Chart Pattern Indicator: What's It Say?…

Monday 2/7/22. Market Monday: The Week Ahead

My Prediction

This is a chart of the S&P 500 index, on the daily scale.

I drew an up-sloping channel, shown here with red lines. If you consider the channel as a chart pattern, we see that the index is
pulling back to the bottom of the channel.

It follows that the index would drop after completion of the pullback (after point A). That’s what we’re seeing now.

I see the index following the blue line. We’ll see the index drop some and then resume moving up. I didn’t measure the retrace from the top of the pullback (A) to the following low, but it’s
possible that the index will rise on Monday and continue moving up.

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 406.39 points.

Tuesday: Up 273.38 points.

Wednesday: Up 224.09 points.

Thursday: Down 518.17 points.

Friday: Down 21.42 points.

For the Week…

The Dow industrials were up 364.27 points or 1.0%.

The Nasdaq composite was up 327.44 points or 2.4%.

The S&P 500 index was up 68.68 points or 1.5%.

Year to Date…

Dow Industrials

     5.0% down from the high of 36,952.65 on 01/05/2022.

     5.9% up from the low of 33,150.33 on 01/24/2022.

Nasdaq

     11.1% down from the high of 15,852.14 on 01/04/2022.

     7.7% up from the low of 13,094.65 on 01/24/2022.

S&P 500

     6.6% down from the high of 4,818.62 on 01/04/2022.

     6.6% up from the low of 4,222.62 on 01/24/2022.

Options Expiration

No options expire this week.

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

Earnings, Chart Patterns & Industries

Earnings season is either underway or should be starting soon. The sessions could be more volatile.

Here’s a symbol list of 107 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ADTN, AJRD, ADS, AMZN, AEO, AEL, AIG, AMWD, AMN, AAPL, AVY, AZTA, BMI, BZH, BKH, BKNG, EPAY, BMY, BBW, CPB, CF, CLNE, CLX, CLR, CCRN, DVN, DDS, EOG, XOM, GPS, IT, GNW, GPRO, GES, HTLD, HD, HON, HOV, HURC, INTC, IPAR, IPI, IVC, KBH, KSS, LZB, LEN, LNC, LOW, M, MRO, MAS, MTRX, MS, MOS, NFG, CNR, NWL, JWN, NWPX, ORI, OTEX, PAYX, PRFT, PFG, RJF, RGA, RES, SEE, SEIC, NOW, SHW, SKX, SWX, SWN, SXI, SNPS, TFX, TJX, RIG, TZOO, UGI, UNM, WMB, WSM, IYE, IEO, FXL, IAT, IGE, ECH, EWS, TUR, DBA, PEJ, PXJ, XLE, XHB, UNG, USO. Clink this link for details (pattern type, start and end dates).

For a list of small patterns (those a few days wide) click this link.

The below industries were the best (rank 1) or worst performing of those I follow.

— Thomas Bulkowski

Friday 2/4/22. Pattern Trading Setups for the Weekend.

$ $ $

Here’s a symbol list of 100 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ADTN, ALRM, ADS, AYX, AEO, AMWD, AMN, AAPL, AVA, BMI, BSET, BAX, BERY, BMRN, BKNG, EPAY, BBW, CAL, CNC, CNP, CLNE, CMTL, CONN, COTY, CCRN, DVN, EPAM, EXC, EZPW, GPS, GIS, GES, HBI, HLIT, HE, HL, HD, HURC, IDXX, ITW, IBP, IPAR, IPG, IVC, KALU, KSS, LZB, LEG, LOW, M, MAN, FB, MS, MYGN, CNR, NWL, JWN, NWPX, ORI, OTEX, PYPL, PRFT, PICO, POR, PFG, PGR, PRU, QCOM, DGX, RL, RJF, REV, ROST, RES, NOW, SCCO, SWX, SSYS, SRDX, TDOC, TJX, TRV, TZOO, VLO, VRTX, WSM, WWW, FDN, FXI, IAT, XLY, XRT, USO. Clink this link for details (pattern type, start and end dates).

For a list of small patterns (those a few days wide) click this link.

$ $ $

You can find setups based on a Fibonacci retrace by clicking on the link.

The following patterns were found manually, not using Patternz. Mr. Bulkowski has excluded any securities he owns from appearing in the list. However, he may add any of the securities listed to his portfolio at any time, just as you can.

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.

For details about the chart patterns, click here.

— Thomas Bulkowski

Thursday 2/3/22. Bitcoin

Weekly, since inception on 6/14/2011:

     The prediction of the Nasdaq closing higher has been right 234/410 or 57.1% of the time.

     The prediction of the index closing lower has been right 60/127 or 47.2% 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.

$ $ $

I show a picture of the cryptocurrency Bitcoin on the daily scale.

I’ve already discussed the double top at AB, confirmed at C when the index closed below it.

I drew two blue lines which form a down-sloping channel. Notice the position of the coin within those two blue lines. The coin is heading toward the top blue line
but today it turned lower. I drew a second line, green, to highlight closer overhead resistance (setup by the green trendline). Because the coin turned lower as it approached the green line,
I think it’s going down to the lower blue line. That’s a drop to about 35,000.

$ $ $

Here’s a symbol list of 152 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ABT, ADTN, AMD, AES, ADS, AYX, DOX, AEO, AMN, APA, AAPL, ARW, AIZ, BMI, BMRN, BKNG, BBW, BG, CAL, CNP, CENX, CLNE, CMTL, ED, CONN, COP, COST, COTY, CRH, CCRN, DVN, ^DJU, D, DOV, DTE, DUK, EMR, EPAM, EQT, EXC, EZPW, FOE, FE, GPS, GE, GILD, GOOGL, GES, HBI, HLIT, HE, HL, HSII, HOLX, HD, JBHT, HURC, IDXX, ITW, IBP, IPAR, IBKR, IPI, IVC, JNJ, KALU, KFRC, KSS, LZB, LH, LEG, LDOS, RAMP, LOW, M, MAN, MRO, MRK, MU, MCO, MS, MYGN, NOV, CNR, JWN, NWPX, OGE, ORI, OLN, OTEX, PYPL, PRFT, PETS, PNW, POR, QCOM, RJF, RGS, REV, ROST, RES, SEE, NOW, SCCO, SWX, SCS, SSYS, TDOC, TEVA, TJX, RIG, TZOO, UGI, VFC, WSM, WWW, XEL, XLNX, IEO, IDU, FDN, FXI, IAT, SOXX, EWO, EWK, EWI, EWJ, EWD, EWU, IEV, XLY, XLP, XLV, XRT, XLU, UNG, SMH. Clink this link for details (pattern type, start and end dates).

For a list of small patterns (those a few days wide) click this link.

$ $ $

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 2/2/22. 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.

As the chart shows, the CPI turned bullish (vertical green bar on the far right) about a week after the index bottomed. The indicator is at 95.5%, where its top end is 100%.

So there’s a small room for improvement but potential for a large drop.

Although I expect a continued move up, I also expect that world affairs (Russia invasion, new and more toxic covid variant) would cause a retrace.

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).

After taking a steep dive, following the market lower, the red and blue lines have recovered (but not returned to the prior level).

The upward move in both lines is bullish, but the trend lower from the left side of the chart to today remains pronounced. It’s like the chart is saying long-term bearish, short-term bullish.

Both charts this week are bullish, and that’s good because it agrees with my stance on the markets.

$ $ $

Here’s a symbol list of 112 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, ADTN, AMD, ADS, AEO, AEL, AMN, ANTM, APOG, AAPL, AVNT, BMI, BAX, BRC, BBW, BG, CBT, CAL, CNP, CF, CHD, CLNE, CL, CRH, CCRN, DVN, DRQ, BOOM, EIX, FOE, FCX, GPS, GE, GILD, GES, HLIT, HSY, HD, HOV, HURC, IIIN, IPAR, KALU, KBH, KSS, LZB, LOW, M, MLM, MTRX, MDT, MS, MOS, MYGN, NBR, CNR, JWN, NWPX, OXY, ORI, OLN, ASGN, OTEX, OXM, PETS, RJF, RGS, RLI, ROK, RES, SLB, SLGN, SCCO, LUV, SWX, SNPS, TECH, TEVA, TKR, TJX, RIG, TZOO, TREX, SLCA, UGI, UPS, VFC, V, WU, WLK, WSM, WOLF, EWO, EWG, EWI, EWL, EWU, DBA, IEV, ILF. Clink this link for details (pattern type, start and end dates).

For a list of small patterns (those a few days wide) click this link.

— Thomas Bulkowski

Tuesday 2/1/22. 2022 Forecast Update

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 237/424 or 55.9% of the time.

     The prediction of the index closing lower has been right 44/93 or 47.3% of the time.

$ $ $

Here’s the updated 2022 forecast, presented in slider format.

Based on sector performance from Fidelity, the best performing sectors for year-to-date performance as of 28 January 2022 were…
(The numbering is how they ranked a month ago.)

1. Energy (+18%)

4. Financials (-1%)

10. Consumer staples (-2%)

11. Utilities (-5%)

9. Industrials (-6%)

5. Health care (-8%)

6. Materials (-8%)

8. Communication services (-9%)

3. Information technology (-9%)

2. Real estate (-10%)

7. Consumer discretionary (-13%)

The folks at two firms polled by Fidelity weigh the sectors in this order, as of 1/28/22.

1. Information technology (IT)

2. Health care

3. Consumer discretionary

4. Financials

5. Communication services

6. Industrials

7. Consumer staples

9. Energy

8. Real estate

11. Utilities

10. Materials

Here’s how they rank the industries, but only the top 10 appear. One-year change, as of 1/28. The numbering is how they ranked a month ago.

7. Oil, gas and consumable fuels (+65%)

New. Energy equipment and services (+65%)

1. Real estate management and development (57%)

New. Consumer finance (+44%)

New. Diversified financial services (+38%)

3. Distributors (+36%)

New. Health care providers and services (+34%)

New. Banks (+34%)

6. Construction and engineering (+33%)

New. Insurance (+32%)

$ $ $

Here’s a symbol list of 108 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
AXDX, ACIW, AKAM, ALRM, ALK, AMED, AEL, AGO, AVY, BCPC, BSET, BBBY, BIG, BIIB, BMRN, BAH, EPAY, CX, CNC, CNP, CENX, CHKP, CINF, CSCO, CLNE, CTSH, COTY, CTS, ^DJI, DUK, EL, EZPW, FDS, FAST, FOE, FCX, FDP, GME, GE, GNW, GS, GPRO, EVRG, HSC, HE, HAYN, HQY, HSY, HURC, INCY, NSP, ITGR, KALU, KBH, K, KBAL, KSS, LHX, LH, LDOS, MNDT, MCHX, MOS, NFLX, NTGR, NTAP, OMCL, OMC, PANW, PAYX, PCG, PLXS, PEG, RHI, SMG, SIGI, NOW, SCCO, SCS, SRDX, RIG, SLCA, VLO, VRSN, WAT, WERN, WLK, ITB, IHI, IDU, IYH, IHF, IYZ, EWK, EWC, EWQ, EWJ, EWL, DBA, PBE, PJP, PHO. Clink this link for details (pattern type, start and end dates).

For a list of small patterns (those a few days wide) click this link.

$ $ $

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

— Thomas Bulkowski