Chart Pattern Indicator: What's It Say?…

Monday 11/7/22. Market Monday: The Week Ahead

My Prediction

I show the Dow transports on the daily scale.

At AB is an Eve & Adam double bottom. It confirms as a valid chart pattern when the index closes above red line C. The index makes a nice climb after.

More recently, we see the index climbing higher in a channel formed with two parallel lines. The transports broke out upward from the channel and then returned to it, as if
the upward momentum had disappeared.

The index has lifted back out of the channel now, so it looks set to move higher, but it’ll have to push through the knot of resistance immediately to the left of where it’s at now.

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 128.85 points.

Tuesday: Down 79.75 points.

Wednesday: Down 505.44 points.

Thursday: Down 146.51 points.

Friday: Up 401.97 points.

For the Week…

The Dow industrials were down 458.58 points or 1.4%.

The Nasdaq composite was down 627.2 points or 5.6%.

The S&P 500 index was down 130.51 points or 3.3%.

Year to Date…

Dow Industrials

     12.3% down from the high of 36,952.65 on 01/05/2022.

     13.1% up from the low of 28,660.94 on 10/13/2022.

Nasdaq

     33.9% down from the high of 15,852.14 on 01/04/2022.

     3.8% up from the low of 10,088.83 on 10/13/2022.

S&P 500

     21.8% down from the high of 4,818.62 on 01/04/2022.

     8.0% up from the low of 3,491.58 on 10/13/2022.

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 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).

Here’s a symbol list of 109 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
DDD, ADBE, ADTN, APD, AA, AMED, AFG, AMN, AAPL, AMAT, ADM, AWI, AIZ, AZTA, BAX, BIG, BKH, BAH, CNC, CENX, CHD, CMTL, GLW, CR, CROX, CCRN, BOOM, EMN, WIRE, EOG, EQT, EL, EZPW, FDS, FISV, FLS, FCX, GE, GS, GPRO, HTLD, HL, HOV, ITW, INFN, IPAR, TILE, INTU, NVTA, JKHY, K, KLIC, LHX, LRCX, LAMR, LNC, RAMP, MTSI, M, MA, MU, MSFT, NFG, NOV, OLN, PANW, PGR, PRU, DGX, RGS, RGA, ROK, ROG, SKX, SCCO, LUV, SWN, SXI, SNPS, TFX, TDC, TER, TSCO, VRSN, V, VC, WERN, WEX, IHF, IGV, SOXX, SLV, EWZ, ECH, EEM, EWH, EWJ, EWW, EZA, EWY, EWT, THD, TUR, ILF, USO, SMH. 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 11/4/22. Pattern Trading Setups for the Weekend.

$ $ $

Here’s a symbol list of 121 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ADBE, ADTN, AJRD, DOX, AEO, AEP, ABC, ANIK, APA, ADM, AWI, AIZ, ADP, AZTA, BALL, BAX, BIG, BIO, BIIB, BKNG, BMY, CDNS, CX, CVX, CMTL, CRH, CROX, CCK, CW, DSGR, EMR, WIRE, EQT, EVRG, EZPW, FFIV, FIS, FMC, FORM, FTNT, GE, GNW, GILD, GPN, GOOGL, HSII, HELE, HP, HON, HOV, ITW, INFN, IPI, IVC, NVTA, JKHY, KLIC, LHX, LANC, LNC, LMT, LXU, MTSI, M, MRO, MAS, META, MOS, NOV, NTGR, NJR, NWL, NEU, NEE, NUS, OLN, OTEX, OUT, PKG, PYPL, PPL, PRU, DGX, RJF, RGS, RCKY, ROG, SLB, SMG, SEE, SRE, LUV, SWN, SXI, TPR, TXN, RIG, VLO, VEEV, VRSN, VMC, WSM, IEZ, FTEC, FDN, FXI, IEO, EWO, EWG, EWM, EZA, PBE, PEJ, PXJ, PJP, GLD, XLK. 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.

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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 11/3/22. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the Nasdaq closing higher has been right 246/435 or 56.6% of the time.

     The prediction of the Nasdaq closing lower has been right 68/140 or 48.6% 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.

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

There’s not a lot to say about this chart. On the far left is a small head-and-shoulders bottom chart pattern (SHS).

In the middle of the chart is a pair of double tops, BC and DE. They confirm as valid chart patterns when the index closed below the horizontal red line. The BC top didn’t see price fall
far enough to be a valuable trade. DE did better.

Point A shows a pullback to just above the DE neckline (the red line) before the FED announcement of an interest rate cut pulled the floor out from under the index. Down it went.

What happens next? I don’t have an idea, based on this chart (it doesn’t show enough history). I expect a bounce. The index is resting on support so I expect a recovery. For all I know, the index could continue
lower, though.

$ $ $

Here’s a symbol list of 119 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ACN, ADTN, ALKS, AMED, AEL, AAPL, ADSK, ADP, AVA, AZTA, BCPC, BALL, BIG, BIIB, BA, BBW, CENX, CINF, CLX, CGNX, CMTL, CR, CSGS, XRAY, WIRE, EPAM, EFX, EQT, EL, EZPW, FFIV, FAST, FDX, GNW, GPRO, THG, HE, HAYN, HTLD, HELE, HOV, ITW, INFN, IBP, IIIN, ITGR, IVC, NVTA, JAZZ, KMT, KFRC, KBAL, KLIC, LHX, LH, LAMR, RAMP, LXU, MTSI, M, MTRN, MYGN, NJR, NEU, NOC, NWPX, OMCL, PANW, PPG, PINC, PRU, PEG, PHM, DGX, RGA, RLI, RCKY, ROG, ROST, SAIA, CRM, SEE, SIGI, NOW, SWN, SXI, SRDX, TDOC, TXN, TMO, UNM, VRTX, WMB, WSM, WDAY, ZBRA, IYC, DDM, FDN, IGV, EWH, EIS, EWM, EWW, EZA, PBE, PJP, PHO, XLV, USO, VHT. 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.

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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 11/2/22. 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.

Yesterday, I covered the CPI in the 2022 forecast update. In this chart, we see the CPI line continuing to drop. The indicator is still bullish, but I expect it to turn neutral before going bearish.

However, tomorrow the FED meets and we’ve seen the markets rises after the meeting as if they markets are saying “Whew! It’s over.”

One can argue that once a pattern is established it’ll cease to work. That could mean the markets will drop tomorrow.

In other words, the markets can go either way.

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 are more bullish this week compared to a week ago. My feeling is that the uptrend will continue but evidence for that is thin.

The two charts shows diverging trends. The CPI chart shows growing weakness. This chart is bullish, however, one could argue that a retrace is overdue.

Let’s wait for tomorrow’s (Wednesday’s) close to see what the indices do. If we see a big spike upward, I would expect a retrace of that move. A down move might be lasting, so that the markets will move sideways.

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Here’s a symbol list of 111 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ACN, AYI, AJRD, AMED, AEL, AAPL, ACGL, BCPC, BALL, BIG, BIIB, BKNG, BOOT, CX, CRL, CINF, CLF, CMTL, CCK, CSGS, DDS, DRQ, WIRE, EPAM, EFX, EQT, RE, EZPW, FFIV, FDX, FRD, IT, THG, HSC, HE, HELE, HOLX, DHI, HOV, IDA, IDXX, ITW, INCY, INFN, IBP, IIIN, NVTA, KALU, LHX, LDOS, M, MANH, MAS, MUR, MYGN, NWL, NEU, NOC, OMCL, PATK, PFE, PGR, PHM, KWR, DGX, RMBS, RGS, RGA, ROST, CRM, SEE, SIGI, SWN, SXI, SCS, SSYS, TECH, TDOC, TFX, SLCA, UNM, WSM, IEZ, DDM, BOTZ, IGV, IGE, EWJ, EWW, EPP, EWS, EZA, EWY, EWL, EWU, PPA, PBE, PHO, XLV, UNG, VHT. 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 11/1/22. 2022 Forecast Update

Weekly, since inception on 6/14/2011:

     The prediction of the Dow closing higher has been right 251/452 or 55.5% of the time.

     The prediction of the Dow closing lower has been right 49/103 or 47.6% of the time.

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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 October 2022 were…
(The numbering is how they ranked a month ago.)

1. Energy (+62%)

3. Consumer staples (-5%)

4. Health care (-6%)

2. Utilities (-6%)

6. Industrials (-11%)

8. Financials (-13%)

5. Materials (-17%)

9. Information technology (-26%)

7. Real estate (-29%)

10. Consumer discretionary (-30%)

11. Communication services (-38%)

The folks at two firms polled by Fidelity weigh the sectors in this order, as of 10/28/22.

1. Information technology (IT)

2. Health care

4. Financials

3. Consumer discretionary

6. Industrials

5. Communication services

7. Consumer staples

8. Energy

9. Utilities

10. Real estate

11. Materials

Here’s how they rank the industries, but only the top 10 appear. One-year change, as of 10/28/22. The numbering is how they ranked a month ago.

1. Oil, gas and consumable fuels (+59%)

3. Energy equipment and services (+40%)

3. Construction and engineering (+21%)

2. Health care providers and services (+21%)

5. Food products (17%)

10. Biotechnology (+17%)

8. Pharmaceuticals (+14%)

6. Beverages (+12%)

New. Aerospace & Defense (+10%)

New. Insurance (+6%)

$ $ $

Here’s a symbol list of 72 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
AEIS, ALB, ALKS, AMAT, AZTA, BALL, CAL, CLF, CAG, CSGS, WIRE, EOG, EXC, EZPW, FISV, FMC, FRD, GGG, HBI, HSC, HOLX, HD, ITW, ILMN, INFN, NSP, IVC, K, LRCX, LDOS, LLY, LXU, M, MLM, MTRN, MUR, NBR, NUS, OXY, PLXS, PPG, DGX, RGS, RES, SEIC, SKX, SXI, TER, RIG, SLCA, VMC, WSO, WOLF, IYE, IEZ, FXI, SOXX, SLV, IGE, EWZ, EWH, EZA, PXJ, IXC, ILF, XLE, XLV, SMH, VHT. 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