I've finished it, it looks good. I have to nail the cleats in place and dress it up a bit and then onto the pavers. Yes, I'll post pictures as soon as it's done. For tomorrow, I'll show you pictures of my bridges and wishing well for those not tuned into facebook.

-- Thomas Bulkowski

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Tuesday 9/16/14. Intraday Market Direction: Dow Not So Much

The index climbed by 0.3% or 43.63 points. Since 10/01/1928 the index made 1033 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 570 occasions.
     Average loss was -0.7% on 463 occasions.
Expect the index to close higher 55.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 80/125 or 64.0% of the time.
     The prediction of the index closing lower has been right 21/39 or 53.8% of the time.

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

$ $ $

I am feeling burned out so I'm taking some time off for the first time since this website was put online. No Dow direction today. You can see what the probabilities say, above.

Instead, I decided to finish my entryway that I've been working on during the weekends. It's mostly finished. Think of an arch over my sidewalk leading to the house with a fence to keep out the cats.

I worked on the last bit today, the arch. Broke only one band saw blade in the process which is really remarkable if you think of the 2x12s I was cutting by myself. The contraption is a thing of beauty, based on the four comments I received from people walking by wondering what I was doing.

Toodle-pip! I have no idea what that means but it sounds cool.

$ $ $

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

-- Thomas Bulkowski

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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  16,054.97    
 Monthly S1  16,543.06  488.08   
 Weekly S2  16,835.35  292.30   
 Monthly Pivot  16,852.30  16.95   
 Daily S2  16,910.99  58.68   
 Weekly S1  16,933.25  22.26   
 Low  16,951.38  18.13   
 Daily S1  16,971.06  19.68   
 Open  16,988.76  17.70   
 61.8% Down from Intraday High  16,989.76  1.00   Yes! The 61.8% Down from Intraday High is close to the Open.
 50% Down from Intraday High  17,001.62  11.86   
 Daily Pivot  17,011.46  9.84   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  17,013.47  2.01   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  17,031.14  17.67   
 Weekly Pivot  17,035.56  4.42   Yes! The Weekly Pivot is close to the Close.
 High  17,051.85  16.29   
 Daily R1  17,071.53  19.68   
 Daily R2  17,111.93  40.39   
 Weekly R1  17,133.46  21.53   
 Weekly R2  17,235.77  102.32   
 Monthly R1  17,340.39  104.61   
 Monthly R2  17,649.63  309.25   

Monday 9/15/14. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the monthly scale.

This is a picture of the Dow industrials on the monthly scale. I wanted to show the recovery since the bear market ended.

The bear market started at A, in 2007 and ended when the index hit a low in 2009. That was a drop from almost 14,000 to 6500. Nice if you were short the market and a devastating blow for those on the long side.

Now look at the recovery since B. The market is at 17,000. That's almost a triple from the low at B.

My research says that Fibonacci extensions work no better than a random pick but who's counting? I show the 1.618 extension applied to the AB move. The dashed line at C is where we're supposed to end up.

How far up is that? I'm interpolating, but it appears to be around 19,000. If the prediction is correct, then we have more upside to go.

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A Brief Look Back

Picture of a flower from my garden.

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

Monday: Down 25.94 points.
Tuesday: Down 97.55 points.
Wednesday: Up 54.84 points.
Thursday: Down 19.71 points.
Friday: Down 61.49 points.

For the Week...

The Dow industrials were down 149.85 points or 0.9%.
The Nasdaq composite was down 15.3 points or 0.3%.
The S&P 500 index was down 22.17 points or 1.1%.

Year to Date...

Dow Industrials
     1.0% down from the high of 17,161.55 on 09/04/2014.
     10.7% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     0.9% down from the high of 4,610.14 on 09/03/2014.
     15.8% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     1.3% down from the high of 2,011.17 on 09/04/2014.
     14.2% up from the low of 1,737.92 on 02/05/2014.

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Economic Reports

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

ReportTimeA-F
Rating
Description
Industrial production9:15 MB-Production of utilities, mines, and manufacturers.
Capacity utilization9:15 MB-Gauges economic activity, hints of inflation.
Producer price index8:30 TB-Measures wholesale goods cost. An indication of future inflation.
Consumer price index8:30 WB+Inflation report. Measures cost of goods and services.
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.
Housing starts8:30 ThB-Number of homes beginning construction.
Building permits8:30 ThB-Measures building permits for new construction.
Leading indicators10:00 FD-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 09/12/2014, the CPI had:

54 bearish patterns,
5 bullish patterns,
237 patterns waiting for breakout.
The CPI signal is 8.5%, which is bearish (<= 35%).

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  16,883  16,935  16,990  17,042  17,096 
Weekly  16,821  16,904  17,021  17,104  17,221 
Monthly  16,040  16,514  16,838  17,311  17,635 
S&P500 (^GSPC): Daily  1,971  1,978  1,988  1,995  2,004 
Weekly  1,964  1,975  1,991  2,002  2,018 
Monthly  1,866  1,926  1,969  2,028  2,071 
Nasdaq (^IXIC): Daily  4,537  4,552  4,571  4,587  4,606 
Weekly  4,515  4,541  4,571  4,597  4,627 
Monthly  4,220  4,394  4,502  4,676  4,784 
  • 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 29.7%   The trend may continue. 
 1 month down 19.4%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week down 27.5%   The trend may continue. 
 1 month down 20.4%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 30.2%   The trend may continue. 
 1 month down 25.6%   The trend may continue. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
12Triangle, symmetrical
11Scallop, ascending and inverted
7Rectangle top
5Broadening bottom
5Rising wedge
4Triangle, descending
3Diamond top
3Falling wedge
3Double Bottom, Adam and Adam
3Head-and-shoulders top

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

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

 

 

 

 

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

This WeekLast Week
1. Shoe1. Shoe
2. Semiconductor Cap Equip.2. Natural Gas (Distributor)
3. Natural Gas (Distributor)3. Petroleum (Producing)
4. Long ETFs4. Semiconductor Cap Equip.
5. Computers and Peripherals5. Retail Store
50. Homebuilding50. Metal Fabricating
51. Internet51. Internet
52. Toiletries/Cosmetics52. Homebuilding
53. Retail Building Supply53. Retail Building Supply
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 9/11/14. Intraday Market Direction: Nasdaq

The index climbed by 0.8% or 34.23 points. Since 02/05/1971 the index made 362 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 242 occasions.
     Average loss was -0.9% on 120 occasions.
Expect the index to close higher 66.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 67/118 or 56.8% of the time.
     The prediction of the index closing lower has been right 26/51 or 51.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

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

This picture highlights two chart patterns. The first, in blue, is a head-and-shoulders top chart pattern. This one breaks out downward and the index drops, but not by much, about 20 points.

The chart pattern in red is a descending triangle. It also breaks out downward before spiking upward and then plunging again. It's as if the index can't make up its mind about a direction.

You can also view this as a double top (AB), confirmed as a valid chart pattern when the index closes below C. A pullback carries price higher (D).

What does all of this say about tomorrow's movement or close?

If the index can close above 4600, then I would expect a strong move higher. That's because the descending triangle will have busted. Busted patterns frequently lead to strong moves.

$ $ $

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

-- Thomas Bulkowski

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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,217.93    
 Monthly S1  4,402.23  184.29   
 Monthly Pivot  4,506.18  103.96   
 Weekly S2  4,512.40  6.22   
 Daily S2  4,530.56  18.16   
 Low  4,544.84  14.28   
 Weekly S1  4,549.46  4.62   
 Open  4,554.15  4.69   
 Daily S1  4,558.54  4.39   
 61.8% Down from Intraday High  4,560.98  2.44   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  4,565.97  4.99   
 38.2% Down from Intraday High  4,570.96  4.99   
 Daily Pivot  4,572.82  1.86   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Weekly Pivot  4,579.80  6.98   
 Close  4,586.52  6.72   
 High  4,587.10  0.58   Yes! The High is close to the Close.
 Daily R1  4,600.80  13.70   
 Daily R2  4,615.08  14.28   
 Weekly R1  4,616.86  1.78   Yes! The Weekly R1 is close to the Daily R2.
 Weekly R2  4,647.20  30.34   
 Monthly R1  4,690.48  43.28   
 Monthly R2  4,794.43  103.96   

Wednesday 9/10/14. Market Direction: CPI

Picture of the chart pattern indicator

This is a picture of the chart pattern indicator on the daily scale. It shows signal changes.

The indicator has changed to bearish today as the red vertical line shows. Clearly that is not good news for people long stocks. Of course, for two weeks now, I've been warning of a bearish turn and perhaps, just perhaps, we are seeing it come true.

The indicator can change signals for up to a week, so we won't know if this is a real bearish turn of just a fake out. A large move in the index will turn things bullish. But in three trading days (the CPI is usually valid after 3 days), we should know if the signal is real or not.

Picture of the chart pattern indicator

The indicator is the line chart below a chart of the S&P 500 composite.

I have penciled in the bearish divergence. You can see that the index is coming down, too, so the bearish turn has started. I expect more to come but if you look at the CPI line, it's low, almost zero.

How much lower can it go? The point is, the line could start moving back up. My guess is that since the indicator hit 0 so quickly, that it will bounce back quickly, too. That's what happened in the past (look at when the indicator hit 0). Thus, this downturn will occur, but it probably won't last long. It might be a shallow dip is what I'm saying.

-- Thomas Bulkowski

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Tuesday 9/9/14. Intraday Market Direction: Dow

The index dropped by -0.2% or -25.94 points. Since 10/01/1928 the index made 1128 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 564 occasions.
     Average loss was -0.7% on 564 occasions.
Expect the index to close higher 50.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 80/124 or 64.5% of the time.
     The prediction of the index closing lower has been right 21/39 or 53.8% of the time.

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

Picture of the Dow industrials on the 5 minute scale.

$ $ $

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

At first, I thought the red chart pattern was a broadening top, but then I saw the diamond shape. It's a diamond top chart pattern. Diamond tops breakout downward 69% of the time.

Notice the strong move upward from A. That tells me a downward breakout will take the index back to just above the low at A, say, 17,030.

The larger pattern in cyan is a broadening bottom since price is trending lower going into the pattern. Also notice that price is struggling to find a direction, at least for the past ten days.

My guess as to what will happen on Tuesday is that we'll get a downward breakout from the diamond and that price will drop to about 17,030. I could be wrong about all of this, so you've been warned.

$ $ $

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

-- Thomas Bulkowski

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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  16,041.15    
 Monthly S1  16,576.28  535.14   
 Monthly Pivot  16,868.92  292.63   
 Weekly S2  16,941.53  72.62   
 Weekly S1  17,026.48  84.94   
 Daily S2  17,050.78  24.30   
 Low  17,079.17  28.39   
 Daily S1  17,081.10  1.93   Yes! The Daily S1 is close to the Low.
 Weekly Pivot  17,094.01  12.91   
 61.8% Down from Intraday High  17,101.60  7.58   
 50% Down from Intraday High  17,108.53  6.93   
 Daily Pivot  17,109.49  0.96   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 Close  17,111.42  1.93   Yes! The Close is close to the Daily Pivot.
 38.2% Down from Intraday High  17,115.45  4.03   Yes! The 38.2% Down from Intraday High is close to the Close.
 Open  17,131.71  16.26   
 High  17,137.88  6.17   
 Daily R1  17,139.81  1.93   Yes! The Daily R1 is close to the High.
 Daily R2  17,168.20  28.39   
 Weekly R1  17,178.96  10.76   
 Weekly R2  17,246.49  67.54   
 Monthly R1  17,404.05  157.56   
 Monthly R2  17,696.69  292.63   

Monday 9/8/14. Market Monday: The Week Ahead

My Prediction

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

This is a chart of the S&P 500 index on the weekly scale. At least I think it's weekly. That's the black bar chart. The red line is the forecast for price movement this year and next.

I though it was a good time to review where we are going.

The forecast is constructed from historical movements. You can read about it at the above link.

Notice that the index bottomed out in February, but the forecast didn't have a clue that it would happen.

The forecast said that the index would struggle and drop going into August. Instead, the index climbed until having a swift drop in August.

September is supposed to be the worst performing month of the year. If the index follows the forecast, I am going to make a lot of money as the market soars.

Unfortunately, based on the prediction's accuracy for the last two years or so, the steady uptrend is a pipe dream.

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A Brief Look Back

Picture of a flower from my garden.

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

Tuesday: Down 30.89 points.
Wednesday: Up 10.72 points.
Thursday: Down 8.7 points.
Friday: Up 67.78 points.
Saturday: Holiday or other weird event!

For the Week...

The Dow industrials were up 38.91 points or 0.2%.
The Nasdaq composite was up 2.63 points or 0.1%.
The S&P 500 index was up 4.34 points or 0.2%.

Year to Date...

Dow Industrials
     0.1% down from the high of 17,161.55 on 09/04/2014.
     11.7% up from the low of 15,340.69 on 02/05/2014.
Nasdaq
     0.6% down from the high of 4,610.14 on 09/03/2014.
     16.1% up from the low of 3,946.03 on 04/15/2014.
S&P 500
     0.2% down from the high of 2,011.17 on 09/04/2014.
     15.5% up from the low of 1,737.92 on 02/05/2014.

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Economic Reports

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

ReportTimeA-F
Rating
Description
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.
Treasury budget2:00 ThDTracks budget deficit. Important in April (tax filing).
Retail sales8:30 FA-Reports total retail sales (not services). Are people spending?
International trade8:30 FC+Import/export prices, trade balance. US economy vs others.
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 09/05/2014, the CPI had:

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

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

Swing Traders: Pivot Points

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

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  16,967  17,052  17,095  17,180  17,223 
Weekly  16,950  17,044  17,103  17,196  17,255 
Monthly  16,050  16,594  16,878  17,421  17,705 
S&P500 (^GSPC): Daily  1,984  1,996  2,002  2,014  2,019 
Weekly  1,982  1,995  2,003  2,016  2,024 
Monthly  1,868  1,938  1,975  2,044  2,081 
Nasdaq (^IXIC): Daily  4,529  4,556  4,570  4,596  4,610 
Weekly  4,511  4,547  4,579  4,614  4,646 
Monthly  4,217  4,400  4,505  4,688  4,793 
  • Seekinger doesn't look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
  • S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
  • If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
  • In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
  • A move outside of daily R1 or S1 usually does not mean a breakout.
  • The odds suggest that the entire week's price action will remain between weekly R2 and S2.
  • Avoid going long when the market moves above weekly R2 (it's overbought) and avoid going short when price moves below weekly S2 (oversold).
  • Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
  • Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 5 weeks up 8.8%   Expect a reversal soon. 
 2 months up 40.5%   Expect a random direction. 
 S & P 500 (^GSPC) 5 weeks up 9.5%   Expect a reversal soon. 
 2 months up 42.4%   Expect a random direction. 
 Nasdaq composite (^IXIC) 5 weeks up 6.6%   Expect a reversal soon. 
 2 months up 40.8%   Expect a random direction. 

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

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

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

Buy-and-Hold: 12-Month SMA

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

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Earnings, Chart Patterns & Industries

Earnings season is over.

 Found Chart Pattern Name
11Triangle, symmetrical
6Dead-cat bounce
5Broadening bottom
4Triangle, descending
4Channel
3Rectangle top
3Head-and-shoulders bottom
3Rising wedge
3Diamond top
3Double Bottom, Adam and Adam

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

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

 

 

 

 

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

This WeekLast Week
1. Shoe1. Retail (Special Lines)
2. Natural Gas (Distributor)2. Natural Gas (Distributor)
3. Petroleum (Producing)3. Shoe
4. Semiconductor Cap Equip.4. Trucking/Transp. Leasing
5. Retail Store5. Retail Store
50. Metal Fabricating50. Metal Fabricating
51. Internet51. Homebuilding
52. Homebuilding52. E-Commerce
53. Retail Building Supply53. Retail Building Supply
54. Short ETFs54. Short ETFs

-- Thomas Bulkowski

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Thursday 9/4/14. Intraday Market Direction: Nasdaq

The index dropped by -0.6% or -25.62 points. Since 02/05/1971 the index made 285 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 124 occasions.
     Average loss was -1.1% on 161 occasions.
Expect the index to close lower 56.5% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 67/118 or 56.8% of the time.
     The prediction of the index closing lower has been right 25/50 or 50.0% of the time.

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

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

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

Look at the red line first. It's a trendline drawn along the bottoms. The index has pierced that line, heading down. Will the decline continue?

To answer that, look at the historical chart. The blue line is another trendline that ends with price dropping through it, also. Notice that the decline lasted about a day before recovery set in.

Now look at the green line. That is a support line drawn starting from today's price movement backward in time, just to see how the peaks and valleys line up (or don't line up).

The chart pattern indicator continues to plummet. My guess is another down day in the S&P 500 index will turn the CPI bearish.

I think the index will surprise us and move higher. If you draw a trendline starting from point A, it would rest on or very near today's close. In other words, the index is resting on support of that trendline plus the green one. The above probabilities suggest a lower close but it's almost random: 57%. I'm going to vote for a higher close. I'll guess that the index will rise to 4590 and form an unconfirmed head-and-shoulders top. The left shoulder is at B and the head is at C.

$ $ $

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

-- Thomas Bulkowski

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© 2014 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  4,233.20    
 Monthly S1  4,402.88  169.69   
 Monthly Pivot  4,491.58  88.69   
 Weekly S2  4,532.84  41.26   
 Daily S2  4,537.94  5.10   
 Weekly S1  4,552.70  14.77   
 Daily S1  4,555.25  2.55   Yes! The Daily S1 is close to the Weekly S1.
 Low  4,565.38  10.13   
 Weekly Pivot  4,566.49  1.11   Yes! The Weekly Pivot is close to the Low.
 Close  4,572.57  6.08   
 61.8% Down from Intraday High  4,582.48  9.91   
 Daily Pivot  4,582.70  0.22   Yes! The Daily Pivot is close to the 61.8% Down from Intraday High.
 Weekly R1  4,586.35  3.66   Yes! The Weekly R1 is close to the Daily Pivot.
 50% Down from Intraday High  4,587.76  1.41   Yes! The 50% Down from Intraday High is close to the Weekly R1.
 38.2% Down from Intraday High  4,593.04  5.28   
 Daily R1  4,600.01  6.97   
 Weekly R2  4,600.14  0.12   Yes! The Weekly R2 is close to the Daily R1.
 High  4,610.14  10.00   
 Open  4,610.14  0.00   Yes! The Open is close to the High.
 Daily R2  4,627.46  17.32   
 Monthly R1  4,661.26  33.81   
 Monthly R2  4,749.96  88.69   

Wednesday 9/3/14. Market Direction: CPI

Picture of the chart pattern indicator

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

Nothing exciting has happened on this chart yet, so the big mystery is why do I show it?

I don't have the answer and considered deleting it but it does show the buy and sell signals. More correctly stated, it shows the bullish and bearish predicted turns. Green is bullish; red is bearish.

Picture of the chart pattern indicator

This is another view of the CPI only it shows the signal.

The chart pattern indicator is making lower highs but the index is either flat or moving up slightly over the last week. That is bearish divergence. Thus, I expect the index to drop.

It may not drop far, though. In fact, I expect the other indices to power upward over the coming two weeks.

This bearish divergence suggests a downward move but it doesn't say when it will happen. The divergence can continue for a month or two with the index moving up. So, we'll have to wait to see what develops. The CPI does show the underlying stocks weakening, so your individual securities may begin to head lower.

-- Thomas Bulkowski

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Tuesday 9/2/14. New Research

I released new research that discusses overhead resistance and how price behaves when a stock breaks out to new highs. Here are the important findings.

When prior price movement (overhead resistance) appears at the ultimate high, stocks in the study averaged gains of 29%. When stocks broke out to new all-time highs (no overhead resistance), the stocks averaged gains of 65%.

A second test of resistance/no resistance at the top of the chart pattern shows startling performance differences between stocks with overhead resistance and those breaking out to new all-time highs. This test looks at the effects of nearby overhead resistance, if any. The below table shows the results.

Performance of Stocks Over Time with and without Overhead Resistance
 Resistance?  1 month  3 months  6 months  1 year  2 years  3 years  4 years 
Resistance18%25%29%33%37%39%40%
No resistance51%55%59%63%70%77%83%

For example, stocks on the way to the ultimate high that did not show overhead resistance above the top of the chart pattern during the prior month averaged gains of 51%. Those with overhead resistance within the prior month climbed just 18% to the ultimate high before suffering a trend change.

Notice that as the time between the top of the chart pattern and overhead resistance increases, the performance also increases.

One can infer from these results that the strength of overhead resistance decreases over time, thereby allowing higher gains from the breakout to the ultimate high.

For trading implications, read the article.

$ $ $

If you want to know how likely it is that the market will close higher or lower, visit my holiday page.

-- Thomas Bulkowski

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