Intraday Market Direction Thursday: Nasdaq Higher…

Tuesday 11/7/17. Intraday Market Direction: Dow

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 150/252 or 59.5% of the time.

     The prediction of the index closing lower has been right 32/65 or 49.2% 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.

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I show a picture of the Dow industrials on the 5-minute scale, but this one is only two days long.

I wanted to show a zoom-in of the ascending triangle, shown here highlighted in red.

The index broke out upward and then dropped, closing below the apex but not below the bottom of the triangle. If it were to close below the bottom of the triangle, then
that would bust the upward breakout. And that would be bad news.

If it busts the upward breakout, then I would expect a nice decline to follow. If it turns around and resumes the upward move, then the curl would just be an extended
throwback.

My guess is the opening minute will determine the day’s direction. If it gaps up, then look for a rise. A gap down, then look for a lower close. But that’s just a guess. I don’t
know if it’ll work or not.

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I started the search for health insurance. Jeepers. None of the companies I checked have my optometrist or family doctor in network. That means I’d be paying about $12,000 (bronze plan, mind you)
and getting no value from it. Not even a free annual exam unless I change doctors.

If I were to get sick, the expenses would have to top about $20,000 before the insurance covers 100%. Go out of network, and they don’t cover anything. Nice for them.

One solution is to get married to a women who has group insurance. Tie the knot by January 1st and I’d be set. What are the odds of that happening? Probably the same as finding
a decent health insurance plan.

I suppose I could marry someone rich (say, $15,000,000 of liquid net worth) and self insure both of us. That would cover about $2 million for each of us if we got cancer.
That would leave a tidy sum to pay for jet fuel.

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Quick shout out (thanks) to Ronda P. You know why.

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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 11/6/17. Market Monday: The Week Ahead

My Prediction

I show the Dow transports on the daily scale.

A head-and-shoulders top appears on the chart, shown with LS as the left shoulder, Head (H), and RS as the right shoulder.

The pattern confirms as a valid chart pattern when the index closes below the red line. I use that line, which I drew horizontally from the right armpit, as the confirmation signal.

Others might use the neckline, a line which connects the two armpits. In this case, the index would slide well below the red line before triggering (after a close on the index).

A broadening bottom appears at A. It had an upward breakout.

Will the index drop all the way down to the broadening bottom before finding support? Probably not, but let’s stay tuned.

It could be an early-warning signal of a coming bear market.

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 85.45 points.

Tuesday: Up 28.5 points.

Wednesday: Up 57.77 points.

Thursday: Up 81.25 points.

Friday: Up 22.93 points.

For the Week…

The Dow industrials were up 105 points or 0.4%.

The Nasdaq composite was up 63.18 points or 0.9%.

The S&P 500 index was up 6.77 points or 0.3%.

Year to Date…

Dow Industrials

     0.1% down from the high of 23,557.06 on 11/03/2017.

     19.6% up from the low of 19,677.94 on 01/19/2017.

Nasdaq

     0.0% down from the high of 6,765.14 on 11/03/2017.

     25.3% up from the low of 5,397.99 on 01/03/2017.

S&P 500

     0.0% down from the high of 2,588.42 on 11/03/2017.

     15.3% up from the low of 2,245.13 on 01/03/2017.

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

As of 11/03/2017, the CPI had:

7 bearish patterns,

8 bullish patterns,

246 patterns waiting for breakout.

The CPI signal is 53.3%, which is
neutral (between 35% and 65%).

The chart pattern indicator is bullish
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.

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 11/3/17. 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 18 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 595 stocks searched, or 3.0%. Based on the percentage, the stock market is
trending since few consolidation patterns appear.

I found 1 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 4 bullish chart patterns this week and 9 bearish ones with any remaining (5) 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: Electronics

Industry RS rank: 12 out of 56

Stock RS rank: 580 out of 587

11/2/17 close: $9.09

1 Month avg volatility: $0.56. Volatility stop (for downward breakout): $10.56 or 16.2% above the close.

Change YTD: -31.60%

Volume: 5,782,100 shares.
3 month avg: 2,715,718 shares.

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

 

Chart pattern: Dead-cat bounce continuation pattern from 11/01/2017 to 11/01/2017

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Food Processing

Industry RS rank: 46 out of 56

Stock RS rank: 494 out of 587

11/2/17 close: $33.86

1 Month avg volatility: $0.51. Volatility stop (for upward breakout): $32.68 or 3.5% below the close.

Change YTD: -14.39%

Volume: 2,481,000 shares.
3 month avg: 3,675,502 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, symmetrical continuation pattern from 09/15/2017 to 11/02/2017

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: Computers and Peripherals

Industry RS rank: 28 out of 56

Stock RS rank: 571 out of 587

11/2/17 close: $31.06

1 Month avg volatility: $1.25. Volatility stop (for downward breakout): $33.81 or 8.9% above the close.

Change YTD: -29.18%

Volume: 1,082,200 shares.
3 month avg: 1,274,698 shares.

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

 

Chart pattern: Dead-cat bounce continuation pattern from 10/27/2017 to 10/27/2017

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Information Services

Industry RS rank: 44 out of 56

Stock RS rank: 542 out of 587

11/2/17 close: $108.92

1 Month avg volatility: $2.37. Volatility stop (for upward breakout): $102.89 or 5.5% below the close.

Change YTD: -7.87%

Volume: 1,240,000 shares.
3 month avg: 3,805,246 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 10/11/2017 to 11/02/2017

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: Air Transport

Industry RS rank: 41 out of 56

Stock RS rank: 499 out of 587

11/2/17 close: $10.75

1 Month avg volatility: $0.41. Volatility stop (for upward breakout): $9.75 or 9.3% below the close.

Change YTD: -36.65%

Volume: 58,600 shares.
3 month avg: 59,686 shares.

This security may be thinly traded (less than 100k shares)!

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

 

Chart pattern: Pipe bottom reversal pattern from 10/16/2017 to 10/23/2017

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: Insurance (Prop/Casualty)

Industry RS rank: 40 out of 56

Stock RS rank: 486 out of 587

11/2/17 close: $227.44

1 Month avg volatility: $4.98. Volatility stop (for downward breakout): $247.20 or 8.7% above the close.

Change YTD: 5.10%

Volume: 692,600 shares.
3 month avg: 522,202 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: Double Top, Adam and Adam reversal pattern from 10/13/2017 to 10/31/2017

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: Computer Software and Svcs

Industry RS rank: 4 out of 56

Stock RS rank: 321 out of 587

11/2/17 close: $14.68

1 Month avg volatility: $0.40. Volatility stop (for downward breakout): $15.97 or 8.8% above the close.

Change YTD: 23.36%

Volume: 17,150,700 shares.
3 month avg: 4,784,169 shares.

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

 

Chart pattern: Head-and-shoulders top reversal pattern from 09/18/2017 to 10/31/2017

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: IT Services

Industry RS rank: 13 out of 56

Stock RS rank: 313 out of 587

11/2/17 close: $126.58

1 Month avg volatility: $1.41. Volatility stop (for downward breakout): $130.00 or 2.7% above the close.

Change YTD: 19.10%

Volume: 1,550,800 shares.
3 month avg: 869,394 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, Eve and Adam reversal pattern from 10/02/2017 to 10/27/2017

Breakout is downward 100% of the time.

Average decline: 15%.

Break-even failure rate: 13%.

Pullbacks occur 64% of the time.

Price hits measure rule target 72% of the time.

Industry: Aerospace/Defense

Industry RS rank: 6 out of 56

Stock RS rank: 75 out of 587

11/2/17 close: $46.72

1 Month avg volatility: $0.72. Volatility stop (for upward breakout): $44.83 or 4.0% below the close.

Change YTD: 29.10%

Volume: 1,325,200 shares.
3 month avg: 1,127,663 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 continuation pattern from 10/26/2017 to 11/02/2017

Breakout is upward 54% of the time.

Average rise: 23%.

Break-even failure rate: 4%.

Throwbacks occur 43% of the time.

Price hits measure rule target 64% of the time.

Industry: Shoe

Industry RS rank: 29 out of 56

Stock RS rank: 587 out of 587

11/2/17 close: $1.66

1 Month avg volatility: $0.35. Volatility stop (for downward breakout): $2.71 or 63.3% above the close.

Change YTD: -82.23%

Volume: 4,880,100 shares.
3 month avg: 1,185,222 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: Dead-cat bounce continuation pattern from 10/30/2017 to 10/30/2017

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Retail Store

Industry RS rank: 49 out of 56

Stock RS rank: 584 out of 587

11/2/17 close: $2.55

1 Month avg volatility: $0.16. Volatility stop (for downward breakout): $3.02 or 18.6% above the close.

Change YTD: -69.31%

Volume: 31,513,800 shares.
3 month avg: 18,747,972 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: Dead-cat bounce continuation pattern from 10/27/2017 to 10/27/2017

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Household Products

Industry RS rank: 53 out of 56

Stock RS rank: 572 out of 587

11/2/17 close: $30.01

1 Month avg volatility: $0.83. Volatility stop (for downward breakout): $34.85 or 16.1% above the close.

Change YTD: -32.79%

Volume: 47,502,400 shares.
3 month avg: 5,681,065 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: Dead-cat bounce continuation pattern from 11/02/2017 to 11/02/2017

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Toiletries/Cosmetics

Industry RS rank: 21 out of 56

Stock RS rank: 273 out of 587

11/2/17 close: $60.86

1 Month avg volatility: $1.28. Volatility stop (for downward breakout): $65.44 or 7.5% above the close.

Change YTD: 27.38%

Volume: 943,200 shares.
3 month avg: 620,995 shares.

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

 

Chart pattern: Double Top, Eve and Adam reversal pattern from 10/16/2017 to 11/01/2017

Breakout is downward 100% of the time.

Average decline: 15%.

Break-even failure rate: 13%.

Pullbacks occur 64% of the time.

Price hits measure rule target 72% of the time.

Industry: Apparel

Industry RS rank: 36 out of 56

Stock RS rank: 237 out of 587

11/2/17 close: $63.59

1 Month avg volatility: $1.34. Volatility stop (for downward breakout): $67.51 or 6.2% above the close.

Change YTD: 5.75%

Volume: 78,700 shares.
3 month avg: 155,811 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: Rising wedge reversal pattern from 09/06/2017 to 10/30/2017

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: Medical Supplies

Industry RS rank: 33 out of 56

Stock RS rank: 540 out of 587

11/2/17 close: $35.97

1 Month avg volatility: $0.80. Volatility stop (for downward breakout): $37.83 or 5.2% above the close.

Change YTD: -12.33%

Volume: 1,047,900 shares.
3 month avg: 1,454,029 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: Pipe top reversal pattern from 10/16/2017 to 10/23/2017

Breakout is downward 100% of the time.

Average decline: 20%.

Break-even failure rate: 11%.

Pullbacks occur 41% of the time.

Price hits measure rule target 70% of the time.

Industry: Electric Utility (East)

Industry RS rank: 26 out of 56

Stock RS rank: 443 out of 587

11/2/17 close: $36.90

1 Month avg volatility: $0.47. Volatility stop (for upward breakout): $35.77 or 3.1% below the close.

Change YTD: 8.37%

Volume: 3,864,000 shares.
3 month avg: 2,968,689 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 10/06/2017 to 10/31/2017

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: Drug

Industry RS rank: 51 out of 56

Stock RS rank: 586 out of 587

11/2/17 close: $11.23

1 Month avg volatility: $0.57. Volatility stop (for downward breakout): $13.38 or 19.1% above the close.

Change YTD: -69.02%

Volume: 117,278,400 shares.
3 month avg: 28,018,565 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: Dead-cat bounce continuation pattern from 11/02/2017 to 11/02/2017

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Apparel

Industry RS rank: 36 out of 56

Stock RS rank: 49 out of 587

11/2/17 close: $69.91

1 Month avg volatility: $1.10. Volatility stop (for upward breakout): $67.11 or 4.0% below the close.

Change YTD: 31.04%

Volume: 2,185,000 shares.
3 month avg: 2,289,871 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: Flag continuation pattern from 10/24/2017 to 10/31/2017

Breakout is upward 54% of the time.

Average rise: 23%.

Break-even failure rate: 4%.

Throwbacks occur 43% of the time.

Price hits measure rule target 64% of the time.

Industry: Investment Co. (Foreign)

Industry RS rank: 22 out of 56

Stock RS rank: 132 out of 587

11/2/17 close: $51.44

1 Month avg volatility: $0.48. Volatility stop (for upward breakout): $49.80 or 3.2% below the close.

Change YTD: 37.47%

Volume: 421,800 shares.
3 month avg: 334,346 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: Scallop, ascending and inverted continuation pattern from 09/27/2017 to 10/27/2017

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.

Thursday 11/2/17. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 138/244 or 56.6% of the time.

     The prediction of the index closing lower has been right 43/83 or 51.8% of the time.

Since I post this the night before, check how the futures are trading before market open. Large moves can affect the opening direction.

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

The only interesting thing I see in the chart on the right is the support area, highlighted by the red line.

I think it begins in the circled area, a congestion region where bulls and bears fought for direction. The bulls won, and the index climbed.

On Wednesday, the bears fought back and pushed the index down to touch the red line before the bulls woke up and took over. I can see the index rounding over and heading lower on Thursday,
but that’s just a guess.

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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 11/1/17. 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.

The chart shows another wave of divergence. We’ve seen this before but the index continues higher.

The last green vertical bar on the right means the indicator is still bullish, even though it flipped to bearish yesterday for a time. (Signals can change for up to a week).

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 took a dive this period. The red line, which is the more sensitive of the two, dropped from 21% bearish to 24% of the stocks in my database.

The average stock is down 12% from their yearly high, dropping a percentage point. Both of these events are bearish but it might not mean anything of the indices continue higher.

And yet I remain nervous. My fingers are on the sell trigger, but I haven’t pulled it much so far.

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I released updated versions of broadening tops and bottoms, including some new performance statistics (performance over decades).

— Thomas Bulkowski

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
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