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.

Wednesday 9/20/17. A Look At Indicators

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 has change much on this chart over the past week. The indicator is still bullish, still bumping up against a reading of 100 (the thin blue line).

The red line is the percentage of stocks at least 20% below their 1-year high (plotted upside down). The blue line is the average percentage drop of stocks below their 1-year high (plotted upside down).

Over the past week, the numbers above say that the lines have flattened out. That could be temporary, or it could mean a downtrend is coming.

I'm thinking that it spells weakness, so look for the markets to retrace some of their recent gains.

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I released a new article on the no-nines trading strategy. You delay buying a stock if it has a 9 as the first digit left of the decimal until price rises to 50 cents above the whole dollar. Doing so increases profit and reduces failure by avoiding false breakouts.

-- Thomas Bulkowski

Tuesday 9/19/17. Intraday Market Direction: Dow

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

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

The past several days have followed a reassuring upward trend that varied little from day to day except for today's action.

Today's sharp move up at the start followed by a horizontal move I think is typical. The index rested after that zip higher. Will another sharp run-up follow?

Perhaps the ascending triangle tells the answer.

I drew the red trendline starting from today backward until the start a week ago. I followed that by the horizontal green line to form the triangle.

This is not a pretty triangle and I even hesitate to call it one. Why? Because price does not cross the pattern enough near the start. Still, it does have that squeezed appearance.

It suggests an upward breakout tomorrow. That's supported by the above probability which also suggests an upward breakout.

On the flip side, the trendline measure rule suggests the index could drop by the height of the bump near the opening session. Eyeballing it, that means a drop of about, oh, 100 points.

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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

Monday 9/18/17. Market Monday: The Week Ahead

• My Prediction
• A Brief Look Back
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Earnings, Chart Patterns & Industries

My Prediction

I show the Dow utilities on the daily scale.

Let's first look at the distinct image of a double top: AB. It's stands like a castle above the surrounding plain.

Yes, tops A and B are not at the same price, but little is perfect in this world. The pattern confirms when the index closes below the valley between the two peaks, which it does when it closes below the red line.

It eventually makes its way down to C, fulfilling the measure rule for double tops (the height of the chart pattern subtracted from the breakout price).

Recently, circled, the index has struggled to find direction. I've seen this in the past where a stock or security makes large price swings. I feel, but haven't proved, that this is a topping sign. However, it could be a head-and-shoulders top forming.

A Brief Look Back

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.

For the Week...

Year to Date...

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 09/15/2017, the CPI had:

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.

• 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:

Consecutive Price Trends

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 over.

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.

-- 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.