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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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Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 08/20/2014
16,979 59.54 0.4%
8,461 46.08 0.5%
556 1.28 0.2%
4,526 -1.03 0.0%
1,987 4.91 0.2%
YTD
2.4%
14.3%
13.3%
8.4%
7.5%
Tom's Targets    Overview: 08/14/2014
17,150 or 16,500 by 09/01/2014
8,700 or 8,000 by 09/01/2014
560 or 525 by 09/01/2014
4,600 or 4,300 by 09/01/2014
2,000 or 1,880 by 09/01/2014

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

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Thursday 8/21/14. Intraday Market Direction: Nasdaq

The index dropped by 0.0% or -1.03 points. Since 02/05/1971 the index made 590 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.8% on 329 occasions.
     Average loss was -1.0% on 261 occasions.
Expect the index to close higher 55.8% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 66/116 or 56.9% of the time.
     The prediction of the index closing lower has been right 25/50 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.

The red line just shows the trend. It's not supposed to be significant in any other manner. I just penciled it in. Notice how the line moves up smartly until yesterday. Then the trend flattens.

What does this mean? Slackening momentum. It's like tossing a ball into the air. The ball rises, turns, and heads back down. That is what I believe is happening to the Nasdaq.

The Nasdaq is leading the other indices higher, but it's looking tired. A review of some stocks shows that many are turning down, too. Weakness. Loss of momentum. Choose your phrase.

While it's possible the index is only taking a break in the upward move, I expect a retrace. My guess is a drop to 4,500 tomorrow. After that, we'll see.

$ $ $

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  4,281.01    
 Weekly S2  4,349.63  68.62   
 Monthly S1  4,403.75  54.11   
 Weekly S1  4,438.06  34.31   
 Monthly Pivot  4,444.62  6.57   
 Weekly Pivot  4,460.26  15.64   
 Daily S2  4,507.79  47.53   
 Low  4,515.73  7.94   
 Daily S1  4,517.14  1.41   Yes! The Daily S1 is close to the Low.
 Open  4,517.75  0.61   Yes! The Open is close to the Daily S1.
 61.8% Down from Intraday High  4,522.33  4.58   
 50% Down from Intraday High  4,524.37  2.04   
 Daily Pivot  4,525.07  0.70   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High  4,526.41  1.34   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close  4,526.48  0.07   Yes! The Close is close to the 38.2% Down from Intraday High.
 High  4,533.01  6.53   
 Daily R1  4,534.42  1.41   Yes! The Daily R1 is close to the High.
 Daily R2  4,542.35  7.94   
 Weekly R1  4,548.69  6.33   
 Monthly R1  4,567.36  18.67   
 Weekly R2  4,570.89  3.54   
 Monthly R2  4,608.23  37.34   

Wednesday 8/20/14. Market Direction: CPI

My post called "What's Hot Wednesday's" is gone. It appears I was the only person on the planet that liked that post (mostly because I could just push a button to produce it). Instead, I'll be focusing on the chart pattern indicator (CPI). I find the CPI important when predicting the future direction of the market. You can find signal changes at the top of most pages and on the home page. Those are updated daily, after the close. CPI charts, three of them, are posted here after the close each Friday.

Although this indicator seems to have good timing, it has it's flaws. Don't use it to trade. Rather, use it as background information. Signals can change for up to a week, but are usually stable after three days. Keep that in mind.

Picture of the chart pattern indicator

This chart shows the CPI as a line chart under the S&P 500 index. You can see divergence in prior weeks but I didn't highlight them today. The red line is interesting.

Why? Because the indicator begins rising after the red line even as the index is making lower lows. It's a form of divergence. Now, the indicator is bumping up against 100%, so it won't go any higher.

Picture of the chart pattern indicator

This chart shows that the move up is robust. Green bars (bullish) appear as of today. There is no clear bars (neutral) nor red bars (bearish). As of Tuesday's close, the up move is still intact and strong.

My concern is not with the CPI but with overhead resistance setup by the prior peak in the index. My guess is that the CPI will turn neutral soon and the index will round over and start to head down. For right now, though, the CPI says everything looks good.

-- Thomas Bulkowski

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Tuesday 8/19/14. Intraday Market Direction: Dow

The index climbed by 1.1% or 175.83 points. Since 10/01/1928 the index made 343 similar moves on a percentage basis. After those moves, the next day's...
     Average gain was 0.7% on 199 occasions.
     Average loss was -0.9% on 144 occasions.
Expect the index to close higher 58.0% of the time.
Weekly, since inception on 6/14/2011:
     The prediction of the index closing higher has been right 78/122 or 63.9% of the time.
     The prediction of the index closing lower has been right 21/39 or 53.8% 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.

Look at the Elliott wave sequence 1 through 5. Odd numbered waves move up, even ones move down. When wave 5 ends, price is supposed to make an ABC correction, which I show in blue (I'm just showing the waveform, not making a 16,600 prediction.).

Do I believe that is going to happen? No. Why not?

I dislike Elliott wave. It seems to me that even the experts can't agree on the wave count. For example, the 1-5 sequence could extend, forming waves 6 and 7, 8 and 9, and so on. The same type of complaint can be lodged against chart patterns, of course. Let's set that argument aside.

My view is that tomorrow the Dow will close higher, following the red arrow. Wave 5 could be the start of a measured move up chart pattern. I am hopeful of this because the above probabilities suggest a higher close and the last half hour of today's market saw the Dow trending upward.

Here is the measure rule for measured move up chart patterns (a way to pick a target)...

Eyeballing the chart, starting with the low on Friday to today's high, we get a move of about 250 points. Add that to the low today of 16,820 (the low around 3:30 in the corrective phase), and you get a target of 17,070.

Will the Dow jump 250 points? Doubtful, even if you factor in a multiple-day gain. Since this method works just 45% of the time, let's multiply the 250 height by 45% to get a closer target: ~16,950. That will be my guess.

$ $ $

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  15,956.91    
 Monthly S1  16,397.83  440.91   
 Weekly S2  16,453.48  55.65   
 Daily S2  16,605.34  151.86   
 Weekly S1  16,646.11  40.77   
 Low  16,664.45  18.34   
 Open  16,664.45  0.00   Yes! The Open is close to the Low.
 Weekly Pivot  16,710.69  46.24   
 Daily S1  16,722.04  11.35   Yes! The Daily S1 is close to the Weekly Pivot.
 61.8% Down from Intraday High  16,731.61  9.57   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High  16,752.36  20.75   
 38.2% Down from Intraday High  16,773.10  20.75   
 Monthly Pivot  16,774.69  1.59   Yes! The Monthly Pivot is close to the 38.2% Down from Intraday High.
 Daily Pivot  16,781.15  6.46   Yes! The Daily Pivot is close to the Monthly Pivot.
 Close  16,838.74  57.59   
 High  16,840.26  1.52   Yes! The High is close to the Close.
 Daily R1  16,897.85  57.59   
 Weekly R1  16,903.32  5.47   Yes! The Weekly R1 is close to the Daily R1.
 Daily R2  16,956.96  53.64   
 Weekly R2  16,967.90  10.94   Yes! The Weekly R2 is close to the Daily R2.
 Monthly R1  17,215.61  247.71   
 Monthly R2  17,592.47  376.87   

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