Chart Pattern Indicator: Up Today Then What?…

Monday 6/10/19. Market Monday: The Week Ahead

My Prediction

I show the S&P 500 index on the daily chart.

Here’s how the index might do over the coming week and maybe beyond.

I’m writing this on Friday night, so we may know who won the trade war with Mexico on Monday. I’ve said I think this is another game, fake news, by Trump. So the markets might shoot higher on
Trump saying ‘just kidding.’ The administration is already making noises about that outlook now.

Here’s another view, though. The chart shows a measured move down pattern from ABCD. Some Elliott wavers might see this as an ABC correction,
which is fine.

After a measured move down ends, you’ll see price drift back up to the corrective phase. That’s BC on the chart. That move happened this week. The real question is, what happens next?

Elliott wavers will say a new motive wave will occur to send the index higher.

I show what might happen on the chart. The index drops. Maybe it’ll be because of the trade war getting worse. My book,
Chart Patterns: After the Buy
spells out what is likely to happen.

The stats say there’s a 67% chance the index will breakout downward. That’s not a guarantee, of course. The book shows a pic of price recovering to BC in a short stair-step move (which didn’t happen in this
case) before heading lower. Those measured moves which breakout upward also show a stair-step move but continue higher thereafter, closing above A.

If the trade war ends, the index will just continue rising, probably to the price of A, maybe higher.

On Monday, we should have some kind of indication of how the coming days will unfold.

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I updated the performance stats of the bullish Gartley.

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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 4.74 points.

Tuesday: Up 512.4 points.

Wednesday: Up 207.39 points.

Thursday: Up 181.09 points.

Friday: Up 263.28 points.

For the Week…

The Dow industrials were up 1168.9 points or 4.7%.

The Nasdaq composite was up 288.95 points or 3.9%.

The S&P 500 index was up 121.28 points or 4.4%.

Year to Date…

Dow Industrials

     2.7% down from the high of 26,695.96 on 04/23/2019.

     14.8% up from the low of 22,638.41 on 01/03/2019.

Nasdaq

     5.3% down from the high of 8,176.08 on 04/29/2019.

     19.9% up from the low of 6,457.13 on 01/03/2019.

S&P 500

     2.7% down from the high of 2,954.13 on 05/01/2019.

     17.6% 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 06/07/2019, the CPI had:

5 bearish patterns,

50 bullish patterns,

279 patterns waiting for breakout.

The CPI signal is 90.9%, which is
bullish (>= 65%).

The chart pattern indicator is bullish
with 1 of 3 half 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

Friday 6/7/19. 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 19 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 594 stocks searched, or 3.2%. Based on the percentage, the stock market is
trending since few consolidation patterns appear.

I found 2 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 13 bullish chart patterns this week and 4 bearish ones with any remaining (4) being undecided.
The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) 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: Medical Services

Industry RS rank: 44 out of 58

Stock RS rank: 20 out of 589

6/6/19 close: $20.79

1 Month avg volatility: $0.93. Volatility stop (for upward breakout): $18.79 or 9.6% below the close.

Change YTD: 80.78%

Volume: 102,500 shares.
3 month avg: 533,922 shares.

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

 

Chart pattern: Triangle, symmetrical continuation pattern from 03/28/2019 to 06/03/2019

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: Electric Utility (East)

Industry RS rank: 24 out of 58

Stock RS rank: 212 out of 589

6/6/19 close: $16.96

1 Month avg volatility: $0.34. Volatility stop (for upward breakout): $15.73 or 7.3% below the close.

Change YTD: 17.29%

Volume: 9,395,300 shares.
3 month avg: 5,494,342 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: Double Bottom, Eve and Eve reversal pattern from 05/09/2019 to 05/31/2019

Breakout is upward 100% of the time.

Average rise: 40%.

Break-even failure rate: 4%.

Throwbacks occur 55% of the time.

Price hits measure rule target 67% of the time.

Industry: Air Transport

Industry RS rank: 57 out of 58

Stock RS rank: 86 out of 589

6/6/19 close: $22.10

1 Month avg volatility: $0.68. Volatility stop (for downward breakout): $23.96 or 8.4% above the close.

Change YTD: -3.11%

Volume: 199,500 shares.
3 month avg: 530,657 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: Triangle, descending reversal pattern from 05/07/2019 to 06/03/2019

Breakout is downward 64% of the time.

Average decline: 16%.

Break-even failure rate: 16%.

Pullbacks occur 54% of the time.

Price hits measure rule target 54% of the time.

Industry: Biotechnology

Industry RS rank: 52 out of 58

Stock RS rank: 475 out of 589

6/6/19 close: $174.45

1 Month avg volatility: $3.09. Volatility stop (for upward breakout): $167.90 or 3.8% below the close.

Change YTD: -10.39%

Volume: 2,353,300 shares.
3 month avg: 2,770,322 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: Double Bottom, Adam and Adam reversal pattern from 05/15/2019 to 05/31/2019

Breakout is upward 100% of the time.

Average rise: 35%.

Break-even failure rate: 5%.

Throwbacks occur 64% of the time.

Price hits measure rule target 66% of the time.

Industry: Building Materials

Industry RS rank: 17 out of 58

Stock RS rank: 14 out of 589

6/6/19 close: $94.70

1 Month avg volatility: $1.56. Volatility stop (for upward breakout): $90.05 or 4.9% below the close.

Change YTD: 62.69%

Volume: 234,900 shares.
3 month avg: 508,948 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: Triangle, ascending reversal pattern from 04/29/2019 to 05/31/2019

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.

Industry: Precision Instrument

Industry RS rank: 15 out of 58

Stock RS rank: 354 out of 589

6/6/19 close: $55.01

1 Month avg volatility: $1.15. Volatility stop (for upward breakout): $51.73 or 6.0% below the close.

Change YTD: 11.79%

Volume: 103,400 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 05/16/2019 to 05/31/2019

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: Retail (Special Lines)

Industry RS rank: 51 out of 58

Stock RS rank: 195 out of 589

6/6/19 close: $5.84

1 Month avg volatility: $0.26. Volatility stop (for upward breakout): $5.18 or 11.3% below the close.

Change YTD: 47.85%

Volume: 156,500 shares.
3 month avg: 99,982 shares.

This security may be thinly traded (less than 100k 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: Horn bottom reversal pattern from 05/13/2019 to 05/28/2019

Breakout is upward 100% of the time.

Average rise: 35%.

Break-even failure rate: 9%.

Throwbacks occur 29% of the time.

Price hits measure rule target 76% of the time.

Industry: Machinery

Industry RS rank: 14 out of 58

Stock RS rank: 108 out of 589

6/6/19 close: $38.55

1 Month avg volatility: $1.19. Volatility stop (for upward breakout): $35.66 or 7.5% below the close.

Change YTD: 27.90%

Volume: 56,700 shares.
3 month avg: 120,960 shares.

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

 

Chart pattern: Pipe bottom reversal pattern from 05/20/2019 to 05/28/2019

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.

Industry: Telecom. Equipment

Industry RS rank: 9 out of 58

Stock RS rank: 299 out of 589

6/6/19 close: $26.54

1 Month avg volatility: $0.75. Volatility stop (for upward breakout): $23.26 or 12.4% below the close.

Change YTD: 9.04%

Volume: 652,100 shares.
3 month avg: 255,535 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: Double Bottom, Eve and Adam reversal pattern from 03/27/2019 to 05/31/2019

Breakout is upward 100% of the time.

Average rise: 35%.

Break-even failure rate: 4%.

Throwbacks occur 57% of the time.

Price hits measure rule target 66% of the time.

Industry: Information Services

Industry RS rank: 8 out of 58

Stock RS rank: 236 out of 589

6/6/19 close: $42.31

1 Month avg volatility: $0.84. Volatility stop (for upward breakout): $39.80 or 5.9% below the close.

Change YTD: 26.60%

Volume: 424,300 shares.
3 month avg: 487,489 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: Double Bottom, Eve and Adam reversal pattern from 05/15/2019 to 06/03/2019

Breakout is upward 100% of the time.

Average rise: 35%.

Break-even failure rate: 4%.

Throwbacks occur 57% of the time.

Price hits measure rule target 66% of the time.

Industry: Retail Store

Industry RS rank: 45 out of 58

Stock RS rank: 247 out of 589

6/6/19 close: $251.21

1 Month avg volatility: $4.11. Volatility stop (for downward breakout): $260.17 or 3.6% above the close.

Change YTD: 23.32%

Volume: 1,484,800 shares.
3 month avg: 3,225,345 shares.

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

 

Chart pattern: Broadening top reversal pattern from 04/17/2019 to 06/06/2019

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.

Industry: Toiletries/Cosmetics

Industry RS rank: 30 out of 58

Stock RS rank: 78 out of 589

6/6/19 close: $173.93

1 Month avg volatility: $3.44. Volatility stop (for upward breakout): $162.83 or 6.4% below the close.

Change YTD: 33.69%

Volume: 1,576,500 shares.
3 month avg: 1,843,415 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: Double Bottom, Adam and Eve reversal pattern from 05/13/2019 to 05/31/2019

Breakout is upward 100% of the time.

Average rise: 37%.

Break-even failure rate: 5%.

Throwbacks occur 59% of the time.

Price hits measure rule target 66% of the time.

Industry: Electronics

Industry RS rank: 41 out of 58

Stock RS rank: 163 out of 589

6/6/19 close: $9.63

1 Month avg volatility: $0.37. Volatility stop (for upward breakout): $8.72 or 9.5% below the close.

Change YTD: 26.54%

Volume: 9,536,700 shares.
3 month avg: 3,241,565 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: Falling wedge from 04/26/2019 to 06/03/2019

Breakout is upward 68% of the time.

Average rise: 32%.

Break-even failure rate: 11%.

Throwbacks occur 56% of the time.

Price hits measure rule target 70% of the time.

Industry: Chemical (Basic)

Industry RS rank: 20 out of 58

Stock RS rank: 401 out of 589

6/6/19 close: $79.50

1 Month avg volatility: $1.77. Volatility stop (for upward breakout): $74.50 or 6.3% below the close.

Change YTD: 7.49%

Volume: 1,461,200 shares.
3 month avg: 1,151,138 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: Pipe bottom reversal pattern from 05/20/2019 to 05/28/2019

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.

Industry: Retail (Special Lines)

Industry RS rank: 51 out of 58

Stock RS rank: 584 out of 589

6/6/19 close: $5.13

1 Month avg volatility: $0.29. Volatility stop (for downward breakout): $5.71 or 11.2% above the close.

Change YTD: -59.35%

Volume: 13,556,700 shares.
3 month avg: 3,063,175 shares.

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

 

Chart pattern: Dead-cat bounce continuation pattern from 06/04/2019 to 06/04/2019

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Drug

Industry RS rank: 39 out of 58

Stock RS rank: 80 out of 589

6/6/19 close: $79.86

1 Month avg volatility: $2.25. Volatility stop (for upward breakout): $75.19 or 5.9% below the close.

Change YTD: 25.59%

Volume: 687,800 shares.
3 month avg: 1,771,434 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: Triangle, symmetrical continuation pattern from 04/25/2019 to 06/06/2019

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: Healthcare Information

Industry RS rank: 6 out of 58

Stock RS rank: 221 out of 589

6/6/19 close: $13.83

1 Month avg volatility: $0.40. Volatility stop (for upward breakout): $12.75 or 7.8% below the close.

Change YTD: -2.47%

Volume: 151,400 shares.

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

 

Chart pattern: Triangle, symmetrical continuation pattern from 04/25/2019 to 06/06/2019

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 (East)

Industry RS rank: 24 out of 58

Stock RS rank: 325 out of 589

6/6/19 close: $31.52

1 Month avg volatility: $0.53. Volatility stop (for upward breakout): $30.02 or 4.8% below the close.

Change YTD: 11.26%

Volume: 4,049,200 shares.
3 month avg: 3,908,818 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: Double Bottom, Eve and Eve reversal pattern from 05/20/2019 to 06/03/2019

Breakout is upward 100% of the time.

Average rise: 40%.

Break-even failure rate: 4%.

Throwbacks occur 55% of the time.

Price hits measure rule target 67% of the time.

Industry: Electronics

Industry RS rank: 41 out of 58

Stock RS rank: 240 out of 589

6/6/19 close: $22.49

1 Month avg volatility: $0.69. Volatility stop (for upward breakout): $20.90 or 7.1% below the close.

Change YTD: 24.88%

Volume: 268,600 shares.
3 month avg: 835,520 shares.

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

 

Chart pattern: Falling wedge from 05/02/2019 to 06/03/2019

Breakout is upward 68% of the time.

Average rise: 32%.

Break-even failure rate: 11%.

Throwbacks occur 56% of the time.

Price hits measure rule target 70% of the time.

Industry: Precision Instrument

Industry RS rank: 15 out of 58

Stock RS rank: 159 out of 589

6/6/19 close: $276.26

1 Month avg volatility: $5.48. Volatility stop (for upward breakout): $263.65 or 4.6% below the close.

Change YTD: 23.45%

Volume: 1,855,500 shares.
3 month avg: 1,572,766 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: Triangle, symmetrical continuation pattern from 04/12/2019 to 06/04/2019

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: 19 out of 58

Stock RS rank: 178 out of 589

6/6/19 close: $59.80

1 Month avg volatility: $0.87. Volatility stop (for downward breakout): $61.62 or 3.0% above the close.

Change YTD: 21.37%

Volume: 1,628,600 shares.
3 month avg: 3,202,808 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: Broadening wedge, ascending reversal pattern from 04/22/2019 to 06/04/2019

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.

Thursday 6/6/19. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 164/300 or 54.7% of the time.

     The prediction of the index closing lower has been right 51/102 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.

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I show a picture of the Nasdaq composite on the 5-minute scale.

Not much happened in the composite today, so I drew two red lines for the fun of it.

They might portray an area which bounds support and resistance formed by prior peaks and valleys. Last Wednesday and Thursday, for example, the index bobbled up and down between the two lines.

Price gapped open lower on Friday and pulled back before heading down going into Tuesday’s low. After that, we saw a nice recovery.

Notice, though, that the trajectory of the composite has rounded over. It started off steep but now it’s not. That suggests the composite is gathering strength for another move. Will it be up
or down? Hard to tell.

If the right of the chart mirrors the left, then the index will move sideways on Tuesday before resuming its upward move. That shares timing with the Mexico trade war coming in as fake news.

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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

Wednesday 6/5/19. Up Today Then What?

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.

Today (Tuesday), the market climbed after the FED said they might lower interest rates if the trade wars continue. The market loved the idea.

And that news sent the indices climbing, including the chart pattern indicator. You can see the bullish signal (green bar) on the right side of the chart, and the thin blue indicator line below the
chart.

Let me remind you that if the index tumbles, so will the CPI. The signal can disappear for up to a week. Although I think it’s a lasting signal because of the cause, I could be wrong, especially
if the trade war blossoms. Based on what I’m hearing from congress, the Mexico trade war is fake news, like I suggested it might be after the close on Friday
(for Monday’s post).

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 the red and blue lines show improvement from a week ago, probably because of today’s rally. Without it, we’d probably be looking at dismal results.

If you look back at the steep rises, you see they are mostly short lived, a few days to maybe a week. That was true before January but the rallies have lasted longer since.

I guess we’ll have to see how it plays out this time.

— Thomas Bulkowski

Tuesday 6/4/19. Slider Quiz!

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 187/309 or 60.5% of the time.

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

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I show a another slider quiz featuring the diamond top chart pattern.

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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 6/3/19. Market Monday: Down then Up?

My Prediction

I show the Nasdaq composite on the daily scale.

There’s nothing remarkable to see here. I put two red lines to show where the targets for the next two weeks are. You can read “Tom’s Targets” at the top of this page,
in the grid.

The trend is downward, but I think that’s fake. Nevertheless, you nearly always go with the existing trend instead of predicting a trend change. Thus, the bottom line shows how
far the index might drop in the coming two weeks.

Having said that, my gut feeling is that the Trump Mexico trade war is fake news. The June 10 deadline will be a “never mind. Just kidding” maneuver, the kind of stuff that Trump
says just to change the story away from Mueller, impeachment, and McCain.

That’s where the top red line comes from. The markets should rebound strongly if the tariff issue goes away, helped by good news from China, too. But that’s another war story.

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.

Tuesday: Down 237.92 points.

Wednesday: Down 222.36 points.

Thursday: Up 44.47 points.

Friday: Down 354.84 points.

Saturday: Holiday or other weird event!

For the Week…

The Dow industrials were down 770.65 points or 3.0%.

The Nasdaq composite was down 183.86 points or 2.4%.

The S&P 500 index was down 74 points or 2.6%.

Year to Date…

Dow Industrials

     7.0% down from the high of 26,695.96 on 04/23/2019.

     9.6% up from the low of 22,638.41 on 01/03/2019.

Nasdaq

     8.8% down from the high of 8,176.08 on 04/29/2019.

     15.4% up from the low of 6,457.13 on 01/03/2019.

S&P 500

     6.8% down from the high of 2,954.13 on 05/01/2019.

     12.6% 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 05/31/2019, the CPI had:

46 bearish patterns,

0 bullish patterns,

195 patterns waiting for breakout.

The CPI signal is 0.0%, 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.

• 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 either underway or should be starting soon. The sessions could be more volatile.

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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