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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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Chart Patterns: After the Buy
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Busted
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 09/19/2017
22,371 39.45 0.2%
9,507 -7.56 -0.1%
737 -2.02 -0.3%
6,461 6.68 0.1%
2,507 2.78 0.1%
YTD
13.2%
5.1%
11.7%
20.0%
12.0%
Tom's Targets    Overview: 09/14/2017
22,450 or 21,500 by 10/01/2017
9,750 or 9,200 by 10/01/2017
775 or 730 by 10/01/2017
6,650 or 6,200 by 10/01/2017
2,600 or 2,425 by 10/01/2017

  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.

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Wednesday 9/20/17. A Look At Indicators

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 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).

Picture of the percent down indicators

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).

Shown as a red line on the above chart...
On Monday, 24% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 24%.
The fewest was 14% on 12/09/2016.
And the most was 36% on 11/03/2016.
Shown as a blue line on the above chart...
The 498 stocks in my database are down an average of 13% from their yearly high.
A week ago, the average was 13%.
The peak was 9% on 12/09/2016.
And the bottom was 18% on 11/03/2016.

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.

$ $ $

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

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

The index climbed by 0.3% or 63.01 points. Since 10/01/1928 the index made 1073 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 592 occasions.
     Average loss was -0.7% on 481 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 145/246 or 58.9% of the time.
     The prediction of the index closing lower has been right 32/65 or 49.2% 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.

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.

$ $ $

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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© 2017 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  21,394.22    
 Weekly S2  21,830.82  436.60   
 Monthly S1  21,862.79  31.96   
 Monthly Pivot  22,068.90  206.12   
 Weekly S1  22,081.09  12.18   
 Weekly Pivot  22,178.05  96.97   
 Daily S2  22,251.17  73.12   
 Low  22,283.35  32.18   
 Daily S1  22,291.26  7.91   
 Open  22,297.92  6.66   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  22,310.96  13.04   
 50% Down from Intraday High  22,319.48  8.53   
 Daily Pivot  22,323.44  3.96   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  22,328.01  4.57   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  22,331.35  3.34   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  22,355.62  24.27   
 Daily R1  22,363.53  7.91   
 Daily R2  22,395.71  32.18   
 Weekly R1  22,428.32  32.61   
 Weekly R2  22,525.28  96.97   
 Monthly R1  22,537.47  12.18   
 Monthly R2  22,743.58  206.12   

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

My Prediction

Picture of the Dow utilities on the daily scale.

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.

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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: Up 259.58 points.
Tuesday: Up 61.49 points.
Wednesday: Up 39.32 points.
Thursday: Up 45.3 points.
Friday: Up 64.86 points.

For the Week...

The Dow industrials were up 470.55 points or 2.2%.
The Nasdaq composite was up 88.28 points or 1.4%.
The S&P 500 index was up 38.8 points or 1.6%.

Year to Date...

Dow Industrials
     0.0% down from the high of 22,275.02 on 09/15/2017.
     13.2% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     0.2% down from the high of 6,464.27 on 09/15/2017.
     19.5% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     0.0% down from the high of 2,500.23 on 09/15/2017.
     11.4% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

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

2 bearish patterns,
45 bullish patterns,
306 patterns waiting for breakout.
The CPI signal is 95.7%, 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  22,192  22,230  22,253  22,291  22,313 
Weekly  21,810  22,039  22,157  22,386  22,504 
Monthly  21,373  21,821  22,048  22,495  22,723 
S&P500 (^GSPC): Daily  2,491  2,496  2,498  2,503  2,505 
Weekly  2,466  2,483  2,492  2,509  2,517 
Monthly  2,390  2,445  2,473  2,528  2,555 
Nasdaq (^IXIC): Daily  6,400  6,424  6,444  6,469  6,489 
Weekly  6,388  6,418  6,441  6,472  6,495 
Monthly  6,076  6,262  6,363  6,549  6,650 
  • 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 43.3%   Expect a random direction. 
 6 months up 7.1%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week up 42.8%   Expect a random direction. 
 6 months up 14.6%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week up 45.4%   Expect a random direction. 
 3 months up 29.8%   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 over.

 Found Chart Pattern Name
40Double Bottom, Adam and Adam
19Pipe bottom
15Triple bottom
13Head-and-shoulders bottom
13Double Top, Adam and Adam
13Triangle, symmetrical
7Double Bottom, Eve and Adam
6Double Bottom, Adam and Eve
6Triangle, ascending
4Broadening 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. Semiconductor1. Medical Supplies
2. Computer Software and Svcs2. Computer Software and Svcs
3. Semiconductor Cap Equip.3. Semiconductor
4. Precision Instrument4. Semiconductor Cap Equip.
5. Biotechnology5. Precision Instrument
50. Building Materials50. Insurance (Life)
51. Information Services51. Metal Fabricating
52. Furn/Home Furnishings52. Securities Brokerage
53. Food Processing53. Short ETFs
54. Short ETFs54. Food Processing
55. Advertising55. Advertising
56. Oilfield Svcs/Equipment56. Oilfield Svcs/Equipment
57. Petroleum (Producing)57. Petroleum (Producing)

-- Thomas Bulkowski

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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.