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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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Busted
Patterns
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 08/17/2018
25,669 110.59 0.4%
11,228 37.37 0.3%
744 2.94 0.4%
7,816 9.81 0.1%
2,850 9.44 0.3%
YTD
3.8%
5.8%
2.8%
13.2%
6.6%
Tom's Targets    Overview: 08/14/2018
26,200 or 24,700 by 09/01/2018
11,400 or 10,700 by 09/01/2018
750 or 700 by 09/01/2018
8,250 or 7,600 by 09/01/2018
2,900 or 2,775 by 09/01/2018

  Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

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Monday 8/20/18. Market Monday: The Week Ahead

My Prediction

Picture of the NASDAQ on the daily scale.

I show the Nasdaq composite on the daily scale.

After I drew the two red lines, the pattern reminded me of a rising wedge.

The rising wedge has two rising and converging trendlines.

What interests me most is that price failed to rise up to the top trendline at A.

I've written about partial rises before (this week, in fact) but not in a wedge.

A partial rise suggests weakness. Indeed, the index has dropped to the bottom trendline. We'll have to wait and see if the index will bounce off that line and move upward or drop through it.

With so many prior trendline touches (6 so far), a pierce would be a significant event. But it also denotes strength (support), so we could see a bounce upward.

Of course, one could argue that so many trendline touches means support has burned away and it's time for a plunge.

I hate saying I don't know what's going to happen, but it's true.

$ $ $

I updated the statistics on the cup with handle chart pattern. The performance has improved...

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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 125.44 points.
Tuesday: Up 112.22 points.
Wednesday: Down 137.51 points.
Thursday: Up 396.32 points.
Friday: Up 110.59 points.

For the Week...

The Dow industrials were up 356.18 points or 1.4%.
The Nasdaq composite was down 22.78 points or 0.3%.
The S&P 500 index was up 16.55 points or 0.6%.

Year to Date...

Dow Industrials
     3.6% down from the high of 26,616.71 on 01/26/2018.
     10.0% up from the low of 23,344.52 on 04/02/2018.
Nasdaq
     1.5% down from the high of 7,933.31 on 07/25/2018.
     17.9% up from the low of 6,630.67 on 02/09/2018.
S&P 500
     0.8% down from the high of 2,872.87 on 01/26/2018.
     12.5% up from the low of 2,532.69 on 02/09/2018.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 08/17/2018, the CPI had:

5 bearish patterns,
22 bullish patterns,
290 patterns waiting for breakout.
The CPI signal is 81.5%, 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  25,433  25,551  25,640  25,758  25,846 
Weekly  24,692  25,181  25,454  25,943  26,217 
Monthly  24,591  25,130  25,429  25,968  26,267 
S&P500 (^GSPC): Daily  2,825  2,837  2,847  2,859  2,868 
Weekly  2,783  2,817  2,836  2,870  2,889 
Monthly  2,760  2,805  2,834  2,879  2,908 
Nasdaq (^IXIC): Daily  7,722  7,769  7,800  7,847  7,878 
Weekly  7,657  7,736  7,813  7,892  7,969 
Monthly  7,456  7,636  7,785  7,965  8,114 
  • 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 44.9%   Expect a random direction. 
 2 months up 41.6%   Expect a random direction. 
 S & P 500 (^GSPC) 1 week up 45.4%   Expect a random direction. 
 5 months up 19.5%   Expect a reversal soon. 
 Nasdaq composite (^IXIC) 1 week down 28.3%   The trend may continue. 
 5 months up 16.6%   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 either underway or should be starting soon. The sessions could be more volatile.

 Found Chart Pattern Name
14Triangle, symmetrical
11Dead-cat bounce
6Double Bottom, Adam and Adam
6Head-and-shoulders top
5Pipe top
5Triple top
5Double Top, Adam and Eve
5Pipe bottom
5Double Top, Adam and Adam
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. Healthcare Information1. Healthcare Information
2. Short ETFs2. Computers and Peripherals
3. Computers and Peripherals3. Computer Software and Svcs
4. Shoe4. Shoe
5. Medical Services5. Human Resources

-- Thomas Bulkowski

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Friday 8/17/18. 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 610 stocks searched, or 1.6%. 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 4 bullish chart patterns this week and 5 bearish ones with any remaining (2) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bearish (down) 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
ALKDiamond top      07/09/201808/15/2018Air Transport
AAPLFlag      08/03/201808/15/2018Computers and Peripherals
BMITriangle, symmetrical      07/23/201808/16/2018Precision Instrument
EDTriangle, ascending      07/13/201808/14/2018Electric Utility (East)
COPHead-and-shoulders top      07/30/201808/14/2018Petroleum (Integrated)
EFXBroadening top      06/11/201808/16/2018Information Services
JCPDead-cat bounce      08/16/201808/16/2018Retail Store
LAMRBroadening wedge, ascending      07/19/201808/15/2018Advertising
NJRBroadening top      07/19/201808/16/2018Natural Gas (Distributor)
TPRPipe bottom      07/30/201808/06/2018Apparel
TUESRectangle bottom      06/04/201808/16/2018Retail Store

 

Weekly screen for chart patterns ending between 08/09/2018 and 08/16/2018. 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.
 
Alaska Air Group, Inc (ALK)
Industry: Air Transport
Industry RS rank: 32 out of 58
Stock RS rank: 412 out of 603
8/16/18 close: $64.31
1 Month avg volatility: $1.84. Volatility stop (for downward breakout): $69.06 or 7.4% above the close.
Change YTD: -12.52%
Volume: 2,063,200 shares. 3 month avg: 1,966,126 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: Diamond top reversal pattern from 07/09/2018 to 08/15/2018
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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Apple Inc. (AAPL)
Industry: Computers and Peripherals
WARNING: This industry is within the top 7 that Dead-cat bounce often.
Industry RS rank: 3 out of 58
Stock RS rank: 84 out of 603
8/16/18 close: $213.32
1 Month avg volatility: $3.00. Volatility stop (for upward breakout): $205.47 or 3.7% below the close.
Change YTD: 26.05%
Volume: 27,611,400 shares. 3 month avg: 27,687,312 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Monday.
 
Chart pattern: Flag continuation pattern from 08/03/2018 to 08/15/2018
Breakout is upward 54% of the time.
Average rise: 23%.
Break-even failure rate: 4%.
Throwbacks occur 43% of the time.
Price hits measure rule target 64% of the time.

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Badger Meter Inc. (BMI)
Industry: Precision Instrument
Industry RS rank: 38 out of 58
Stock RS rank: 288 out of 603
8/16/18 close: $52.05
1 Month avg volatility: $1.34. Volatility stop (for upward breakout): $49.22 or 5.4% below the close.
Change YTD: 8.89%
Volume: 69,800 shares. 3 month avg: 149,246 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: Triangle, symmetrical continuation pattern from 07/23/2018 to 08/16/2018
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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Con Edison, Inc (ED)
Industry: Electric Utility (East)
Industry RS rank: 22 out of 58
Stock RS rank: 294 out of 603
8/16/18 close: $80.71
1 Month avg volatility: $1.08. Volatility stop (for upward breakout): $77.25 or 4.3% below the close.
Change YTD: -4.99%
Volume: 2,286,900 shares. 3 month avg: 1,605,666 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: Triangle, ascending reversal pattern from 07/13/2018 to 08/14/2018
Breakout is upward 70% of the time.
Average rise: 35%.
Break-even failure rate: 13%.
Throwbacks occur 57% of the time.
Price hits measure rule target 75% of the time.

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ConocoPhillips (COP)
Industry: Petroleum (Integrated)
Industry RS rank: 12 out of 58
Stock RS rank: 94 out of 603
8/16/18 close: $69.41
1 Month avg volatility: $1.21. Volatility stop (for downward breakout): $72.09 or 3.9% above the close.
Change YTD: 26.45%
Volume: 5,418,000 shares. 3 month avg: 6,156,062 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 07/30/2018 to 08/14/2018
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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Equifax Inc (EFX)
Industry: Information Services
Industry RS rank: 24 out of 58
Stock RS rank: 191 out of 603
8/16/18 close: $129.76
1 Month avg volatility: $1.75. Volatility stop (for downward breakout): $133.99 or 3.3% above the close.
Change YTD: 10.04%
Volume: 485,600 shares. 3 month avg: 3,458,600 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: Broadening top reversal pattern from 06/11/2018 to 08/16/2018
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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JC Penney Company Inc (JCP)
Industry: Retail Store
Industry RS rank: 20 out of 58
Stock RS rank: 600 out of 603
8/16/18 close: $1.76
1 Month avg volatility: $0.11. Volatility stop (for downward breakout): $2.19 or 24.3% above the close.
Change YTD: -44.30%
Volume: 83,752,400 shares. 3 month avg: 17,298,666 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: Dead-cat bounce continuation pattern from 08/16/2018 to 08/16/2018
Breakout is downward 67% of the time.
Average decline: 18%.

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Lamar Advertising (LAMR)
Industry: Advertising
Industry RS rank: 55 out of 58
Stock RS rank: 219 out of 603
8/16/18 close: $75.75
1 Month avg volatility: $1.14. Volatility stop (for downward breakout): $78.23 or 3.3% above the close.
Change YTD: 2.03%
Volume: 360,100 shares. 3 month avg: 612,354 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Thursday.
 
Chart pattern: Broadening wedge, ascending reversal pattern from 07/19/2018 to 08/15/2018
Breakout is downward 73% of the time.
Average decline: 17%.
Break-even failure rate: 11%.
Pullbacks occur 57% of the time.
Price hits measure rule target 58% of the time.

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New Jersey Resources Corp (NJR)
Industry: Natural Gas (Distributor)
Industry RS rank: 10 out of 58
Stock RS rank: 110 out of 603
8/16/18 close: $46.90
1 Month avg volatility: $0.90. Volatility stop (for downward breakout): $48.89 or 4.2% above the close.
Change YTD: 16.67%
Volume: 315,200 shares. 3 month avg: 424,785 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: Broadening top reversal pattern from 07/19/2018 to 08/16/2018
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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Tapestry Inc (TPR)
Industry: Apparel
Industry RS rank: 21 out of 58
Stock RS rank: 355 out of 603
8/16/18 close: $51.38
1 Month avg volatility: $1.16. Volatility stop (for upward breakout): $48.48 or 5.7% below the close.
Change YTD: 16.17%
Volume: 3,721,800 shares. 3 month avg: 3,145,718 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: Pipe bottom reversal pattern from 07/30/2018 to 08/06/2018
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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Tuesday Morning Corp (TUES)
Industry: Retail Store
Industry RS rank: 20 out of 58
Stock RS rank: 377 out of 603
8/16/18 close: $3.00
1 Month avg volatility: $0.11. Volatility stop (for downward breakout): $3.28 or 9.2% above the close.
Change YTD: 9.09%
Volume: 312,600 shares. 3 month avg: 391,566 shares.
Since 2009 bear market, the best buy day (fewest up closes) is Tuesday, and best sell day (most up closes) is Monday.
 
Chart pattern: Rectangle bottom continuation pattern from 06/04/2018 to 08/16/2018
Breakout is downward 55% of the time.
Average decline: 14%.
Break-even failure rate: 16%.
Pullbacks occur 69% of the time.
Price hits measure rule target 50% of the time.

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Thursday 8/16/18. Intraday Market Direction: Nasdaq

The index dropped by -1.2% or -96.77 points. Since 02/05/1971 the index made 113 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 1.0% on 47 occasions.
     Average loss was -1.4% on 66 occasions.
Expect the index to close lower 58.4% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 150/272 or 55.1% of the time.
     The prediction of the index closing lower has been right 46/91 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 took a big dive right from the opening. It hit bottom at A, bounced up to the red line, and then dropped back down to B.

That pattern formed the beginning of a double bottom.

The pattern became real when the index closed above the red line. The problem is, I'm not sure it's happened yet. If it has, then it suggests an upward move tomorrow. No guarantees, of course and I've been wrong a lot recently. The above probabilities suggest a lower close, too, so who knows what will happen.

$ $ $

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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© 2018 ThePatternSite.com    Metric  Value  Diff  Close (within 10% of the high-low range for the day)? 
 Monthly S2  7,420.70    
 Monthly S1  7,597.41  176.71   
 Daily S2  7,679.85  82.44   
 Weekly S2  7,711.65  31.79   
 Daily S1  7,726.99  15.34   
 Low  7,732.69  5.70   Yes! The Low is close to the Daily S1.
 Weekly S1  7,742.88  10.19   
 Monthly Pivot  7,765.36  22.48   
 61.8% Down from Intraday High  7,770.88  5.52   Yes! The 61.8% Down from Intraday High is close to the Monthly Pivot.
 Close  7,774.12  3.24   Yes! The Close is close to the 61.8% Down from Intraday High.
 Daily Pivot  7,779.82  5.70   Yes! The Daily Pivot is close to the Close.
 50% Down from Intraday High  7,782.67  2.85   Yes! The 50% Down from Intraday High is close to the Daily Pivot.
 38.2% Down from Intraday High  7,794.47  11.80   
 Open  7,810.02  15.55   
 Daily R1  7,826.96  16.94   
 High  7,832.66  5.70   Yes! The High is close to the Daily R1.
 Weekly Pivot  7,833.12  0.46   Yes! The Weekly Pivot is close to the High.
 Weekly R1  7,864.35  31.24   
 Daily R2  7,879.79  15.44   
 Monthly R1  7,942.07  62.28   
 Weekly R2  7,954.59  12.52   
 Monthly R2  8,110.02  155.43   

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.