2019 Forecast Update…

Wednesday 7/10/19. 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.

Although the indicator remains bullish, it’s a near thing. If you look at the thin blue indicator line near the bottom of the chart, you’ll see that it’s been trending lower for about 2 weeks.

I keep looking for bearish divergence, but it’s not there. So far. Because the indicator can rebound quickly, it’s possible that this is momentary weakness and nothing more.

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).

Both lines deteriorated from a week ago, but it’s tough to see on the chart. The red line shows the clearest indication of weakness.

Notice how the red line is struggling to exceed the prior peak in May. Hmm. Overhead resistance? Could be.

Based on this chart, it tells me a weak period is here, but I’m not convinced. Maybe it’s because I’ve been buy more shares recently (think buy-the-dip).

— Thomas Bulkowski

Tuesday 7/9/19. Slider Quiz: Flags!

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 190/314 or 60.5% of the time.

     The prediction of the index closing lower has been right 38/74 or 51.4% of the time.

$ $ $

I show a another slider quiz featuring the flag chart pattern. It’s timely because of the July 4 holiday.

$ $ $

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 7/8/19. Market Monday: The Week Ahead

My Prediction

I show a picture of the Nasdaq composite on the daily scale.

The index, at week’s end, has bumped up against overhead resistance. I show that as a horizontal red line at A. Below that, is a support area, shown by a green horizontal line.

You might say that the composite is bouncing between the two lines, forming a trading range.

But which way will it breakout?

The answer is a guess because no one knows for sure. My guess is upward. Everything seems to be going well, so far. Of course, the US/Iran situation can become worse. The US/China trade
war could get worse. And who knows that antic Trump will stage next in his presidential reality show to upset things and keep the focus on him.

I’m hoping the markets will see the strong employment numbers as a reason to cheer, not worry that the FED will keep interest rates steady or raise them soon.

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.

Monday: Up 117.47 points.

Tuesday: Up 69.25 points.

Wednesday: Up 179.32 points.

Friday: Down 43.88 points.

Saturday: Holiday or other weird event!

For the Week…

The Dow industrials were up 322.16 points or 1.2%.

The Nasdaq composite was up 155.55 points or 1.9%.

The S&P 500 index was up 48.65 points or 1.7%.

Year to Date…

Dow Industrials

     0.2% down from the high of 26,966.00 on 07/03/2019.

     18.9% up from the low of 22,638.41 on 01/03/2019.

Nasdaq

     0.2% down from the high of 8,176.08 on 04/29/2019.

     26.4% up from the low of 6,457.13 on 01/03/2019.

S&P 500

     0.2% down from the high of 2,995.84 on 07/03/2019.

     22.4% up from the low of 2,443.96 on 01/03/2019.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 07/05/2019, the CPI had:

7 bearish patterns,

19 bullish patterns,

349 patterns waiting for breakout.

The CPI signal is 73.1%, which is
bullish (>= 65%).

The chart pattern indicator is bullish
with 1 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:

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

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 will be starting in about 8 days.

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

Friday 7/5/19. 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 593 stocks searched, or 1.7%. Based on the percentage, the stock market is
trending since few consolidation patterns appear.

Excluding ETFs, there were 4 bullish chart patterns this week and 4 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

Definitions

’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.

Industry: IT Services

Industry RS rank: 1 out of 58

Stock RS rank: 180 out of 588

7/3/19 close: $164.09

1 Month avg volatility: $2.50. Volatility stop (for downward breakout): $169.18 or 3.1% above the close.

Change YTD: 25.14%

Volume: 1,938,800 shares.
3 month avg: 2,140,888 shares.

Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Thursday.

 

Chart pattern: Head-and-shoulders top reversal pattern from 06/11/2019 to 07/01/2019

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.

Industry: Insurance (Prop/Casualty)

Industry RS rank: 14 out of 58

Stock RS rank: 353 out of 588

7/3/19 close: $128.70

1 Month avg volatility: $2.11. Volatility stop (for downward breakout): $133.84 or 4.0% above the close.

Change YTD: 10.22%

Volume: 143,200 shares.
3 month avg: 201,215 shares.

Since 2009 bear market, the best buy day (fewest up closes) is Friday, and best sell day (most up closes) is Monday.

 

Chart pattern: Roof, inverted reversal pattern from 06/17/2019 to 07/03/2019

Breakout is downward 50% of the time.

Average decline: 17%.

Break-even failure rate: 10%.

Pullbacks occur 56% of the time.

Price hits measure rule target 73% of the time.

Industry: Diversified Co.

Industry RS rank: 37 out of 58

Stock RS rank: 122 out of 588

7/3/19 close: $26.97

1 Month avg volatility: $0.72. Volatility stop (for upward breakout): $25.38 or 5.9% below the close.

Change YTD: 35.80%

Volume: 246,000 shares.
3 month avg: 523,465 shares.

Since 2009 bear market, the best buy day (fewest up closes) is Monday, and best sell day (most up closes) is Wednesday.

 

Chart pattern: Triangle, symmetrical continuation pattern from 06/06/2019 to 06/27/2019

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.

Industry: Electric Utility (West)

Industry RS rank: 24 out of 58

Stock RS rank: 305 out of 588

7/3/19 close: $103.59

1 Month avg volatility: $1.71. Volatility stop (for downward breakout): $107.39 or 3.7% above the close.

Change YTD: 11.32%

Volume: 551,400 shares.
3 month avg: 199,551 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, right-angled and ascending reversal pattern from 05/08/2019 to 07/03/2019

Breakout is downward 66% of the time.

Average decline: 15%.

Break-even failure rate: 20%.

Pullbacks occur 65% of the time.

Price hits measure rule target 32% of the time.

Industry: Metal Fabricating

Industry RS rank: 20 out of 58

Stock RS rank: 265 out of 588

7/3/19 close: $150.10

1 Month avg volatility: $2.47. Volatility stop (for upward breakout): $144.18 or 3.9% below the close.

Change YTD: 18.48%

Volume: 688,400 shares.
3 month avg: 1,139,580 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 06/11/2019 to 07/03/2019

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.

Industry: Chemical (Basic)

Industry RS rank: 29 out of 58

Stock RS rank: 441 out of 588

7/3/19 close: $21.38

1 Month avg volatility: $0.69. Volatility stop (for upward breakout): $19.44 or 9.1% below the close.

Change YTD: 6.32%

Volume: 951,500 shares.
3 month avg: 1,697,154 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: Triangle, symmetrical continuation pattern from 05/31/2019 to 07/03/2019

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.

Industry: Apparel

Industry RS rank: 57 out of 58

Stock RS rank: 466 out of 588

7/3/19 close: $72.80

1 Month avg volatility: $2.44. Volatility stop (for downward breakout): $77.86 or 7.0% above the close.

Change YTD: 2.48%

Volume: 120,300 shares.
3 month avg: 144,562 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: Three Falling Peaks reversal pattern from 06/13/2019 to 07/01/2019

Breakout is downward 100% of the time.

Average decline: 17%.

Break-even failure rate: 12%.

Pullbacks occur 59% of the time.

Price hits measure rule target 33% of the time.

Industry: Homebuilding

Industry RS rank: 30 out of 58

Stock RS rank: 197 out of 588

7/3/19 close: $32.68

1 Month avg volatility: $0.74. Volatility stop (for downward breakout): $34.35 or 5.1% above the close.

Change YTD: 25.74%

Volume: 1,653,900 shares.
3 month avg: 4,812,565 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: Broadening top, right-angled and ascending reversal pattern from 04/24/2019 to 06/27/2019

Breakout is downward 66% of the time.

Average decline: 15%.

Break-even failure rate: 20%.

Pullbacks occur 65% of the time.

Price hits measure rule target 32% of the time.

Industry: Apparel

Industry RS rank: 57 out of 58

Stock RS rank: 431 out of 588

7/3/19 close: $110.49

1 Month avg volatility: $2.96. Volatility stop (for downward breakout): $117.07 or 6.0% above the close.

Change YTD: 6.79%

Volume: 1,095,800 shares.
3 month avg: 1,365,482 shares.

Since 2009 bear market, the best buy day (fewest up closes) is Wednesday, and best sell day (most up closes) is Monday.

 

Chart pattern: Double Top, Adam and Adam reversal pattern from 06/24/2019 to 07/01/2019

Breakout is downward 100% of the time.

Average decline: 19%.

Break-even failure rate: 8%.

Pullbacks occur 61% of the time.

Price hits measure rule target 72% of the time.

Industry: Packaging and Container

Industry RS rank: 6 out of 58

Stock RS rank: 94 out of 588

7/3/19 close: $31.61

1 Month avg volatility: $0.48. Volatility stop (for upward breakout): $30.05 or 5.0% below the close.

Change YTD: 33.83%

Volume: 691,800 shares.
3 month avg: 499,285 shares.

Since 2009 bear market, the best buy day (fewest up closes) is Thursday, and best sell day (most up closes) is Friday.

 

Chart pattern: Triangle, symmetrical continuation pattern from 05/31/2019 to 06/27/2019

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.

Wednesday 7/3/19. Midyear Forecast

I show the Dow industrials plotted on the daily scale, year to date. The red line is the predicted path of the Dow.

The prediction is a mechanical thing, where I sum the daily Dow values from the start of data until today, grouping those with years ending in 9 (like 1929, 1939, etc).
The theory is that the markets show a 10-year cycle. (I didn’t invent this, by the way).

You can read more at this link.

If you flip the red line, it would probably look better (I wanted to do that, but couldn’t figure out how. Sorry.)

This chart is the same as the last one, but after I removed the 2007-2009 bear market from the data. The thinking here is that a bear market won’t happen in 2019, so
excluding that one-time event makes sense. Clearly we haven’t had a bear market since then.

Notice that the red line tracks the Dow better. The markets should continue higher until late August when fall weakness sets in and takes the Dow to the October low.

Of the three charts, this one is the most accurate (because of the way the averages are calculated).

It’s shown on the weekly scale but it includes bear market data.

I drew horizontal and vertical lines so you can more easily see where peaks or valleys will occur and at what price.

If the chart is correct, then look for the Dow to peak in January 2020 and drop for about 6 weeks before recovering.

Of course, the big decline will occur in May 2021 when the Dow drops from 30,700 to about 26,000 or 16%. That misses being a bear market by four percentage points, but it’ll still hurt
your portfolio. Buying in September of that year will be a terrific idea.

Keep in mind that these predictions are rarely accurate but you can see for yourself at the link. Years 2009 and 2016 were accurate at year end. Years 2011 and 2013
got the trend right.

— Thomas Bulkowski

Tuesday 7/2/19. Slider Quiz!

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 189/313 or 60.4% of the time.

     The prediction of the index closing lower has been right 38/74 or 51.4% of the time.

$ $ $

I show a another slider quiz featuring the rising wedge chart pattern.

$ $ $

I released research on V-bottoms.

$ $ $

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 7/1/19. Market Monday: The Week Ahead

My Prediction

I show the Dow transports on the daily scale.

This chart reminds me of a head-and-shoulders top chart pattern.

I show that on the chart as LS for the left shoulder, head in the middle, and RS for right shoulder.

The right shoulder isn’t symmetrical in height with the left shoulder, so that’s a problem. It’s possible that the right shoulder mirrors the bump to the right of the left shoulder.
I show that mirror as AB.

That means the transports will continue to rise to meet the height of the left shoulder (a rise to the RS label, if it works perfectly).

There’s an additional problem, of course. The chart pattern has to confirm. And that means the index has to close below the neckline (drawn on the chart as a thin brown line).
The neckline is an imaginary line connecting
the two armpits. In this case, I’d draw it horizontally starting from the valley below the green line. That would get you into a trade sooner than the traditional neckline approach.

The green line at this link shows the traditional view of a neckline.

If the chart pattern behaves perfectly, then look for the transports to rise to the RS label before tumbling to close below the price of the valley below the green line (C, shown as a
thin blue line).

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.

Monday: Up 8.41 points.

Tuesday: Down 179.32 points.

Wednesday: Down 11.4 points.

Thursday: Down 10.24 points.

Friday: Up 73.38 points.

For the Week…

The Dow industrials were down 119.17 points or 0.4%.

The Nasdaq composite was down 25.47 points or 0.3%.

The S&P 500 index was down 8.7 points or 0.3%.

Year to Date…

Dow Industrials

     1.1% down from the high of 26,907.37 on 06/21/2019.

     17.5% up from the low of 22,638.41 on 01/03/2019.

Nasdaq

     2.1% down from the high of 8,176.08 on 04/29/2019.

     24.0% up from the low of 6,457.13 on 01/03/2019.

S&P 500

     0.8% down from the high of 2,964.15 on 06/21/2019.

     20.4% up from the low of 2,443.96 on 01/03/2019.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 06/28/2019, the CPI had:

4 bearish patterns,

68 bullish patterns,

290 patterns waiting for breakout.

The CPI signal is 94.4%, which is
bullish (>= 65%).

The chart pattern indicator is bullish
with 1 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:

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

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

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