Bulkowski's Blog: ThePatternSite.com
As of 05/17/2019
  Industrials: 25,764 -98.68 -0.4%  
  Transports: 10,492 -113.76 -1.1%  
  Utilities: 790 +3.91 +0.5%  
  Nasdaq: 7,816 -81.77 -1.0%  
  S&P 500: 2,860 -16.79 -0.6%  
YTD
 +10.4%  
 +14.4%  
 +10.8%  
 +17.8%  
 +14.1%  
  Tom's Targets    Overview: 05/14/2019  
  Up arrow26,600 or 25,000 by 06/01/2019
  Up arrow10,700 or 10,000 by 06/01/2019
  Up arrow825 or 755 by 06/01/2019
  Up arrow8,100 or 7,400 by 06/01/2019
  Up arrow2,900 or 2,740 by 06/01/2019
As of 05/17/2019
  Industrials: 25,764 -98.68 -0.4%  
  Transports: 10,492 -113.76 -1.1%  
  Utilities: 790 +3.91 +0.5%  
  Nasdaq: 7,816 -81.77 -1.0%  
  S&P 500: 2,860 -16.79 -0.6%  
YTD
 +10.4%  
 +14.4%  
 +10.8%  
 +17.8%  
 +14.1%  
  Tom's Targets    Overview: 05/14/2019  
  Up arrow26,600 or 25,000 by 06/01/2019
  Up arrow10,700 or 10,000 by 06/01/2019
  Up arrow825 or 755 by 06/01/2019
  Up arrow8,100 or 7,400 by 06/01/2019
  Up arrow2,900 or 2,740 by 06/01/2019

 

February 2019 Headlines

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Monday 5/20/19. Market Monday: The Week Ahead

My Prediction

Picture of the Dow industrials on the daily scale.

The chart shows the Dow industrials on the daily scale.

A double top appears at AB and that's the only thing which is interesting in this chart.

I drew a horizontal red line across a few valleys to show where support is.

Last week, I showed a chart of where the transports might go. The image formed a head-and-shoulders top chart pattern.

The Dow could form the same structure, a three-peak pattern, only this version has two peaks on the left, a center one at AB, and a forming one off the chart to the right (that is, in the future). The right side might be a double peak, too, matching the ones on the left.

Based on the height of the two peaks on the left, it appears the right side has more room to move up this week followed by a drop. So that's what I expect...a rising price trend for a few days followed by a small drop. Then another run up and down (a second peak). After that, we'll have to see.

 

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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 617.38 points.
Tuesday: Up 207.06 points.
Wednesday: Up 115.97 points.
Thursday: Up 214.66 points.
Friday: Down 98.68 points.

For the Week...

The Dow industrials were down 178.37 points or 0.7%.
The Nasdaq composite was down 100.66 points or 1.3%.
The S&P 500 index was down 21.87 points or 0.8%.

Year to Date...

Dow Industrials
     3.5% down from the high of 26,695.96 on 04/23/2019.
     13.8% up from the low of 22,638.41 on 01/03/2019.
Nasdaq
     4.4% down from the high of 8,176.08 on 04/29/2019.
     21.0% up from the low of 6,457.13 on 01/03/2019.
S&P 500
     3.2% down from the high of 2,954.13 on 05/01/2019.
     17.0% up from the low of 2,443.96 on 01/03/2019.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 05/17/2019, the CPI had:

69 bearish patterns,
4 bullish patterns,
380 patterns waiting for breakout.
The CPI signal is 5.5%, which is bearish (<= 35%).

The chart pattern indicator is bearish 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  25,499  25,632  25,790  25,923  26,081 
Weekly  24,913  25,338  25,648  26,074  26,383 
Monthly  24,421  25,092  25,894  26,566  27,368 
S&P500 (^GSPC): Daily  2,835  2,847  2,866  2,879  2,898 
Weekly  2,760  2,810  2,851  2,901  2,942 
Monthly  2,719  2,789  2,872  2,942  3,024 
Nasdaq (^IXIC): Daily  7,740  7,778  7,848  7,887  7,957 
Weekly  7,478  7,647  7,797  7,966  8,116 
Monthly  7,324  7,570  7,873  8,119  8,422 

Here are the formulas:

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

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Consecutive Price Trends

Index Consecutive
Closes So Far 
% Comments 
 Dow industrials (^DJI) 4 weeks down 1.1%   Expect a reversal soon. 
 1 month down 21.6%   Expect a reversal soon. 
 S & P 500 (^GSPC) 2 weeks down 11.6%   Expect a reversal soon. 
 1 month down 22.3%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 2 weeks down 13.5%   Expect a reversal soon. 
 1 month down 26.9%   The trend may continue. 

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

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

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

Earnings, Chart Patterns & Industries

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

 Found Chart Pattern Name
16Pipe bottom
11Double Top, Adam and Adam
10Dead-cat bounce
10Double Top, Adam and Eve
9Double Top, Eve and Eve
8Broadening top
8Head-and-shoulders top
6Head-and-shoulders bottom
6Triple top
5Triangle, 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. Semiconductor Cap Equip.1. Semiconductor Cap Equip.
2. Homebuilding2. IT Services
3. IT Services3. Cement and Aggregates
4. Computer Software and Svcs4. Computer Software and Svcs
5. Financial Services5. Financial Services

-- Thomas Bulkowski

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Friday 5/17/19. Pattern Trading Setups for the Weekend.

Go to Table.

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

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

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

There were 10 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 591 stocks searched, or 1.7%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

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

Excluding ETFs, there were 6 bullish chart patterns this week and 3 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) turn.

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

More...

-- Thomas Bulkowski

 

Symbol Chart Pattern Bullish
Bearish
Start End Industry
APOGScallop, ascending and inverted      04/11/201905/13/2019Building Materials
BSETPipe top      04/29/201905/06/2019Furn/Home Furnishings
HQYTriangle, symmetrical      04/16/201905/16/2019Healthcare Information
HPDouble Bottom, Adam and Adam      05/02/201905/10/2019Petroleum (Producing)
MDCAFlag, high and tight      03/26/201905/16/2019Advertising
MURPipe bottom      04/29/201905/06/2019Petroleum (Integrated)
NEEBroadening top      04/10/201905/16/2019Electric Utility (East)
PNWBroadening top, right-angled and descending      04/15/201905/13/2019Electric Utility (West)
RTNTriangle, symmetrical      04/25/201905/14/2019Aerospace/Defense
TJXHead-and-shoulders top      04/05/201905/10/2019Retail Store
UGIDiamond top      05/01/201905/16/2019Natural Gas (Distributor)

 

Weekly screen for chart patterns ending between 05/09/2019 and 05/16/2019. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Definitions
RS is relative strength (where 1 is best). For other definitions, see the glossary.
’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate.
All numbers assume a bull market and are based on the breakout direction that occurs most often.
For more information, consult my book, Encyclopedia of Chart Patterns, Second Edition.
 
Apogee Enterprises (APOG)
Industry: Building Materials
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 14 out of 58
Stock RS rank: 235 out of 585
5/16/19 close: $40.36
1 Month avg volatility: $0.82. Volatility stop (for upward breakout): $38.37 or 4.9% below the close.
Change YTD: 35.21%
Volume: 101,100 shares. 3 month avg: 243,183 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Scallop, ascending and inverted continuation pattern from 04/11/2019 to 05/13/2019
Breakout is upward 100% of the time.
Average rise: 43%.
Break-even failure rate: 4%.
Throwbacks occur 61% of the time.
Price hits measure rule target 61% of the time.

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Bassett Furniture Industries Inc (BSET)
Industry: Furn/Home Furnishings
Industry RS rank: 17 out of 58
Stock RS rank: 490 out of 585
5/16/19 close: $16.77
1 Month avg volatility: $0.56. Volatility stop (for downward breakout): $18.10 or 7.9% above the close.
Change YTD: -16.32%
Volume: 17,000 shares. 3 month avg: 28,538 shares.
This security may be thinly traded (less than 100k shares)!
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Pipe top reversal pattern from 04/29/2019 to 05/06/2019
Breakout is downward 100% of the time.
Average decline: 20%.
Break-even failure rate: 11%.
Pullbacks occur 41% of the time.
Price hits measure rule target 70% of the time.

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HealthEquity, Inc (HQY)
Industry: Healthcare Information
Industry RS rank: 8 out of 58
Stock RS rank: 518 out of 585
5/16/19 close: $69.64
1 Month avg volatility: $3.29. Volatility stop (for upward breakout): $62.48 or 10.3% below the close.
Change YTD: 16.75%
Volume: 515,400 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Wednesday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 04/16/2019 to 05/16/2019
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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Helmerich and Payne Inc. (HP)
Industry: Petroleum (Producing)
Industry RS rank: 48 out of 58
Stock RS rank: 360 out of 585
5/16/19 close: $58.08
1 Month avg volatility: $1.65. Volatility stop (for upward breakout): $53.96 or 7.1% below the close.
Change YTD: 21.15%
Volume: 889,500 shares. 3 month avg: 1,539,165 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Double Bottom, Adam and Adam reversal pattern from 05/02/2019 to 05/10/2019
Breakout is upward 100% of the time.
Average rise: 35%.
Break-even failure rate: 5%.
Throwbacks occur 64% of the time.
Price hits measure rule target 66% of the time.

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MDC Pateners Inc (MDCA)
Industry: Advertising
Industry RS rank: 21 out of 58
Stock RS rank: 75 out of 585
5/16/19 close: $3.28
1 Month avg volatility: $0.18. Volatility stop (for upward breakout): $2.77 or 15.5% below the close.
Change YTD: 25.67%
Volume: 634,200 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Flag, high and tight continuation pattern from 03/26/2019 to 05/16/2019
Breakout is upward 100% of the time.
Average rise: 69%.
Throwbacks occur 54% of the time.
Price hits measure rule target 90% of the time.

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Murphy Oil Corporation (MUR)
Industry: Petroleum (Integrated)
Industry RS rank: 46 out of 58
Stock RS rank: 465 out of 585
5/16/19 close: $27.87
1 Month avg volatility: $0.96. Volatility stop (for upward breakout): $25.91 or 7.0% below the close.
Change YTD: 19.15%
Volume: 2,250,300 shares. 3 month avg: 2,218,335 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Pipe bottom reversal pattern from 04/29/2019 to 05/06/2019
Breakout is upward 100% of the time.
Average rise: 45%.
Break-even failure rate: 5%.
Throwbacks occur 44% of the time.
Price hits measure rule target 83% of the time.

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NextEra Energy Inc (NEE)
Industry: Electric Utility (East)
Industry RS rank: 22 out of 58
Stock RS rank: 188 out of 585
5/16/19 close: $197.11
1 Month avg volatility: $2.58. Volatility stop (for downward breakout): $203.07 or 3.0% above the close.
Change YTD: 13.40%
Volume: 2,116,300 shares. 3 month avg: 1,582,705 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Friday.
 
Chart pattern: Broadening top reversal pattern from 04/10/2019 to 05/16/2019
Breakout is downward 50% of the time.
Average decline: 15%.
Break-even failure rate: 18%.
Pullbacks occur 48% of the time.
Price hits measure rule target 37% of the time.

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Pinnacle West Capital Corp (PNW)
Industry: Electric Utility (West)
Industry RS rank: 24 out of 58
Stock RS rank: 222 out of 585
5/16/19 close: $95.82
1 Month avg volatility: $1.42. Volatility stop (for upward breakout): $91.90 or 4.1% below the close.
Change YTD: 12.46%
Volume: 554,800 shares. 3 month avg: 665,203 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Broadening top, right-angled and descending continuation pattern from 04/15/2019 to 05/13/2019
Breakout is upward 51% of the time.
Average rise: 28%.
Break-even failure rate: 19%.
Throwbacks occur 52% of the time.
Price hits measure rule target 63% of the time.

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Raytheon Co. (RTN)
Industry: Aerospace/Defense
Industry RS rank: 26 out of 58
Stock RS rank: 363 out of 585
5/16/19 close: $179.44
1 Month avg volatility: $3.34. Volatility stop (for upward breakout): $170.30 or 5.1% below the close.
Change YTD: 17.01%
Volume: 1,257,300 shares. 3 month avg: 1,302,565 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Friday.
 
Chart pattern: Triangle, symmetrical continuation pattern from 04/25/2019 to 05/14/2019
Breakout is upward 54% of the time.
Average rise: 31%.
Break-even failure rate: 9%.
Throwbacks occur 37% of the time.
Price hits measure rule target 66% of the time.

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TJX Companies Inc (TJX)
Industry: Retail Store
Industry RS rank: 53 out of 58
Stock RS rank: 353 out of 585
5/16/19 close: $52.69
1 Month avg volatility: $0.87. Volatility stop (for downward breakout): $55.12 or 4.6% above the close.
Change YTD: 17.77%
Volume: 5,239,000 shares. 3 month avg: 4,406,445 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Tuesday.
 
Chart pattern: Head-and-shoulders top reversal pattern from 04/05/2019 to 05/10/2019
Breakout is downward 100% of the time.
Average decline: 22%.
Break-even failure rate: 4%.
Pullbacks occur 50% of the time.
Price hits measure rule target 55% of the time.

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UGI Corp. (UGI)
Industry: Natural Gas (Distributor)
Industry RS rank: 36 out of 58
Stock RS rank: 418 out of 585
5/16/19 close: $54.23
1 Month avg volatility: $0.76. Volatility stop (for downward breakout): $55.95 or 3.2% above the close.
Change YTD: 1.65%
Volume: 1,661,000 shares. 3 month avg: 686,418 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Diamond top reversal pattern from 05/01/2019 to 05/16/2019
Breakout is downward 69% of the time.
Average decline: 21%.
Break-even failure rate: 6%.
Pullbacks occur 57% of the time.
Price hits measure rule target 76% of the time.

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Thursday 5/16/19. Intraday Market Direction: Nasdaq

The index climbed by 1.1% or 87.66 points. Since 02/05/1971 the index made 183 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 120 occasions.
     Average loss was -1.0% on 63 occasions.
Expect the index to close higher 65.6% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 163/298 or 54.7% of the time.
     The prediction of the index closing lower has been right 51/101 or 50.5% 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.

The index made a wonderful pattern at A to B called an inverted and ascending scallop. It repeated that pattern at BC, too, although this one isn't as well shaped. No doubt there won't be a third in the row. Why? Because too many people have recognized the pattern. Time to confound them and switch to a new pattern.

At DEF, there's a confirmed head-and-shoulders top. The pattern presaged a nice decline. One might quibble about the head (E) being formed because of an opening day gap. Yes, it looks weird, but you can't deny there's a peak at E.

What does all of this mean? My guess is that we'll see a higher close tomorrow, which also agrees with the above probabilities.

$ $ $

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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© 2019 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  7,502.45    
 Weekly S2  7,529.48  27.03   
 Daily S2  7,624.56  95.08   
 Monthly S1  7,662.30  37.74   
 Weekly S1  7,675.81  13.51   Yes! The Weekly S1 is close to the Monthly S1.
 Low  7,682.24  6.43   Yes! The Low is close to the Weekly S1.
 Open  7,682.80  0.56   Yes! The Open is close to the Low.
 Daily S1  7,723.35  40.55   
 61.8% Down from Intraday High  7,742.02  18.66   
 50% Down from Intraday High  7,760.48  18.46   
 38.2% Down from Intraday High  7,778.94  18.46   
 Daily Pivot  7,781.04  2.09   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Close  7,822.15  41.11   
 High  7,838.72  16.57   
 Daily R1  7,879.83  41.11   
 Weekly Pivot  7,905.68  25.84   
 Monthly Pivot  7,919.19  13.51   Yes! The Monthly Pivot is close to the Weekly Pivot.
 Daily R2  7,937.52  18.33   
 Weekly R1  8,052.01  114.50   
 Monthly R1  8,079.04  27.03   
 Weekly R2  8,281.88  202.84   
 Monthly R2  8,335.93  54.05   

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