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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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Fundamental Analysis and Position Trading: Evolution of a Trader book.
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Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.
Bulkowski's Blog: ThePatternSite.com
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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 03/27/2017
20,551 -45.74 -0.2%
8,935 6.33 0.1%
702 -3.50 -0.5%
5,840 11.63 0.2%
2,342 -2.39 -0.1%
YTD
4.0%
-1.2%
6.5%
8.5%
4.6%
Tom's Targets    Overview: 03/14/2017
20,100 or 21,250 by 04/15/2017
8,500 or 9,500 by 04/15/2017
675 or 715 by 04/01/2017
5,950 or 5,650 by 04/15/2017
2,275 or 2,425 by 04/15/2017
Mutt Losers: None YTD
Mutt Winners: None YTD

  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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Tuesday 3/28/17. Intraday Market Direction: Dow

The index dropped by -0.2% or -45.74 points. Since 10/01/1928 the index made 1173 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.6% on 590 occasions.
     Average loss was -0.6% on 583 occasions.
Expect the index to close higher 50.3% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 133/225 or 59.1% of the time.
     The prediction of the index closing lower has been right 32/64 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 Dow industrials on the 5 minute scale.

$ $ $

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

The two red lines show support and resistance within the A region.

This is not a rectangle bottom because there are not enough touches of the trendlines.

However, we can consider the move up to the bottom line as a pullback. It just looks like one to me. And that suggests the index will drop on Tuesday.

Additionally, a small double top appears at B, but this hasn't confirmed yet. That means the index still needs to close below the low between the two peaks. If it does that, then look for the index to drop further.

$ $ $

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  20,110.48    
 Weekly S2  20,243.19  132.71   
 Monthly S1  20,330.73  87.54   
 Daily S2  20,348.42  17.69   
 Weekly S1  20,397.09  48.67   
 Low  20,412.80  15.71   Yes! The Low is close to the Weekly S1.
 Daily S1  20,449.70  36.90   
 61.8% Down from Intraday High  20,476.08  26.38   
 Open  20,488.35  12.27   Yes! The Open is close to the 61.8% Down from Intraday High.
 50% Down from Intraday High  20,495.63  7.28   Yes! The 50% Down from Intraday High is close to the Open.
 Daily Pivot  20,514.08  18.45   
 38.2% Down from Intraday High  20,515.18  1.10   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  20,550.98  35.80   
 High  20,578.46  27.48   
 Daily R1  20,615.36  36.90   
 Daily R2  20,679.74  64.38   
 Weekly Pivot  20,683.56  3.82   Yes! The Weekly Pivot is close to the Daily R2.
 Monthly Pivot  20,749.92  66.36   
 Weekly R1  20,837.46  87.54   
 Monthly R1  20,970.17  132.71   
 Weekly R2  21,123.93  153.76   
 Monthly R2  21,389.36  265.43   

Tuesday Special

Picture of the head's law.
Kindle
Paperback
Nook

My first novel, Head's Law appears on the right.

I struggled trying to decide which chapter should be the first one.

Here's the chapter that was to be the opening sequence until the last minute, when I withdrew it. You can read the pdf file. If you like it, consider buying a copy of the book. It's available in kindle, nook, and paperback versions.

$ $ $

I was working in my garage and discovered that a squirrel had used a cabinet as a nest. Lots of eaten acorns loaded with sap and lots of dropping. I found other locations in the garage where it was eating, too. What a mess.


Monday 3/27/17. Market Monday: The Week Ahead

My Prediction

Picture of the Nasdaq composite on the daily scale.

I show the Nasdaq composite on the daily scale.

The index has been climbing for quite a while now without a significant retrace. The rise started at D and climbed up to A.

After A, it has moved sideways, forming another peak at B.

Peak B is slightly higher than A, qualifying it as a 2B pattern.

When the index dropped below the red line at C, it also qualified as a double top.

Both of those patterns suggests the index is going down. However, often the drop after a double top isn't anything to worry about (meaning it'll likely be much less than 20%).

It is time for the indices to retrace. Perhaps the index will just move sideways for several months, bobbing up and down without forming any sustained trend.

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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 8.86 points.
Tuesday: Down 237.75 points.
Wednesday: Down 6.71 points.
Thursday: Down 4.72 points.
Friday: Down 59.86 points.

For the Week...

The Dow industrials were down 317.9 points or 1.5%.
The Nasdaq composite was down 72.26 points or 1.2%.
The S&P 500 index was down 34.27 points or 1.4%.

Year to Date...

Dow Industrials
     2.7% down from the high of 21,169.11 on 03/01/2017.
     4.7% up from the low of 19,677.94 on 01/19/2017.
Nasdaq
     1.7% down from the high of 5,928.06 on 03/21/2017.
     8.0% up from the low of 5,397.99 on 01/03/2017.
S&P 500
     2.4% down from the high of 2,400.98 on 03/01/2017.
     4.4% 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 03/24/2017, the CPI had:

26 bearish patterns,
5 bullish patterns,
244 patterns waiting for breakout.
The CPI signal is 16.1%, 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  20,426  20,511  20,615  20,700  20,804 
Weekly  20,258  20,428  20,699  20,868  21,139 
Monthly  20,126  20,361  20,765  21,001  21,405 
S&P500 (^GSPC): Daily  2,325  2,334  2,345  2,355  2,366 
Weekly  2,308  2,326  2,354  2,372  2,400 
Monthly  2,295  2,319  2,360  2,385  2,425 
Nasdaq (^IXIC): Daily  5,781  5,805  5,832  5,856  5,883 
Weekly  5,700  5,764  5,846  5,911  5,992 
Monthly  5,700  5,764  5,846  5,911  5,992 
  • 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 28.7%   The trend may continue. 
 1 month down 21.1%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week down 27.3%   The trend may continue. 
 1 month down 21.8%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 27.9%   The trend may continue. 
 5 months up 12.2%   Expect a reversal soon. 

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
21Triangle, symmetrical
15Double Top, Adam and Adam
13Head-and-shoulders top
7Triangle, descending
6Rising wedge
5Channel
4Triangle, ascending
4Broadening top
3Pipe bottom
3Double Top, Eve 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. Semiconductor Cap Equip.1. Securities Brokerage
2. Semiconductor2. Human Resources
3. Securities Brokerage3. Semiconductor Cap Equip.
4. Human Resources4. Semiconductor
5. Electronics5. Electronics
50. Retail Store50. Petroleum (Producing)
51. Toiletries/Cosmetics51. Retail Store
52. Retail (Special Lines)52. Toiletries/Cosmetics
53. Petroleum (Producing)53. Biotechnology
54. Natural Gas (Diversified)54. Natural Gas (Diversified)
55. Short ETFs55. Furn/Home Furnishings
56. Furn/Home Furnishings56. Apparel
57. Apparel57. Short ETFs

-- 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.