Intraday Market Direction Tuesday: Dow Higher…

Friday 10/6/17. 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 8 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 596 stocks searched, or 1.3%. Based on the percentage, the stock market is
trending since few consolidation patterns appear.

I found 2 pipe bottom chart patterns, which is neutral. High numbers of pipe bottoms can signal a bullish move (I see many of them just before a bear market ends or during a bear market rally. Often it means the first bottom of a double bottom has formed. Thus, expect a move down to the second bottom).

Excluding ETFs, there were 3 bullish chart patterns this week and 3 bearish ones with any remaining (3) 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: Diversified Co.

Industry RS rank: 12 out of 56

Stock RS rank: 10 out of 588

10/5/17 close: $34.84

1 Month avg volatility: $1.01. Volatility stop (for upward breakout): $32.72 or 6.1% below the close.

Change YTD: 94.09%

Volume: 316,800 shares.
3 month avg: 800,169 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: Flag continuation pattern from 09/27/2017 to 10/05/2017

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: Semiconductor Cap Equip.

Industry RS rank: 3 out of 56

Stock RS rank: 58 out of 588

10/5/17 close: $51.43

1 Month avg volatility: $1.21. Volatility stop (for upward breakout): $48.35 or 6.0% below the close.

Change YTD: 59.37%

Volume: 9,335,000 shares.
3 month avg: 10,490,491 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: Flag continuation pattern from 10/02/2017 to 10/05/2017

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: Apparel

Industry RS rank: 20 out of 56

Stock RS rank: 577 out of 588

10/5/17 close: $8.89

1 Month avg volatility: $0.25. Volatility stop (for downward breakout): $9.46 or 6.4% above the close.

Change YTD: -38.22%

Volume: 1,815,300 shares.
3 month avg: 3,022,685 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: Rising wedge reversal pattern from 08/25/2017 to 10/05/2017

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: Food Processing

Industry RS rank: 52 out of 56

Stock RS rank: 549 out of 588

10/5/17 close: $34.10

1 Month avg volatility: $0.59. Volatility stop (for upward breakout): $32.66 or 4.2% below the close.

Change YTD: -13.78%

Volume: 2,714,300 shares.
3 month avg: 4,290,028 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 08/30/2017 to 10/05/2017

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: Retail Store

Industry RS rank: 47 out of 56

Stock RS rank: 428 out of 588

10/5/17 close: $167.07

1 Month avg volatility: $2.01. Volatility stop (for downward breakout): $171.14 or 2.4% above the close.

Change YTD: 4.35%

Volume: 4,167,200 shares.
3 month avg: 3,551,286 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: Rising wedge reversal pattern from 08/16/2017 to 10/05/2017

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: Electronics

Industry RS rank: 2 out of 56

Stock RS rank: 388 out of 588

10/5/17 close: $16.91

1 Month avg volatility: $0.24. Volatility stop (for downward breakout): $17.46 or 3.2% above the close.

Change YTD: 17.68%

Volume: 2,022,500 shares.
3 month avg: 3,226,712 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 09/12/2017 to 09/29/2017

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: Medical Services

Industry RS rank: 18 out of 56

Stock RS rank: 516 out of 588

10/5/17 close: $9.65

1 Month avg volatility: $0.25. Volatility stop (for upward breakout): $9.06 or 6.1% below the close.

Change YTD: 21.54%

Volume: 278,100 shares.
3 month avg: 292,009 shares.

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

 

Chart pattern: Pipe bottom reversal pattern from 09/18/2017 to 09/25/2017

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: Semiconductor Cap Equip.

Industry RS rank: 3 out of 56

Stock RS rank: 265 out of 588

10/5/17 close: $22.03

1 Month avg volatility: $0.51. Volatility stop (for upward breakout): $20.85 or 5.3% below the close.

Change YTD: 38.12%

Volume: 331,700 shares.
3 month avg: 551,045 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: Pennant continuation pattern from 10/03/2017 to 10/05/2017

Breakout is upward 61% of the time.

Average rise: 25%.

Break-even failure rate: 2%.

Throwbacks occur 47% of the time.

Price hits measure rule target 60% of the time.

Industry: Household Products

Industry RS rank: 51 out of 56

Stock RS rank: 479 out of 588

10/5/17 close: $43.80

1 Month avg volatility: $0.91. Volatility stop (for upward breakout): $41.08 or 6.2% below the close.

Change YTD: -1.90%

Volume: 5,915,800 shares.
3 month avg: 4,318,922 shares.

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

 

Chart pattern: Pipe bottom reversal pattern from 09/18/2017 to 09/25/2017

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: Investment Co. (Foreign)

Industry RS rank: 26 out of 56

Stock RS rank: 407 out of 588

10/5/17 close: $33.95

1 Month avg volatility: $0.23. Volatility stop (for downward breakout): $34.45 or 1.5% above the close.

Change YTD: -2.44%

Volume: 445,700 shares.
3 month avg: 198,366 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: Diamond top reversal pattern from 09/26/2017 to 10/05/2017

Breakout is downward 69% of the time.

Average decline: 21%.

Break-even failure rate: 6%.

Pullbacks occur 57% of the time.

Price hits measure rule target 76% of the time.

Thursday 10/5/17. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 137/241 or 56.8% of the time.

     The prediction of the index closing lower has been right 42/82 or 51.2% 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 Nasdaq composite on the 5-minute scale.

This is an unusual pic, different from all of the others I’ve posted over the years. Why?

Because I show a curving channel.

Trendlines show momentum. When price rises above an up-sloping trendline, momentum is increasing. When it turns back toward the trendline, upward momentum drops and downward momentum gathers
steam.

In this case, you can see momentum turn at the bottom trendline at A. And that leaves price starting to move sideways.

Most of the time (based on what I’ve read, not from hard facts), the security will drop after a horizontal topping pattern. In excitable times, whatever that is, a security will
breakout upward and resume trending higher, often following almost the same slope.

To me, though, the index looks tired, as if it needs a retrace to recoup strength.

$ $ $

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 10/4/17. 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.

Nothing much has changed on this picture for weeks now, so I’ve nothing important to say about the chart. It’s bullish. And the indicator remains pegged at or near 100, the top of its scale.

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).

The two lines continue to show improvement, much to my surprise. September is typically the weakest performing month of the year but it did well this time around.

I don’t know what else to say except the trend will end sometime. Just don’t bet on when that will happen.

— Thomas Bulkowski

Tuesday 10/3/17. Intraday Market Direction: Dow

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 146/248 or 58.9% 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.

$ $ $

I show a picture of the Dow industrials on the 5-minute scale.

An upward breakout from a symmetrical triangle saw the index make a nice gain. That should have made me happy, but the move was overshadowed by the gun violence in Las Vegas.

Fact: If no one had guns, there’d be no gun violence. Therefore, the more guns, the more gun violence.

What is congress doing? They are working on NRA-backed legislation to make buying a gun silencer easier!

One solution is to get people to turn in their guns. “Australia’s [new, stringent] gun laws [and a gun buy-back program in 1997] stopped mass shootings and reduced homicides, study finds” after a massacre there in 1996, according to
The Guardian. “Between 1995 and 2006, gun-related homicides and suicides in the country [Australia] dropped by 59 percent and 65 percent, respectively,” according to The Atlantic.

According to tonight’s national news, the US has 5% of the world’s population, but 30% of mass shootings.

According to Time magazine (October 24, 2016 issue), they said as of 2009 (eight years ago!), “there were 310 million firearms [and a 2009 population of 306.8 million people or more than one gun per person] in the US” and “Firearms were responsible for 71% of all murders” in 2015.

$ $ $

I released version 6.6 of Patternz. It has a manual scoring system now (as well as the automatic one) and it has an auto-retry feature on the update form. If a quote
isn’t updated by one quote provider, it’ll try another.

$ $ $

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 10/2/17. Market Monday: The Week Ahead

My Prediction

I show a chart of the Dow industrials on the daily scale.

Nothing much of interest shows on this chart.

I drew a channel in red by connecting the valleys on the bottom and drew another red line connecting the two recent peaks.

The channel is flawed, in my view, because there’s not enough trendline touches on the top.

One of the ideas that this chart highlights, though, is point A.

That dip is what I call a partial decline. It suggests more of an upward move ahead, but we’ll have to see what happens.

Clearly the index is struggling to move higher. Some of the other indices have broken out to new highs.

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 53.5 points.

Tuesday: Down 11.77 points.

Wednesday: Up 56.39 points.

Thursday: Up 40.49 points.

Friday: Up 23.89 points.

For the Week…

The Dow industrials were up 55.5 points or 0.2%.

The Nasdaq composite was up 69.04 points or 1.1%.

The S&P 500 index was up 17.14 points or 0.7%.

Year to Date…

Dow Industrials

     0.1% down from the high of 22,419.51 on 09/21/2017.

     13.9% up from the low of 19,677.94 on 01/19/2017.

Nasdaq

     0.0% down from the high of 6,497.98 on 09/29/2017.

     20.3% up from the low of 5,397.99 on 01/03/2017.

S&P 500

     0.0% down from the high of 2,519.44 on 09/29/2017.

     12.2% 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 09/29/2017, the CPI had:

3 bearish patterns,

10 bullish patterns,

215 patterns waiting for breakout.

The CPI signal is 76.9%, which is
bullish (>= 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 over.

Large numbers of bullish or bearish chart patterns can signal short- to intermediate-term market trends (many bullish chart patterns can mean an uptrend will continue, for example).
However, please realize that the short-term price trend could have changed since the pattern was discovered (this is especially true of pipe tops or bottoms, which are weekly patterns).

The 10 types of most frequently appearing chart patterns in the stocks, indices, and long-only exchange traded funds I follow during the last month are shown in the adjacent table.

The industries I follow were the best (rank 1) and worst performing.

— Thomas Bulkowski

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