Pattern Trading Setups for the Weekend!…

Wednesday 12/7/22. 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.

A bearish signal appeared yesterday but it was probably because today’s (Tuesday’s) drop pulled down yesterday’s results. That can happen up to a week (meaning signals can appear or disappear).

It looks like the bearish divergence with the index has taken hold and we’ll see the indices drop, perhaps lasting until the FED meeting next 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 are worse this week compared to a week ago. They bounced off overhead resistance and now appear headed lower.

Both charts are bearish, too, so I’m looking for the indices to retrace some of their gains. We could see a third bottom form, but I don’t see us getting that low. If it does form a 3rd bottom, expect
it to take about 1.5 months to get there.

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Here’s a symbol list of 131 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, AXDX, ADBE, ATSG, AKAM, DOX, AMGN, APA, AMAT, ATR, AWI, ASH, ADSK, AZTA, BMI, BERY, BIG, BKNG, BOOT, BRC, BFH, CF, CIEN, CLNE, CLX, ED, CR, CSGS, DVN, DRQ, EPAM, EQT, FLS, FORM, FTNT, FRD, GPS, GE, GES, HBI, HAYN, HP, HD, HUBG, IBP, IBKR, IPG, IVC, NVTA, JNJ, K, KMT, KFRC, KLAC, KSS, LZB, LH, LEN, RAMP, LMT, MHO, MANH, MRO, MAS, MRK, MOS, MLI, NOV, NTGR, JWN, NOC, ASGN, OTEX, PKE, PTEN, PYPL, PHM, RES, SLB, SEE, SMTC, SO, SWX, SR, SSYS, TECH, TXN, TKR, RIG, TREX, SLCA, UPS, VFC, V, WSO, WMB, WWW, IYE, IEZ, FXI, IAT, IGE, IHI, EWO, EWH, EIS, EWI, EWM, EWY, EWP, TUR, PXJ, IXC, 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.

— Thomas Bulkowski

Tuesday 12/6/22. Slider Trading Quiz!

Weekly, since inception on 6/14/2011:

     The prediction of the Dow closing higher has been right 254/456 or 55.7% of the time.

     The prediction of the Dow closing lower has been right 49/104 or 47.1% of the time.

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I show another slider trading quiz featuring Teradyne: TER 2 stock.

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Here’s a symbol list of 99 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, AXDX, AMD, AKAM, AA, AEP, AEL, ABC, ANIK, APA, BCPC, BECN, BERY, BRC, CX, CENX, CF, CLNE, CMTL, ED, COP, CW, XRAY, DVN, DRQ, BOOM, XOM, FDS, FISV, FORM, GES, HAYN, HP, HD, HUBG, INTC, IPG, JAZZ, JBLU, KALU, LH, RAMP, MRO, MCHX, MRTN, MOS, MLI, NBR, NFG, NOV, JWN, OUT, PTEN, PYPL, DGX, ROG, RES, SLB, SAIC, SEIC, SWN, SCS, TEVA, RIG, TZOO, SLCA, VEEV, VMC, WSO, WMB, WWW, IYE, IEZ, IHE, FXI, IAT, IGE, EWO, EIS, EWI, EPP, EWS, EWP, TUR, PBE, PXJ, PJP, XLE, UNG, VIS. 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 Dow industrials, sorted by value. When several are near each other (small differences),
the area might act as support or resistance.

— Thomas Bulkowski

Monday 12/5/22. Market Monday: The Week Ahead

My Prediction

I show the Dow utilities on the daily scale.

At AB appears a double top. The chart pattern has two peaks separated by a valley. A close below the valley means confirmation and a valid chart pattern. Until confirmation happens, you don’t have
a double top. A close above the tallest peaks of either A or B means the pattern is invalid (before confirmation, that is).

I show confirmation happening at C.

LHR is another chart pattern called a head-and-shoulders bottom. L is the left shoulder, H is the head, and R is the right shoulder. It confirms as a valid chart pattern when the index closes
above the right armpit, at D.

A throwback happens at E before a resumption of the upward trend. Notice the strong move upward after E.

Right now, we see the index closing in on overhead resistance (the horizontal red line without a label). The index could stall or reverse there.

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I released new research on tax loss selling. When’s the best time (of the month) to buy back in after selling?

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 497.57 points.

Tuesday: Up 3.07 points.

Wednesday: Up 737.24 points.

Thursday: Down 194.76 points.

Friday: Up 34.87 points.

For the Week…

The Dow industrials were up 82.85 points or 0.2%.

The Nasdaq composite was up 235.14 points or 2.1%.

The S&P 500 index was up 45.58 points or 1.1%.

Year to Date…

Dow Industrials

     6.8% down from the high of 36,952.65 on 01/05/2022.

     20.1% up from the low of 28,660.94 on 10/13/2022.

Nasdaq

     27.7% down from the high of 15,852.14 on 01/04/2022.

     13.6% up from the low of 10,088.83 on 10/13/2022.

S&P 500

     15.5% down from the high of 4,818.62 on 01/04/2022.

     16.6% 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 over.

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 137 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, AXDX, ALRM, ALB, AA, AEO, ACGL, ATO, AVA, BECN, BERY, BA, BKNG, BG, CBT, CALM, CPB, CE, CENX, CF, CHD, CNA, CL, CMTL, ED, CAG, COST, CRH, CROX, CCRN, CCK, CTS, CW, XRAY, DOV, DRQ, EMN, EMR, EL, FISV, FLS, FMC, FCX, GD, GNW, GILD, GL, GPRO, GES, HE, HAYN, HQY, HL, HSIC, HD, HOV, HUBG, HURC, TILE, IVC, JAZZ, KALU, LH, LDOS, RAMP, LMT, MTSI, M, MCHX, MA, MTRN, MDT, MYGN, NOC, NUS, OMI, OXM, PKG, PKE, PYPL, PETS, PFE, PLXS, PPG, PINC, PG, RGS, RLI, ROST, SLB, SEE, SHW, SR, SUM, TZOO, SLCA, VMC, WERN, ITA, IYM, IYK, IEZ, IHE, FXI, SLV, EWK, ECH, EWQ, EWG, EWH, PPA, PBE, PXJ, PJP, MXI, XLP, XLI, XLB, UNG, VHT, VIS, 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.

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

— Thomas Bulkowski

Friday 12/2/22. 2022 Forecast Update

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 11/30/2022 were…
(The numbering is how they ranked a month ago.)

1. Energy (+64%)

2. Consumer staples (0%)

4. Utilities (-1%)

3. Health care (-2%)

5. Industrials (-4%)

6. Financials (-7%)

7. Materials (-9%)

8. Information technology (-22%)

9. Real estate (-24%)

10. Consumer discretionary (-30%)

11. Communication services (-35%)

The folks at two firms polled by Fidelity weigh the sectors in this order, as of 11/30/22.

1. Information technology (IT)

2. Health care

3. Financials

4. Consumer discretionary

5. Industrials

6. Communication services

7. Consumer staples

8. Energy

9. Utilities

11. Materials

10. Real estate

Here’s how they rank the industries, but only the top 10 appear. One-year change, as of 11/30/22. The numbering is how they ranked a month ago.

1. Oil, gas and consumable fuels (+65%)

2. Energy equipment and services (+59%)

New. Gas utilities (+28%)

4. Health care providers and services (+23%)

3. Construction and engineering (+23%)

new. Independent power and renewable elec producers (+22%)

5. Food products (20%)

9. Aerospace & Defense (+19%)

6. Biotechnology (+19%)

7. Pharmaceuticals (+16%)

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Here’s a symbol list of 158 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, ACN, APD, AKAM, AA, ALL, AYX, AFG, AMWD, ANIK, AON, APOG, ARCB, ADM, ATO, AXS, BERY, BKH, BA, BBW, BG, CLS, CNP, CF, CVX, CSCO, CNA, CTSH, CMCO, ED, CR, CCK, DDS, ^DJU, DRQ, DUK, EFX, RE, FFIV, FDS, FAST, FIS, FISV, FLEX, FORM, FTNT, IT, GE, GNW, GOOGL, GGG, GES, HE, HL, HELE, HNI, HOLX, HD, DHI, HUBG, IEX, ILMN, IBP, IBKR, INTU, IVC, KMB, LH, RAMP, LOW, LXU, MANH, MCHX, MA, MTRN, MTRX, MCO, MS, MOS, NJR, NWL, NEE, NXGN, OLN, OXM, PATK, PDCO, PTEN, PAYX, PETS, PFE, RJF, RNG, ROK, CRM, SIGI, SRE, NOW, SHW, SLGN, LUV, SR, SXI, TECH, TFX, TDC, TJX, TOL, RIG, TZOO, TREX, SLCA, VMC, ITA, IHE, FTEC, QTEC, FXL, SLV, IGE, EWK, EWC, EWG, EWH, EWJ, EWM, EWS, EWP, THD, EWU, PPA, PXJ, ROBO, IEV, GLD, XLK, UNG, 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.

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Thursday 12/1/22. Intraday Market Direction: Nasdaq

Weekly, since inception on 6/14/2011:

     The prediction of the Nasdaq closing higher has been right 247/437 or 56.5% of the time.

     The prediction of the Nasdaq closing lower has been right 69/141 or 48.9% 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 Ethereum (cryptocurrency) on the daily scale.

At B, the currency shows a long region of support or resistance. You can consider this a rectangle bottom. Notice how the currency shot upward after the end of B.

Now, the currency looks to climb to confirmation of a double bottom. Confirmation means the currency needs to close above the highest peak between the two bottoms. I drew the red line incorrectly
to show confirmation. The highest spike after the first bottom happens a day later. So the coin would need to close above that level to confirm. If confirmed, look for the coin to rise higher.

Until confirmation, anything can happen. (Well, even after confirmation anything can happen).

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Here’s a symbol list of 110 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, AXDX, ACN, AMD, AJRD, AKAM, DOX, AMED, AMN, AVA, BMI, BCPC, BZH, BERY, BIG, BBW, BG, CACI, CPB, CF, CRL, CHKP, CSCO, CLX, CONN, COST, CCRN, CSGS, DHR, DDS, DTE, EXC, FDS, FAST, FIVN, FLEX, FCX, GIS, GNW, GES, HBI, HSY, HD, HUBG, IDXX, INTC, IBKR, IPG, INTU, ISRG, NVTA, JKHY, K, LHX, LH, RAMP, MHO, MRTN, MA, MTRX, MDC, MLKN, NFG, NTAP, OXM, PKE, PRFT, PETS, PFE, PCG, PNW, CRM, SEE, SIGI, SKX, SR, TZOO, TG, VC, WDAY, ZBRA, ITA, ITB, FXI, IGV, SLV, EWO, EEM, EWH, EIS, EPP, EWS, EZA, EWY, EWT, THD, PPA, DBA, PBE, ILF, XLP, UNG, 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.

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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 11/30/22. 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.

The indicator has flipped from neutral to bearish to neutral over three days. It’s as if the indicator can’t make up its mind.

The indicator is at 53% today (Tuesday, after the close), which is neutral. I do see bearish divergence between the indicator and the index. It suggests
the index is going lower. Clearly with the flip to neutral to bearish, it tried but failed to stay bearish.

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 shows improvement, according to the above statistics, but the improvements are minor.

The blue line hugs price and the red line is like the index on steroids. Both lines appear bullish this week (trending upward, that is).

The prior chart is neutral and this one is bullish but approaching overhead resistance. I don’t know what will happen in the coming week. My gut tells me the index will rise, but I’m frequently wrong.

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Here’s a symbol list of 125 chart and candlestick patterns (13 “investment grade” candle patterns) found in today’s securities using my version of Patternz:
ANF, ADBE, ADTN, AEIS, ATSG, AYX, AMZN, AEP, AAPL, AMAT, AIZ, ATO, AZTA, BSET, BERY, BMRN, BOOT, BLDR, BG, CE, CLS, CENX, CF, CLX, COST, CCK, EL, RE, EVRG, FFIV, FAST, GL, GES, HBI, HSY, HNI, HD, DHI, HUBG, IBP, IBKR, KBH, KMT, KMB, KLIC, LH, LRCX, LDOS, LEN, RAMP, L, MTRN, MTRX, MU, MSFT, MS, NTGR, NEE, NUS, ORI, OMC, ASGN, OXM, PKE, PATK, PAYX, PINC, PHM, RJF, RGS, RCKY, SWX, TPR, TGT, TER, TEVA, TXN, TOL, TZOO, TG, VLO, VEEV, WRB, WLK, WEX, WSM, WOLF, ZBRA, ITA, IDU, FTEC, QTEC, FXL, FXI, SOXX, SLV, EWO, EEM, EIS, EWW, EPP, EWD, EWT, THD, PPA, PEJ, PHO, ROBO, IXN, SSO, MXI, XLB, SPY, XAR, XLK, XLU, 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.

— Thomas Bulkowski