Chart Pattern Indicator: What's It Say?…

Monday 3/7/22. Market Monday: The Week Ahead

My Prediction

I show the Dow industrials on the daily scale. Here’s how I determine when it’s time to buy.

This evening, I was talking to my brother about buying the dip, and how to do that.

A head-and-shoulders top appears on the chart as LS (left shoulder), head, and RS (right shoulder). It looks as if the index closed below the blue neckline at A.
When that happened, it was a sell signal.

But notice that the index turned around and has struggled to move higher.

In my terms, the head-and-shoulders busted the downward breakout and that suggests a strong upward move.

The way this might unfold I show as two routes. Route 1 is a climb following red line 1.

Alternatively, the index can drop to form a double bottom. Once that happens, look for a recovery following path 2 to 3.

Please don’t assume that the rise to 1 or drop to 2 will be straight-line affairs. But if I had cash to put into the market or if I had an under performing stock (or one I thought would
underperform in the coming months/years), I’d be buying the dip. If you’re worried about a single stock dropping then buy an ETF like the QQQs (which track the Nasdaq) or a mutual fund to spread
the risk.

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 166.15 points.

Tuesday: Down 597.65 points.

Wednesday: Up 596.4 points.

Thursday: Down 96.69 points.

Friday: Down 179.86 points.

For the Week…

The Dow industrials were down 443.95 points or 1.3%.

The Nasdaq composite was down 381.18 points or 2.8%.

The S&P 500 index was down 55.78 points or 1.3%.

Year to Date…

Dow Industrials

     9.0% down from the high of 36,952.65 on 01/05/2022.

     4.2% up from the low of 32,272.64 on 02/24/2022.

Nasdaq

     16.0% down from the high of 15,852.14 on 01/04/2022.

     5.8% up from the low of 12,587.88 on 02/24/2022.

S&P 500

     10.2% down from the high of 4,818.62 on 01/04/2022.

     5.2% up from the low of 4,114.65 on 02/24/2022.

Options Expiration

No options expire this week.

Swing Traders: Pivot Points

The following is based on an SFO article in December 2004 by John Seekinger, titled, “Take a
two-dimensional approach.” He offers these tips.

• Seekinger doesn’t look at the range of S2 to R2 as support and resistance levels. Rather, he considers them oversold (S) and overbought (R) areas.
• S2 to R2 range of values across daily, weekly, and monthly periods: If two values are close together then they lend more significance to the area.
• If the market trends on day 1, the odds rise tremendously that the market will be range bound between daily S1 and daily R1 the next day.
• In a quiet market when traders are waiting for an important earnings announcement or economic report, look for daily R1 and S1 levels to hold and for the market to return to the daily pivot.
• A move outside of daily R1 or S1 usually does not mean a breakout.
• The odds suggest that the entire week’s price action will remain between weekly R2 and S2.
• Avoid going long when the market moves above weekly R2 (it’s overbought) and avoid going short when price moves below weekly S2 (oversold).
• Consider going short at weekly R1 or long at weekly S1 with a profit objective of the weekly pivot.
• Consider going long at weekly S2 or short at weekly R2 with a profit objective of weekly S1 or R1, respectively.

Here are the formulas:

Pivot point: P = (H + L + C)/3

First resistance level: R1 = (2 * P) – L

First support level: S1 = (2 * P) – H)

Second resistance level: R2 = P + (R1 – S1)

Second support level: S2 = P – (R1 – S1)

H = high price , L=low price, C=closing price

Earnings, Chart Patterns & Industries

Earnings season is over.

Here’s a symbol list of 186 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
DDD, AYI, ADBE, AES, ALK, ALKS, AEE, AEO, AEP, AXP, AIG, AMGN, ANIK, APA, AMAT, ASH, BSET, BAX, BBBY, BERY, BIO, BKH, BA, BOOT, CACI, CDNS, CNC, CTSH, COP, CLR, COTY, CRH, CROX, CCRN, CCK, CSGS, CW, DECK, DFS, EMN, EOG, EFX, EQT, RE, XOM, EZPW, FOE, FE, FISV, FLEX, FTNT, GE, GL, HTLD, HSY, HNI, JBHT, HURC, IDXX, ILMN, INCY, IIIN, INTC, IBKR, IPI, ISRG, IVC, JKHY, JAZZ, JBLU, KBH, KLAC, LHX, LAWS, LEN, LNC, RAMP, M, MNDT, MANH, MAN, MCHX, MRTN, MAS, MA, MTRX, MS, MUR, NFG, NI, OXY, OGE, OLN, OMI, PANW, PTEN, PAYX, PICO, POR, PFG, PRU, PEG, RL, RJF, REV, RLI, SCHW, SEE, SMTC, NOW, SKX, LUV, SSYS, TECH, TFX, TDC, TOL, RIG, TZOO, VEEV, V, WEX, WWW, WDAY, ZBRA, ITA, IYM, IAI, IYC, IHI, IEO, QTEC, FXI, IYH, IHF, IAT, IGV, SLV, EWA, EWO, EWK, ECH, EEM, EWQ, EWG, EWH, EWI, EWJ, EWW, EWS, EWY, EWP, EWD, EWL, EWT, TUR, EWU, IBB, PBE, PEJ, PXJ, ROBO, IEV, XLE, GLD, UNG. Clink this link for details (pattern type, start and end dates).

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

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

— Thomas Bulkowski

Friday 3/4/22. Pattern Trading Setups for the Weekend.

$ $ $

Here’s a symbol list of 157 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
AYI, ADBE, APD, ALB, ADS, AMZN, AEO, AEP, ANIK, APA, ATO, ADSK, BSET, BBBY, BBY, BIO, BKH, BA, BOOT, CBT, CDNS, CENX, CRL, CHKP, CGNX, COTY, CRH, CCRN, DECK, DFS, D, EPAM, EQT, EXPD, XOM, EZPW, FDS, FOE, FIS, FE, FISV, FTNT, GME, GE, GIS, HSC, HQY, HTLD, HSY, HNI, HOV, JBHT, HURC, IDXX, ILMN, IBP, INTC, IPAR, IBKR, TILE, NVTA, JKHY, KBH, KFRC, LH, LRCX, LEN, RAMP, LXU, M, MNDT, MANH, MCHX, MA, MTRN, MRK, FB, MCO, MS, ^IXIC, NXGN, NI, JWN, NVDA, OGE, OLN, OMI, PANW, PYPL, PICO, PNW, POR, PEG, PHM, RL, SEE, SMTC, NOW, SCS, SSYS, SRDX, SNPS, TECH, TDC, TOL, RIG, TZOO, VC, WEX, WDAY, XEL, ZBRA, ITA, IYM, IYC, IHI, FTEC, QTEC, FXL, IGV, EWO, EWZ, EWC, EWJ, EWM, EPP, EWP, TUR, EWU, QLD, IBB, PPA, PBE, PXJ, QQQ, ROBO, ILF, XLY, XLE, XAR, MGK. Clink this link for details (pattern type, start and end dates).

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

$ $ $

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

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

In the table below, the red and green colors are based on the historical breakout direction for the associated chart pattern. If a high and tight flag appears, the start and end dates highlight the flagpole only and not the flag.

For details about the chart patterns, click here.

— Thomas Bulkowski

Thursday 3/3/22. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 235/414 or 56.8% of the time.

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

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

$ $ $

I show a picture of bitcoin (BTC-USD) on the daily scale.

I drew a channel, shown here in red by two down-sloping trendlines. I wanted to see where the coin was in relation to that channel.

The coin bottomed at C and climbed up to A, pushing outside of the channel. The coin retraced and surged to form a second peak, B.

When the index dropped, it formed a double top (AB). After confirmation (meaning after the double top became valid), the coin dropped to D, fulfilling the target for
the chart pattern. That target is the height of the double top subtracted from the low between the two peaks.

Now, the coin is rising again amid the world’s turbulence. It as reached the price level near A or B. If the coin were to drop below the lowest valley between A and where we are now, it would
form a triple top.

Of course, the coin hasn’t dropped yet but it looks like it’s slowing after hitting resistance from the prior peaks at A and B. I’d expect it to drop in the coming weeks.

$ $ $

Here’s a symbol list of 134 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
DDD, ANF, ACN, AYI, ADBE, AEP, AFG, AIG, AMWD, AMGN, APA, ATR, ARW, ASH, AVNT, BSET, BIO, BOOT, EPAY, CDNS, CVX, CINF, CLF, CMTL, COP, CLR, CRH, CCRN, CW, DHR, ^DJI, D, DTE, EOG, EPAM, FFIV, FE, FISV, FDP, GPN, GES, THG, HLIT, HAYN, HTLD, HSY, HNI, HOV, HUBG, HURC, IDXX, ILMN, INTC, IVC, NVTA, JKHY, JAZZ, RAMP, L, M, MCHX, MLM, MTRN, MLKN, MUR, NBR, NCR, NTAP, NEU, NI, JWN, NWPX, OGE, ORI, OMI, PANW, PKE, PDCO, PICO, RMBS, REV, RCKY, CRM, SMG, SEE, SKX, SWX, SXI, SCS, TPR, TECH, TPX, TKR, RIG, TREX, UNM, VMI, WMB, WWW, WDAY, IHI, IEO, IDU, FXI, IHF, IAT, IGE, EWA, EWC, EWS, EWP, EWU, PXJ, IXC, XLE, XAR, UNG. Clink this link for details (pattern type, start and end dates).

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

$ $ $

The following table shows where Fibonacci retrace values of the day’s high-low range are plus pivot points, calculated on the Nasdaq composite, sorted by value. When several are near each other (small differences),
the area might act as support or resistance.

— Thomas Bulkowski

Wednesday 3/2/22. A Look At Indicators

$ $ $

I released a new version of Patternz (7.34). It fixes two bugs. That’s important if you use the Update Form to update your quotes.

$ $ $

I read a Reuters article about hackers trying to interfere with operations in Russia and Belarus. I’m glad someone is taking cyber action…and having success.

For my part, I’ve attempted to block bots from Russia, China, and North Korea from accessing this website. You may have seen some weird error messages appear when trying to access the
site. That’s me trying to rig things. It’s especially apparent with translators and blocked images. Sorry about that, but I don’t have a fix for it yet. I wanted to paint
the border surrounding the site blue over yellow (colors of the Ukraine flag) to show my support, but haven’t figured that out yet either. Instead, I show the flag and am proud
of the Ukrainian people for defending themselves with such courage.

$ $ $

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.

We snuck in a green (bullish) bar on the chart, but the indicator turned red today. Sigh. It suggests a double bottom is going to form. If that’s the case, then look for the second bottom to
be a buying opportunity.

Indeed, this war has been a buying opportunity for stocks punished by the market. I still expect to see a strong and fast rebound but what do I know? I am frequently wrong.

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).

Much to my surprise, both lines show no change from a week ago. I expected the lines to drop. I will remind you of the longer-term downtrend that we
see in the chart (from far left to far right, in both the red and blue lines).

The prior chart is very short-term bearish and this one is neutral but tending toward bearish. So I expect more of a bumpy ride ahead even as I expect a fast upward recovery (move).

$ $ $

Here’s a symbol list of 162 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
DDD, ABT, ACIW, ADBE, AFL, ALRM, ADS, AMED, AEE, AEP, AXP, AIG, ANIK, APA, ATR, AWI, AGO, ATO, ADSK, AVA, AXS, BMI, BSET, BECN, BIO, BKNG, BOOT, CDNS, CAL, CE, CLS, CENX, CVX, CTXS, CLF, CNO, COP, CLR, CROX, CCRN, DHR, D, BOOM, EMN, EOG, EPAM, EQT, EZPW, FOE, FE, FISV, FLEX, IT, GPRO, GGG, HE, HL, HSY, HNI, HOV, HURC, IDXX, ITW, ILMN, NSP, IBP, INTC, NVTA, JKHY, LHX, LDOS, LNC, RAMP, LMT, M, MANH, MCHX, MRTN, MTRN, MOS, MLI, MUR, NFG, NOV, NJR, NI, NOC, NUS, OGE, OLN, OMI, PANW, PYPL, POR, PPG, PHM, CRM, SLB, SEE, NOW, SCCO, SXI, SCS, SSYS, TGT, TECH, TJX, RIG, TZOO, UNM, VC, WSO, WLK, WEX, WMB, WDAY, IYM, IYE, IHI, IEO, IEZ, QTEC, SLV, IGE, EWO, EWK, ECH, EWQ, EWG, EWH, EWI, EWS, EWP, EWU, PXJ, IXC, MXI, XLE, XRT, XAR, USO, VAW. Clink this link for details (pattern type, start and end dates).

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

— Thomas Bulkowski

Tuesday 3/1/22. 2022 Forecast Update

Weekly, since inception on 6/14/2011:

     The prediction of the index closing higher has been right 240/427 or 56.2% of the time.

     The prediction of the index closing lower has been right 45/94 or 47.9% of the time.

$ $ $

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

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

1. Energy (+39%)

10. Real estate (19%)

3. Consumer staples (18%)

2. Financials (17%)

6. Health care (14%)

9. Information technology (14%)

4. Utilities (13%)

7. Materials (11%)

5. Industrials (6%)

11. Consumer discretionary (4%)

8. Communication services (-2%)

The folks at two firms polled by Fidelity weigh the sectors in this order, as of 2/25/22.

1. Information technology (IT)

2. Health care

3. Consumer discretionary

4. Financials

5. Communication services

6. Industrials

7. Consumer staples

8. Energy

9. Real estate

11. Materials

10. Utilities

Here’s how they rank the industries, but only the top 10 appear. One-year change, as of 2/25. The numbering is how they ranked a month ago.

1. Oil, gas and consumable fuels (+39%)

7. Health care providers and services (+36%)

New. Metals and mining (34%)

New. Health care technology (33%)

2. Energy equipment and services (+32%)

New. Technology hardware, storage, and peripherals (31%)

4. Consumer finance (+29%)

5. Diversified financial services (+28%)

9. Construction and engineering (+28%)

3. Real estate management and development (28%)

$ $ $

Here’s a symbol list of 61 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
AXDX, AMD, AYX, AEE, BMRN, BA, BKNG, BG, COP, CTS, DECK, DVN, EPAM, EVH, FICO, FIVN, FRD, GD, GILD, HQY, HURC, INFN, IPI, LHX, LMT, LXU, MRTN, MOS, NEU, NXGN, NOC, NUS, OXY, OMI, PICO, PPG, PHM, RHI, ROG, SRE, TPR, TDOC, RIG, TZOO, UNM, WEX, WMB, WWW, IYE, IEO, IGE, EWH, PPA, PEJ, XAR, UNG, USO. Clink this link for details (pattern type, start and end dates).

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

$ $ $

The 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