Chart Pattern Indicator: What's It Say?…

Monday 12/12/16. Market Monday: The Week Ahead

My Prediction

I have made so much money in this market (on paper because I haven’t sold), it’s making me very nervous. Think preservation of capital.

I have a rule, except that it’s really a guideline, which says, if I double my money, sell. That has allowed me to rack up impressive gains over time while building my net worth.

Many stocks I own are approaching that point.

I had one stock drop 10% today after earnings failed to meet expectations. That cut my profit by $7,000. It suggests that when earnings come out next month, the market is going to
be disappointed. And the thrill of the Trump takeover will evaporate. And that means the market is going to drop in spectacular fashion.

Maybe not, but I’m going to take a closer look at my portfolio this weekend and see where the stops should go.

As to the chart, pattern A is a rare upward-sloping flag. The flagpole begins at B and rises to C.

The theory says that leg BA should approximate leg AC.

If that holds true, then we won’t have much time before we top out and head lower.

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I released version 5.11 of Patternz.

This is an important release because it fixes a number of serious bugs. I tuned the pattern recognition for chart patterns and candlesticks, too.

Let me know if you have problems with it.

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 45.82 points.

Tuesday: Up 35.54 points.

Wednesday: Up 297.84 points.

Thursday: Up 65.19 points.

Friday: Up 142.04 points.

For the Week…

The Dow industrials were up 586.43 points or 3.1%.

The Nasdaq composite was up 188.85 points or 3.6%.

The S&P 500 index was up 67.58 points or 3.1%.

Year to Date…

Dow Industrials

     0.0% down from the high of 19,757.74 on 12/09/2016.

     27.9% up from the low of 15,450.56 on 01/20/2016.

Nasdaq

     0.1% down from the high of 5,450.16 on 12/09/2016.

     29.3% up from the low of 4,209.76 on 02/11/2016.

S&P 500

     0.0% down from the high of 2,259.80 on 12/09/2016.

     24.8% up from the low of 1,810.10 on 02/11/2016.

Options Expiration

Many options expire this week, so traders will be looking to close out their positions, and that suggests increased volatility (large daily price swings).

Swing and Position Traders: Chart Pattern Indicator

As of 12/09/2016, the CPI had:

2 bearish patterns,

35 bullish patterns,

230 patterns waiting for breakout.

The CPI signal is 94.6%, 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.

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

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 12/9/16. 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 14 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 625 stocks searched, or 2.2%. Based on the percentage, the stock market is
trending since few consolidation patterns appear.

Excluding ETFs, there were 9 bullish chart patterns this week and 1 bearish ones with any remaining (1) being undecided.
The ratio of bullish to bearish patterns suggests the market is bullish.

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: Computer Software and Svcs

Industry RS rank: 29 out of 56

Stock RS rank: 125 out of 617

12/8/16 close: $27.17

1 Month avg volatility: $0.69. Volatility stop (for upward breakout): $25.10 or 7.6% below the close.

Change YTD: 29.88%

Volume: 347,700 shares.
3 month avg: 336,125 shares.

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

 

Chart pattern: Scallop, ascending and inverted continuation pattern from 11/04/2016 to 12/02/2016

Breakout is upward 100% of the time.

Average rise: 43%.

Break-even failure rate: 4%.

Throwbacks occur 61% of the time.

Price hits measure rule target 61% of the time.

Industry: Trucking/Transp. Leasing

Industry RS rank: 4 out of 56

Stock RS rank: 562 out of 617

12/8/16 close: $9.00

1 Month avg volatility: $0.59. Volatility stop (for upward breakout): $6.41 or 28.7% below the close.

Change YTD: -9.00%

Volume: 1,131,700 shares.
3 month avg: 445,465 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: Flag, high and tight continuation pattern from 11/08/2016 to 12/07/2016

Breakout is upward 100% of the time.

Average rise: 69%.

Throwbacks occur 54% of the time.

Price hits measure rule target 90% of the time.

Industry: Retail (Special Lines)

Industry RS rank: 7 out of 56

Stock RS rank: 247 out of 617

12/8/16 close: $2.24

1 Month avg volatility: $0.10. Volatility stop (for upward breakout): $2.00 or 10.5% below the close.

Change YTD: 35.76%

Volume: 191,700 shares.
3 month avg: 239,182 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: Flag, high and tight continuation pattern from 11/01/2016 to 12/05/2016

WARNING: A dead-cat bounce occurred on 08/30/2016. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 02/28/2017.

Breakout is upward 100% of the time.

Average rise: 69%.

Throwbacks occur 54% of the time.

Price hits measure rule target 90% of the time.

Industry: Computer Software and Svcs

Industry RS rank: 29 out of 56

Stock RS rank: 159 out of 617

12/8/16 close: $61.90

1 Month avg volatility: $1.45. Volatility stop (for upward breakout): $58.25 or 5.9% below the close.

Change YTD: 89.41%

Volume: 1,355,600 shares.
3 month avg: 1,942,660 shares.

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

 

Chart pattern: Scallop, ascending and inverted continuation pattern from 11/04/2016 to 12/06/2016

Breakout is upward 100% of the time.

Average rise: 43%.

Break-even failure rate: 4%.

Throwbacks occur 61% of the time.

Price hits measure rule target 61% of the time.

Industry: Telecom. Equipment

Industry RS rank: 14 out of 56

Stock RS rank: 616 out of 617

12/8/16 close: $10.55

1 Month avg volatility: $0.48. Volatility stop (for downward breakout): $12.71 or 20.5% above the close.

Change YTD: -47.49%

Volume: 2,696,000 shares.
3 month avg: 328,146 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: Dead-cat bounce continuation pattern from 12/08/2016 to 12/08/2016

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Insurance (Prop/Casualty)

Industry RS rank: 17 out of 56

Stock RS rank: 284 out of 617

12/8/16 close: $47.99

1 Month avg volatility: $0.71. Volatility stop (for upward breakout): $46.21 or 3.7% below the close.

Change YTD: 10.42%

Volume: 2,789,200 shares.
3 month avg: 2,854,089 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, ascending reversal pattern from 11/14/2016 to 12/05/2016

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: Chemical (Diversified)

Industry RS rank: 38 out of 56

Stock RS rank: 14 out of 617

12/8/16 close: $2.39

1 Month avg volatility: $0.16. Volatility stop (for upward breakout): $1.78 or 25.6% below the close.

Change YTD: -18.98%

Volume: 6,215,500 shares.
3 month avg: 1,304,342 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: Flag, high and tight continuation pattern from 10/14/2016 to 12/07/2016

Breakout is upward 100% of the time.

Average rise: 69%.

Throwbacks occur 54% of the time.

Price hits measure rule target 90% of the time.

Industry: Aerospace/Defense

Industry RS rank: 21 out of 56

Stock RS rank: 282 out of 617

12/8/16 close: $259.25

1 Month avg volatility: $3.72. Volatility stop (for downward breakout): $273.81 or 5.6% above the close.

Change YTD: 19.39%

Volume: 2,765,900 shares.
3 month avg: 1,474,503 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: Double Top, Adam and Adam reversal pattern from 11/15/2016 to 12/05/2016

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: Oilfield Svcs/Equipment

Industry RS rank: 27 out of 56

Stock RS rank: 67 out of 617

12/8/16 close: $5.90

1 Month avg volatility: $0.38. Volatility stop (for upward breakout): $5.00 or 15.3% below the close.

Change YTD: 171.89%

Volume: 2,847,500 shares.
3 month avg: 986,238 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: Flag, high and tight continuation pattern from 11/04/2016 to 12/05/2016

Breakout is upward 100% of the time.

Average rise: 69%.

Throwbacks occur 54% of the time.

Price hits measure rule target 90% of the time.

Industry: Shoe

Industry RS rank: 22 out of 56

Stock RS rank: 430 out of 617

12/8/16 close: $11.23

1 Month avg volatility: $0.34. Volatility stop (for upward breakout): $10.33 or 8.0% below the close.

Change YTD: -2.85%

Volume: 20,300 shares.
3 month avg: 26,574 shares.

This security may be thinly traded (less than 100k 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 10/20/2016 to 12/08/2016

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: Retail (Special Lines)

Industry RS rank: 7 out of 56

Stock RS rank: 10 out of 617

12/8/16 close: $26.44

1 Month avg volatility: $0.93. Volatility stop (for upward breakout): $22.45 or 15.1% below the close.

Change YTD: 80.11%

Volume: 12,505,900 shares.
3 month avg: 1,418,745 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: Flag, high and tight continuation pattern from 11/09/2016 to 12/08/2016

WARNING: A dead-cat bounce occurred on 06/09/2016. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 12/08/2016.

Breakout is upward 100% of the time.

Average rise: 69%.

Throwbacks occur 54% of the time.

Price hits measure rule target 90% of the time.

Industry: Investment Co. (Foreign)

Industry RS rank: 42 out of 56

Stock RS rank: 460 out of 617

12/8/16 close: $46.85

1 Month avg volatility: $0.39. Volatility stop (for upward breakout): $45.96 or 1.9% below the close.

Change YTD: -4.76%

Volume: 59,900 shares.
3 month avg: 24,831 shares.

This security may be thinly traded (less than 100k 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: Triangle, ascending reversal pattern from 11/03/2016 to 12/08/2016

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: Investment Co. (Foreign)

Industry RS rank: 42 out of 56

Stock RS rank: 474 out of 617

12/8/16 close: $23.72

1 Month avg volatility: $0.30. Volatility stop (for upward breakout): $22.74 or 4.1% below the close.

Change YTD: -13.68%

Volume: 2,054,000 shares.
3 month avg: 1,522,745 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: Broadening bottom reversal pattern from 09/29/2016 to 12/07/2016

Breakout is upward 53% of the time.

Average rise: 27%.

Break-even failure rate: 10%.

Throwbacks occur 41% of the time.

Price hits measure rule target 59% of the time.

Industry: Investment Co. (Foreign)

Industry RS rank: 42 out of 56

Stock RS rank: 303 out of 617

12/8/16 close: $51.10

1 Month avg volatility: $0.31. Volatility stop (for upward breakout): $50.32 or 1.5% below the close.

Change YTD: 5.40%

Volume: 8,607,200 shares.
3 month avg: 20,385,497 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 09/22/2016 to 12/05/2016

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.

Thursday 12/8/16. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 118/204 or 57.8% of the time.

     The prediction of the index closing lower has been right 40/78 or 51.3% 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.

I drew a red line connecting the right side of the chart with the left. It shows a chart pattern, too. Can you identify it?

The obvious pattern, but one you probably didn’t guess, is overhead resistance. Price has bumped up against a ceiling three times, instead of heading lower as I expected
it would do today (Wednesday).

However, the other pattern I was really thinking about, is a cup with handle.

If you’re an O’Neil follower, you’ll want to look for a 30% rise leading to the left cup lip. Regardless, the bowl shape from a week ago is clear. Could a handle form on Thursday?

Because the index has reached resistance, my guess is yes, it will pause for a time and form a handle. It will retrace, some in the process.

However, since I was wrong about today’s activity, the index could just continue moving up. Or it could drop precipitously, beginning to take a breather. Take your pick.

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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 12/7/16. 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.

Much to my surprise, the indicator quickly recovered after its recent dip.

Notice, though, that it has rounded over and it’s well below the prior peak.

What does this mean? I have no idea, but my guess is it’s a sign of weakness underlying the market. This rally might be a bull trap.

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 ticked up in the last day or two but as measured from the prior week, both are flat.

That’s another concern. It could mean weakness or just a sign of momentum gathering for another push upward.

I’ll let you figure which will happen.

— Thomas Bulkowski

Tuesday 12/6/16. Intraday Market Direction: Dow

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 127/213 or 59.6% of the time.

     The prediction of the index closing lower has been right 32/64 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 Dow industrials on the 5-minute scale.

I drew two red lines outlining the upward trend. These two lines form a chart pattern called a channel. Nothing new there. I’ve identified them often enough
in this blog.

It appears as if the index has or will bounce off the bottom channel line. As I write this, the Dow futures are up a smidgen, about 15 points, so a more lasting direction isn’t known yet.

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Thanks to all of you that wrote in about my health problems (approaching diabetes). Your tips have been useful.

I found out that eating eggs is not a suicide attempt. Rather, according to
research
released in 2016, “Low to moderated egg consumption was not associated with an increased CVD (cardiovascular disease) risk in diabetic or non-diabetic individuals at high cardiovascular risk.”

In another study published in Nov-Dec 2016, they write,
“…recent reviews of the literature have suggested that dietary cholesterol is not a nutrient of concern.
We conducted a meta-analysis of egg intake (a significant contributor to dietary cholesterol) and risk of coronary heart disease (CHD) and stroke.
A comprehensive literature search was conducted through August 2015 to identify prospective cohort studies that reported risk estimates for egg consumption in association with CHD or stroke.

“Overall, summary associations indicate that intake of up to 1 egg daily may be associated with reduced risk of total stroke. Overall, summary associations show no clear association between egg intake and increased or decreased risk of CHD. Eggs are a relatively low-cost and nutrient-dense whole food that provides a valuable source of protein, essential fatty acids, antioxidants, choline, vitamins, and minerals.”

Both of these studies were posted here, “PubMed comprises more than 26 million citations for biomedical literature from MEDLINE, life science journals, and online books.” It’s a repository of health studies run by the US government.

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I poked my fingers to draw blood more than 25 times this weekend but I learned a few tricks to control my blood sugar.

For breakfast, the 1/2 cup of oatmeal is high carb but if I take a heaping teaspoon of metamucil (fiber) in a glass of water, just before I eat the oats, I can reduce the glucose spike
considerably, from 99/168 (immediately before eating having a glucose reading of 99 mg/dl to 168 one hour after I eat), a 70% rise) to 94/136 or 88/136 (a 45% and 55% rise — two tests).

The second trick is to eat a bit of carb an hour before a meal. In this case, I ate a gala apple with about 2 tbsp of peanut butter. The rise changed from 84/145 (73%) to 103/112 (9%)
and 107/120 (12%). That’s a huge change. What you’re doing is telling the body that it doesn’t have to panic and flood your body with glucose when the full meal comes. Adding fiber
to the meal (without the small carb warning pre-meal) didn’t have any substantial effect for dinner. That was disappointing. Exercise helped to burn off some of the glucose, too but I haven’t
measured it specifically.

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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 12/5/16. Market Monday: The Week Ahead

My Prediction

This is a picture of the Dow transports on the daily scale.

The first thing I noticed is the change in slope.

I show that with the red line at A. It has a modest slope, one you could tolerate for a few miles if you were a professional cyclist.

But look what happens to the index at B. The slope changes into a Cat 1 hill (a very steep one).

How long do you think this upward run will last?

I have found that the steeper the trendline the shorter it tends to be.

However, the trendline could break. The index would retrace for a time and then climb again, but at a more shallow slope.

That’s my guess as to what will happen in the coming weeks and months.

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This is a reminder to all of you that visit this free website and do business with Amazon.com. If you click on one of the pictures of my books, like those shown on the far left or the row
of my books I show above, the link will take you to Amazon.com. If you purchase anything while there during that visit, I collect a small referral fee. That helps keep this website free
and available to everyone.

Thank you!

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Back in March, I visited with my optometrist for my annual eye exam. She found two veins that had burst. What was the cause? She named several, including a spike in glucose (blood sugar).

A visit to my family doctor showed that my A1c (roughly, a three month weighted average of glucose) was near the high for being normal.

So I changed my diet to lower my carb intake (carbs get changed to glucose easily). I cut carbs by 23% and yet my A1c climbed another tenth of a percentage. Another similar climb and I’d be pre-diabetic — on my way to becoming diabetic.

So I cut my carbs more (about 50% now) and I started testing myself today.

That means I bought a meter, test strips, and lances. Just before each meal, I stabbed myself to draw blood, and did the same an hour and two hours after each meal.

It’s an interesting way to track how your body responds to eating.

Let me be clear. I’m not fat (5′ 9″ tall and 142 pounds). Plus I get plenty of exercise (summer bicycling and winter working on a treadmill and elliptical). You might think, as I did,
that diabetes is a fat person’s disease. It can be but not in my case.

Anyway, yes, it’s painful to stick yourself with a lancet (as it’s called). My first attempt, it took me three tries to draw something, and blood then flowed from two of the holes (the first
one never touched my skin). I had to dial in how far the machine would stick the needle.

Anyway, my finger is still sore from those stabs. I’ve had better luck with my other fingers, completing ten sticks today.

What I learned is that the vegetable soup I made is just fine for lunch. Same with the smoothie (snack). My glucose rises but not much. Breakfast and dinner are problems, though.

I think I can lower the glucose spike by either adding peanuts to my oatmeal for breakfast (or removing the highly glycemic blueberries) and only have vegan sloppy Joes (the hamburger roll
is the problem) for dinner occasionally.

Anyway, it’s an interesting way to live, knowing you should never have a pizza or hot fudge sundae or even potato chips again. Ever. Doing so could, in my case, lead to blindness.

And I consider that a death sentence.

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: Down 54.24 points.

Tuesday: Up 23.7 points.

Wednesday: Up 1.98 points.

Thursday: Up 68.35 points.

Friday: Holiday or other weird event!

For the Week…

The Dow industrials were up 39.79 points or 0.2%.

The Nasdaq composite was down 147.81 points or 2.7%.

The S&P 500 index was down 21.4001 points or 1.0%.

Year to Date…

Dow Industrials

     0.2% down from the high of 19,225.29 on 11/30/2016.

     24.2% up from the low of 15,450.56 on 01/20/2016.

Nasdaq

     2.8% down from the high of 5,403.86 on 11/29/2016.

     24.7% up from the low of 4,209.76 on 02/11/2016.

S&P 500

     1.0% down from the high of 2,214.10 on 11/30/2016.

     21.1% up from the low of 1,810.10 on 02/11/2016.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 12/02/2016, the CPI had:

4 bearish patterns,

8 bullish patterns,

193 patterns waiting for breakout.

The CPI signal is 66.7%, 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.

Mutual funds will begin dividend distributions and rebalancing their portfolios for the approaching year end (starts in late November).

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 12/2/16. 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 15 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 625 stocks searched, or 2.4%. Based on the percentage, the stock market is
trending since few consolidation patterns appear.

Excluding ETFs, there were 6 bullish chart patterns this week and 2 bearish ones with any remaining (2) 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: Furn/Home Furnishings

Industry RS rank: 42 out of 56

Stock RS rank: 461 out of 617

12/1/16 close: $251.46

1 Month avg volatility: $6.27. Volatility stop (for upward breakout): $237.59 or 5.5% below the close.

Change YTD: 7.55%

Volume: 333,000 shares.
3 month avg: 466,808 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: Triangle, symmetrical continuation pattern from 11/16/2016 to 12/01/2016

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: 15 out of 56

Stock RS rank: 407 out of 617

12/1/16 close: $45.41

1 Month avg volatility: $1.25. Volatility stop (for upward breakout): $42.14 or 7.2% below the close.

Change YTD: -5.89%

Volume: 2,042,900 shares.
3 month avg: 2,230,098 shares.

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

 

Chart pattern: Triangle, symmetrical continuation pattern from 11/14/2016 to 12/01/2016

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: Aerospace/Defense

Industry RS rank: 11 out of 56

Stock RS rank: 132 out of 617

12/1/16 close: $152.39

1 Month avg volatility: $2.18. Volatility stop (for downward breakout): $157.05 or 3.1% above the close.

Change YTD: 5.39%

Volume: 2,825,500 shares.
3 month avg: 3,601,438 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: Rising wedge reversal pattern from 10/26/2016 to 12/01/2016

Breakout is downward 69% of the time.

Average decline: 14%.

Break-even failure rate: 24%.

Pullbacks occur 63% of the time.

Price hits measure rule target 46% of the time.

Industry: Oilfield Svcs/Equipment

Industry RS rank: 16 out of 56

Stock RS rank: 612 out of 617

12/1/16 close: $19.31

1 Month avg volatility: $0.79. Volatility stop (for upward breakout): $16.91 or 12.5% below the close.

Change YTD: -8.48%

Volume: 5,525,700 shares.
3 month avg: 3,901,792 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: Double Bottom, Eve and Adam reversal pattern from 11/11/2016 to 11/29/2016

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: Semiconductor

Industry RS rank: 1 out of 56

Stock RS rank: 19 out of 617

12/1/16 close: $10.35

1 Month avg volatility: $0.49. Volatility stop (for downward breakout): $12.43 or 20.1% above the close.

Change YTD: 15.00%

Volume: 488,800 shares.
3 month avg: 417,006 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: Broadening top reversal pattern from 08/03/2016 to 12/01/2016

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: Building Materials

Industry RS rank: 13 out of 56

Stock RS rank: 30 out of 617

12/1/16 close: $39.77

1 Month avg volatility: $1.46. Volatility stop (for upward breakout): $36.14 or 9.1% below the close.

Change YTD: 90.11%

Volume: 368,700 shares.
3 month avg: 331,248 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: Flag, high and tight continuation pattern from 10/20/2016 to 11/25/2016

WARNING: A dead-cat bounce occurred on 10/20/2016. There is a 26% chance that a 15% or higher decline will occur (or has occurred since then) by 01/19/2017 and a 38% chance by 04/20/2017.

Breakout is upward 100% of the time.

Average rise: 69%.

Throwbacks occur 54% of the time.

Price hits measure rule target 90% of the time.

Industry: Natural Gas (Distributor)

Industry RS rank: 18 out of 56

Stock RS rank: 452 out of 617

12/1/16 close: $26.40

1 Month avg volatility: $0.86. Volatility stop (for upward breakout): $23.86 or 9.6% below the close.

Change YTD: 24.82%

Volume: 91,800 shares.
3 month avg: 59,895 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 Thursday.

 

Chart pattern: Rectangle top continuation pattern from 04/21/2016 to 12/01/2016

Breakout is upward 68% of the time.

Average rise: 39%.

Break-even failure rate: 9%.

Throwbacks occur 64% of the time.

Price hits measure rule target 80% of the time.

Industry: Electric Utility (East)

Industry RS rank: 52 out of 56

Stock RS rank: 550 out of 617

12/1/16 close: $33.10

1 Month avg volatility: $0.60. Volatility stop (for upward breakout): $31.57 or 4.6% below the close.

Change YTD: -3.02%

Volume: 4,619,000 shares.
3 month avg: 4,977,234 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: Triangle, symmetrical continuation pattern from 09/27/2016 to 12/01/2016

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: Computer Software and Svcs

Industry RS rank: 24 out of 56

Stock RS rank: 359 out of 617

12/1/16 close: $75.19

1 Month avg volatility: $1.60. Volatility stop (for downward breakout): $82.69 or 10.0% above the close.

Change YTD: -9.20%

Volume: 1,550,600 shares.
3 month avg: 1,513,811 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: Double Top, Adam and Adam reversal pattern from 11/18/2016 to 11/29/2016

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: Chemical (Specialty)

Industry RS rank: 14 out of 56

Stock RS rank: 59 out of 617

12/1/16 close: $33.10

1 Month avg volatility: $1.13. Volatility stop (for upward breakout): $30.50 or 7.9% below the close.

Change YTD: 8.03%

Volume: 226,300 shares.
3 month avg: 250,603 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: Triangle, symmetrical continuation pattern from 11/16/2016 to 12/01/2016

WARNING: A dead-cat bounce occurred on 08/11/2016. There is a 38% chance that a 15% or higher decline will occur (or has occurred since then) by 02/09/2017.

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: Petroleum (Integrated)

Industry RS rank: 20 out of 56

Stock RS rank: 289 out of 617

12/1/16 close: $65.87

1 Month avg volatility: $1.43. Volatility stop (for downward breakout): $70.18 or 6.6% above the close.

Change YTD: 24.40%

Volume: 210,300 shares.
3 month avg: 107,972 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 reversal pattern from 09/01/2016 to 11/29/2016

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: Investment Co. (Foreign)

Industry RS rank: 37 out of 56

Stock RS rank: 278 out of 617

12/1/16 close: $20.66

1 Month avg volatility: $0.18. Volatility stop (for upward breakout): $20.20 or 2.2% below the close.

Change YTD: 8.97%

Volume: 2,729,500 shares.
3 month avg: 2,100,129 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: Triangle, ascending reversal pattern from 08/26/2016 to 12/01/2016

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: Investment Co. (Foreign)

Industry RS rank: 37 out of 56

Stock RS rank: 294 out of 617

12/1/16 close: $49.47

1 Month avg volatility: $0.31. Volatility stop (for upward breakout): $48.78 or 1.4% below the close.

Change YTD: 2.04%

Volume: 6,530,700 shares.
3 month avg: 22,298,551 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 09/22/2016 to 12/01/2016

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: Investment Co. (Foreign)

Industry RS rank: 37 out of 56

Stock RS rank: 511 out of 617

12/1/16 close: $27.42

1 Month avg volatility: $0.26. Volatility stop (for upward breakout): $26.81 or 2.2% below the close.

Change YTD: -6.03%

Volume: 141,700 shares.
3 month avg: 222,649 shares.

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

 

Chart pattern: Triangle, symmetrical continuation pattern from 11/04/2016 to 12/01/2016

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: Petroleum (Producing)

Industry RS rank: 9 out of 56

Stock RS rank: 571 out of 617

12/1/16 close: $11.33

1 Month avg volatility: $0.29. Volatility stop (for upward breakout): $10.67 or 5.8% below the close.

Change YTD: 3.00%

Volume: 90,497,300 shares.
3 month avg: 46,684,312 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: Head-and-shoulders bottom reversal pattern from 11/04/2016 to 11/29/2016

Breakout is upward 100% of the time.

Average rise: 38%.

Break-even failure rate: 3%.

Throwbacks occur 45% of the time.

Price hits measure rule target 74% of the time.

Thursday 12/1/16. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 118/203 or 58.1% of the time.

     The prediction of the index closing lower has been right 40/78 or 51.3% 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 Nasdaq composite on the 5-minute scale.

On the daily charts, I swapped directions on all of the indices. I think over the next two weeks, we’re going to see a retrace.

This chart suggests it’s already begun. The red line shows the uptrend following the line. The green line shows the index dropping.

Intraday, I’m not sure it’s as bleak as the longer-term picture. The above probabilities suggests the index will close higher tomorrow (Thursday).

$ $ $

On 11/1/2013, I bought a Phillips Sonicare electric toothbrush for $99. Add in the cost of the brushes (about $10 a pop for 3 months of use, if you buy theirs, according to their recommendation, too)
and it was an expensive investment. But it worked great, especially for reaching behind the wisdom teeth, until a few days ago.

If I registered the toothbrush with the company, which I did, then they would extend the 2 year warranty by 6 months. The extended warranty expired this past May.

A few days ago, the $%%^ thing just started running without me touching it. It woke me up that night every 1.5 hours until I buried it in the garage (I tried the office but it still woke me).
The thing would start and run for 15 seconds, then shut off. Another 1.5 hours later, it would cycle again. And yes, I could stop and start it manually, so it wasn’t a stuck on/off switch.

I called the company and asked about this. “It’s broke” they replied. No kidding. But they gave me a 15% coupon which didn’t work either. Go figure.

Buying an exact replacement toothbrush would have set me back $150. Jeepers. That’s as bad as Mylan raising the price of their Epi pens.

I think it’s curious that it breaks just after the extended warranty expires. For the first year, I only used it once a day. Hmm. It’s as if they timed it well. The brush commits suicide
as soon as the warranty expires.

At least it wasn’t made by Samsung. It would have caught fire by now.

$ $ $

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

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
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