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Intraday Market Direction Thursday: Nasdaq Higher…

Blog: July 2020

Bulkowski's Blog: ThePatternSite.com

As of 07/07/2020

  Indus: 25,890 -396.85 -1.5%  

  Trans: 9,279 -108.33 -1.2%  

  Utils: 776 -3.44 -0.4%  

  Nasdaq: 10,344 -89.76 -0.9%  

  S&P 500: 3,145 -34.40 -1.1%  

YTD

-9.3%  

-14.9%  

-11.8%  

 +15.3%  

-2.6%  

  Down arrow24,000 or 27,800 by 07/15/2020
  Down arrow8,400 or 10,000 by 07/15/2020
  Up arrow825 or 700 by 07/15/2020
  Up arrow10,800 or 10,000 by 08/01/2020
  Down arrow2,900 or 3,300 by 07/15/2020

As of 07/07/2020

  Indus: 25,890 -396.85 -1.5%  

  Trans: 9,279 -108.33 -1.2%  

  Utils: 776 -3.44 -0.4%  

  Nasdaq: 10,344 -89.76 -0.9%  

  S&P 500: 3,145 -34.40 -1.1%  

YTD

-9.3%  

-14.9%  

-11.8%  

 +15.3%  

-2.6%  

  Down arrow24,000 or 27,800 by 07/15/2020
  Down arrow8,400 or 10,000 by 07/15/2020
  Up arrow825 or 700 by 07/15/2020
  Up arrow10,800 or 10,000 by 08/01/2020
  Down arrow2,900 or 3,300 by 07/15/2020

 


Wednesday 7/8/20. A Look At Indicators

Picture of the chart pattern indicator

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 pattern indicator turned green, which is bullish, about a week ago and it’s still bullish today.

However, look at the signal line, that thin blue thing near the bottom of the chart. It has turned down, hasn’t it?

Combined with the index hitting overhead resistance setup by the early June peak, it could be the index will drop from here. So the chart is bullish but hinting of a downturn.

Picture of the percent down indicators

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).

Shown as a red line on the above chart…

On Tuesday, 60% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).

A week ago, it was 62%.

The fewest was 20% on 01/16/2020.

And the most was 96% on 03/23/2020.

Shown as a blue line on the above chart…

The 479 stocks in my database are down an average of 27% from their yearly high.

A week ago, the average was 27%.

The peak was 11% on 01/16/2020.

And the bottom was 47% on 03/23/2020.

Usually this chart doesn’t tell us anything we don’t already know. Why? Because the two red and blue indicator lines hug price movement. When the index burps, so do the two lines.

The above text says the more sensitive red line has shown improvement from a week ago.

Now look at A, the brown or orange lines. They show bearish divergence. In other words, the index has a higher peak and the indicators show lower peaks. That’s not good.

This chart, combined with the prior one suggests the index is going down. Maybe not hard and fast, but there’s weakness underlying the market. That’s my take, anyway.

— Thomas Bulkowski

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Tuesday 7/7/20. Slider Trading Quiz!

The index climbed by 1.8% or 459.67 points. Since 10/01/1928 the index made 109 similar moves on a percentage basis. After those moves, the next day’s…

     Average gain was 0.6% on 66 occasions.

     Average loss was -0.8% on 43 occasions.

Expect the index to close higher 60.6% of the time.

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 208/358 or 58.1% of the time.

     The prediction of the index closing lower has been right 39/79 or 49.4% of the time.

$ $ $

I show a another slider trading quiz featuring Apache stock. It’s an actual trade of mine.

$ $ $

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

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© 2020 ThePatternSite.com    Metric   Value   Diff   Close (within 10% of the high-low range for the day)? 
 Monthly S2   23,499.78      
 Weekly S2   24,754.28   1,254.51   
 Monthly S1   24,893.40   139.12   
 Weekly S1   25,520.66   627.25   
 Weekly Pivot   25,862.53   341.88   
 Daily S2   25,892.10   29.56   Yes! The Daily S2 is close to the Weekly Pivot.
 Low   25,996.08   103.98   
 Open   25,996.08   0.00   Yes! The Open is close to the Low.
 Daily S1   26,089.56   93.48   
 61.8% Down from Intraday High   26,111.23   21.67   Yes! The 61.8% Down from Intraday High is close to the Daily S1.
 50% Down from Intraday High   26,146.80   35.57   
 38.2% Down from Intraday High   26,182.38   35.57   
 Daily Pivot   26,193.55   11.17   Yes! The Daily Pivot is close to the 38.2% Down from Intraday High.
 Monthly Pivot   26,236.81   43.26   
 Close   26,287.03   50.22   
 High   26,297.53   10.50   Yes! The High is close to the Close.
 Daily R1   26,391.01   93.48   
 Daily R2   26,495.00   103.98   
 Weekly R1   26,628.91   133.91   
 Weekly R2   26,970.78   341.88   
 Monthly R1   27,630.43   659.65   
 Monthly R2   28,973.84   1,343.40   


Monday 7/6/20. Market Monday: The Week Ahead

My Prediction

Picture of the Dow utilities on the daily scale.

I show the Dow utilities on the daily scale, but there’s not much to write about this chart.

I drew two trendlines, the top one along the peaks. It slopes upward but because price only touches it two times, it’s not as reliable as other trendlines with more touches.

It may act as overhead resistance.

Along the bottom, I drew another trendline. With this one, I had to make a decision as to whether to draw the line so it cut through price at the late June bottom or just touched it
like the prior two touches.

I consider the late June dip as still resting on support. The index has climbed and looks to continue climbing. That’s the direction I predicted in Tom’s Targets
at the top of this page for the next 2 weeks, but with covid spiking across the south and west, traders and investors could freak and send the index lower. So who knows what’s going to happen.

The two trendlines, taken together, form a pattern called a rising wedge.

Usually, I like to see at least five trendline touches (3 on one trendline and 2 on the other), so this one with 4 touches isn’t ideal. The breakout is downward 60% of the time.
Maybe it has already broken out downward with the late June drop.

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A Brief Look Back

Picture of a flower from my garden.

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 580.25 points.

Tuesday: Up 217.08 points.

Wednesday: Down 77.91 points.

Thursday: Up 92.39 points.

Friday: Holiday or other weird event!

For the Week…

The Dow industrials were up 811.81 points or 3.2%.

The Nasdaq composite was up 450.41 points or 4.6%.

The S&P 500 index was up 120.96 points or 4.0%.

Year to Date…

Dow Industrials

     12.7% down from the high of 29,568.57 on 02/12/2020.

     41.8% up from the low of 18,213.65 on 03/23/2020.

Nasdaq

     1.0% down from the high of 10,310.36 on 07/02/2020.

     53.9% up from the low of 6,631.42 on 03/23/2020.

S&P 500

     7.8% down from the high of 3,393.52 on 02/19/2020.

     42.8% up from the low of 2,191.86 on 03/23/2020.

Options Expiration

No options expire this week.

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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.

Index S2 S1 Pivot R1 R2
Dow Industrials (^DJI): Daily   25,510   25,669   25,937   26,095   26,363 
Weekly   24,601   25,214   25,709   26,322   26,818 
Monthly   23,347   24,587   26,084   27,324   28,821 
S&P500 (^GSPC): Daily   3,099   3,114   3,140   3,156   3,181 
Weekly   2,932   3,031   3,099   3,197   3,265 
Monthly   2,842   2,986   3,110   3,254   3,377 
Nasdaq (^IXIC): Daily   10,121   10,164   10,237   10,281   10,354 
Weekly   9,414   9,811   10,061   10,457   10,707 
Monthly   8,962   9,585   9,948   10,570   10,933 
  • 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

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Consecutive Price Trends

Index  Consecutive
Closes So Far 
%  Comments 
 Dow industrials (^DJI)  1 week up  46.5%   Expect a random direction. 
  4 months up  24.1%   Expect a reversal soon. 
 S & P 500 (^GSPC)  1 week up  47.4%   Expect a random direction. 
  4 months up  30.6%   The trend may continue. 
 Nasdaq composite (^IXIC)  1 week up  48.7%   Expect a random direction. 
  4 months up  22.1%   Expect a reversal soon. 

How long can an index close higher (or lower) each day? The adjacent table shows how often consecutive up or down closes occur in the indices, based on the most recent trend of closes.

Low percentages suggest the market is overdue to turn (think of it as the likelihood that next week or next month will continue the trend, based on historical performance). Values of 50% mean random, so most percentages will be lower.

The analysis uses data going back 10 years for weekly percentages and 25 years for monthly percentages (or the start of data, whichever is more recent). Any unchanged closing price is interpreted as the end of the string of consecutive up or down closes.

Earnings, Chart Patterns & Industries

Earnings season will be starting in about 10 days.

 Found  Chart Pattern Name
13 Double Top, Adam and Adam
13 Head-and-shoulders top
10 Pipe top
8 Flag, high and tight
8 Triangle, symmetrical
5 Double Bottom, Adam and Adam
3 Dead-cat bounce
3 Pipe bottom
2 Diamond top
2 Pennant

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.

This Week Last Week
1. Healthcare Information 1. Healthcare Information
2. Computer Software and Svcs 2. Computer Software and Svcs
3. Semiconductor 3. Semiconductor
4. Internet 4. Internet
5. Retail Building Supply 5. Retail Building Supply

— Thomas Bulkowski

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Friday 7/3/20. Heavy Lifting: Supporting ThePatternSite.com

Today is a trading holiday in the US.

If you wish to support the website, then try one of these options.

  1. Perhaps the best way is come to this site and click on an image of one of my books. You’ll find the images at the bottom of the page. The click will take
    you to
    Amazon.com.
    The link passes a code to them and I receive a small referral fee but only if you buy something while there during the visit. You do NOT need to buy the book. It’s just a vehicle to get you to Amazon
    with the referral code (and I think it only works for customers in the US).

    So each time you want to use Amazon.com to buy something, come to this site first. The referral is free (it does not increase the cost of anything you buy), it’s easy to do, and it supports this site.

  2. You can click on an ad. Please don’t click on them just to run up the score. Google frowns on that. If you see something of interest, then click the ad and visit their site.
    Ad sales are where most of the financial support for the site comes from. Some of you may have to turn off your ad blocker to see the ads.
  3.  

  4. Finally, you can donate to the site directly. The home page (and some other pages as well) has a Donate link at the bottom of the page.

Thanks! — Tom Bulkowski

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Thursday 7/2/20. Intraday Market Direction: Nasdaq

The index climbed by 1.0% or 95.86 points. Since 02/05/1971 the index made 235 similar moves on a percentage basis. After those moves, the next day’s…

     Average gain was 0.9% on 151 occasions.

     Average loss was -0.8% on 84 occasions.

Expect the index to close higher 64.3% of the time.

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 190/341 or 55.7% of the time.

     The prediction of the index closing lower has been right 56/113 or 49.6% 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.

Picture of the Nasdaq composite on the 5 minute scale.

$ $ $

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

There’s a very pretty looking head-and-shoulders bottom on the chart. The left shoulder (LS), head, and right shoulder (RS) are all well defined and symmetrical about the head.

The down-sloping neckline at A shows where the buy signal is. The index climbed to the target without much of a pause along the way.

Today, the index hit overhead resistance shown by the green line and turned lower.

Will the index have enough selling pressure to keep the index down?

This page (Holiday.html) says the index closes higher 53.6% of the time the day before a holiday (which Thursday is). On Monday, expect the index to close
lower 57.2% of the time.

$ $ $

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

Top

© 2020 ThePatternSite.com    Metric   Value   Diff   Close (within 10% of the high-low range for the day)? 
 Monthly S2   8,762.68      
 Monthly S1   9,458.66   695.97   
 Weekly S2   9,569.07   110.41   
 Monthly Pivot   9,840.25   271.18   
 Weekly S1   9,861.85   21.60   
 Daily S2   9,984.14   122.29   
 Weekly Pivot   10,041.85   57.71   
 Low   10,048.04   6.19   Yes! The Low is close to the Weekly Pivot.
 Open   10,063.67   15.63   
 Daily S1   10,069.38   5.71   Yes! The Daily S1 is close to the Open.
 61.8% Down from Intraday High   10,105.02   35.63   
 50% Down from Intraday High   10,122.62   17.60   
 Daily Pivot   10,133.29   10.67   Yes! The Daily Pivot is close to the 50% Down from Intraday High.
 38.2% Down from Intraday High   10,140.21   6.93   Yes! The 38.2% Down from Intraday High is close to the Daily Pivot.
 Close   10,154.63   14.42   Yes! The Close is close to the 38.2% Down from Intraday High.
 High   10,197.19   42.56   
 Daily R1   10,218.53   21.34   
 Daily R2   10,282.44   63.90   
 Weekly R1   10,334.63   52.19   
 Weekly R2   10,514.63   180.00   
 Monthly R1   10,536.23   21.60   
 Monthly R2   10,917.82   381.60   


Wednesday 7/1/20. 2020 Market Forecast July Update

Here’s the updated 2020 forecast for July, presented in slider format.

Based on sector performance from Fidelity, the best performing sectors for year to date performance as of 30 June 2020 were… (The numbering is how they ranked a month ago.)

1. Information technology (+14.21%),

2. Consumer discretionary (+6.60%),

3. Communication services (-0.97%),

4. Health care (-1.72%),

5. Consumer staples (-7.05%),

8. Materials (-8.04%),

7. Real estate (-9.96%),

6. Utilities (-12.61%),

9. Industrials (-15.50%),

10. Financials (-24.62%),

11. and dead last is energy (-37.02%).

Here’s how they rank the industries, but only those in the plus column appear. Year to date returns. The rank is how they listed a month ago.

1. Internet & direct marketing retail (+41.05%),

2. Software (+26.50%),

5. Technology hardware, storage & Peripherals (+20.15%),

3. Biotechnology (+12.35%),

6. Metals & mining (+11.48%),

8. Semiconductors & semiconductor equipment (+9.18%),

7. Life sciences tools & Services (+5.81%),

4. Interactive media & Services (+5.27%),

?. Professional Services (+4.83%),

9. Specialty retail (+2.94%),

10. IT Services (+2.35%),

11. Entertainment (+2.30%).

?. Trading Companies & Distributors (+2.08%),

?. Household products (+0.39%),

— Thomas Bulkowski

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Forecast Update…

Blog: June 2020 As of 06/04/2020   Indus: 26,282 +11.93 +0.0%     Trans: 9,575 +134.48 +1.4%     Utils: 814 -17.21 -2.1%   ...

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