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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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Bulkowski's Blog: ThePatternSite.com
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 10/22/2014
16,461 -153.49 -0.9%
8,312 -174.20 -2.1%
576 3.51 0.6%
4,383 -36.63 -0.8%
1,927 -14.17 -0.7%
YTD
-0.7%
12.3%
17.4%
4.9%
4.3%
Tom's Targets    Overview: 10/10/2014
16,800 or 15,800 by 11/01/2014
8,700 or 8,000 by 11/01/2014
600 or 560 by 11/15/2014
4,600 or 4,200 by 11/15/2014
1,950 or 1,800 by 11/01/2014

Written and copyright © 2014 by Thomas N. Bulkowski. All rights reserved.

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Thursday 10/23/14. Intraday Market Direction: Nasdaq

The index dropped by -0.8% or -36.63 points. Since 02/05/1971 the index made 230 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.9% on 113 occasions.
     Average loss was -1.4% on 117 occasions.
Expect the index to close lower 50.9% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 70/123 or 56.9% of the time.
     The prediction of the index closing lower has been right 26/52 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.

There's not much to say about this figure. The index made a V-shaped drop as the red lines show.

The index slides through the right red line at A. That could mean the market is turning bearish for a spell. Think Elliott wave's simple ABC correction. Price moves down in a series of down-up-down steps. After it completes, a 5-wave move up returns.

$ $ $

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  3,876.04    
 Weekly S2  4,080.54  204.50   
 Monthly S1  4,129.44  48.91   
 Weekly S1  4,231.69  102.25   
 Weekly Pivot  4,267.76  36.06   
 Daily S2  4,345.42  77.66   
 Daily S1  4,364.13  18.72   
 Monthly Pivot  4,370.01  5.87   
 Low  4,381.28  11.27   
 Close  4,382.85  1.57   Yes! The Close is close to the Low.
 Daily Pivot  4,400.00  17.15   
 61.8% Down from Intraday High  4,402.13  2.13   Yes! The 61.8% Down from Intraday High is close to the Daily Pivot.
 50% Down from Intraday High  4,408.57  6.44   
 38.2% Down from Intraday High  4,415.01  6.44   
 Daily R1  4,418.71  3.70   Yes! The Daily R1 is close to the 38.2% Down from Intraday High.
 Weekly R1  4,418.91  0.20   Yes! The Weekly R1 is close to the Daily R1.
 Open  4,429.16  10.25   
 High  4,435.86  6.70   
 Daily R2  4,454.58  18.72   
 Weekly R2  4,454.98  0.40   Yes! The Weekly R2 is close to the Daily R2.
 Monthly R1  4,623.41  168.44   
 Monthly R2  4,863.98  240.56   

Wednesday 10/22/14. 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.

Notice how the indicator has shot upward into bullish territory in just a few days. The problem is to maintain a bullish hold on the altitude. If it can't, then look for the bullish signal to disappear and the bearish one from mid October to remain.

Picture of the chart pattern indicator

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

The indicator called the turn three days ago by turning bullish. That's about the same time as I called the turn. But I also expected the rise to falter and drop back to form a double bottom. That hasn't happened yet.

An alternative thought is that the index will form a head-and-shoulders top chart pattern. The right armpit is in place so now all we need is the index to rise a bit higher to near the July bump's height.

$ $ $

Over 5 million vehicles are subject to an airbag recall. To see if you vehicle is on any recall list, go here (http://www.safercar.gov/). Click "Search for recalls" on the upper right. The site was slow to connect and update, probably due to traffic.

-- Thomas Bulkowski

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Tuesday 10/21/14. Intraday Market Direction: Dow

The index climbed by 0.1% or 19.26 points. Since 10/01/1928 the index made 1254 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 642 occasions.
     Average loss was -0.6% on 612 occasions.
Expect the index to close higher 51.2% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 81/129 or 62.8% of the time.
     The prediction of the index closing lower has been right 22/40 or 55.0% 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 Dow industrials on the 5 minute scale.

$ $ $

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

A head-and-shoulders top appears at L (left shoulder, H (head), and R (guess ). The pattern confirms as a valid one at A. That's when the index closes above the red neckline.

The blue pattern may be a puzzle for most of you. I call it an inverted roof. If the shoulders are well-defined, you can call it a head-and-shoulders or even one from the complex variety (complex head and shoulders). The inverted roof does not need confirmation to be valid. All it needs is for the index to close outside of the blue lines. The breakout direction is random.

The narrow trading range today makes me think of Bollinger bands. That indicator shows periods of low volatility followed by periods of high volatility. Thus, look for the index to make a big move. The upward trend in place since last Wednesday suggests an upward breakout. Earnings reports would have to support that notion, of course. But the index could drop just as easily, forming a double bottom.

That would mean a loss of at least 300 points.

$ $ $

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  15,039.62    
 Weekly S2  15,538.44  498.82   
 Monthly S1  15,719.65  181.20   
 Weekly S1  15,969.06  249.41   
 Daily S2  16,212.86  243.80   
 Low  16,260.54  47.68   
 Weekly Pivot  16,285.73  25.19   
 Daily S1  16,306.26  20.53   
 61.8% Down from Intraday High  16,314.44  8.17   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  16,331.08  16.65   
 38.2% Down from Intraday High  16,347.73  16.65   
 Daily Pivot  16,353.95  6.21   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Open  16,373.15  19.20   
 Close  16,399.67  26.52   
 High  16,401.63  1.96   Yes! The High is close to the Close.
 Daily R1  16,447.35  45.72   
 Daily R2  16,495.04  47.68   
 Monthly Pivot  16,535.14  40.11   
 Weekly R1  16,716.35  181.20   
 Weekly R2  17,033.02  316.68   
 Monthly R1  17,215.17  182.14   
 Monthly R2  18,030.66  815.50   

Written and copyright © 2014 by Thomas N. Bulkowski. All rights reserved.