Bulkowski's Blog: ThePatternSite.com
As of 03/19/2019
  Industrials: 25,887 -26.72 -0.1%  
  Transports: 10,277 -137.04 -1.3%  
  Utilities: 768 -8.57 -1.1%  
  Nasdaq: 7,724 +9.47 +0.1%  
  S&P 500: 2,833 -0.37 0.0%  
YTD
 +11.0%  
 +12.1%  
 +7.8%  
 +16.4%  
 +13.0%  
  Tom's Targets    Overview: 03/14/2019  
  Down arrow26,900 or 25,200 by 04/01/2019
  Down arrow10,700 or 9,900 by 04/01/2019
  Down arrow785 or 750 by 04/01/2019
  Down arrow7,900 or 7,300 by 04/01/2019
  Down arrow2,875 or 2,700 by 04/01/2019
As of 03/19/2019
  Industrials: 25,887 -26.72 -0.1%  
  Transports: 10,277 -137.04 -1.3%  
  Utilities: 768 -8.57 -1.1%  
  Nasdaq: 7,724 +9.47 +0.1%  
  S&P 500: 2,833 -0.37 0.0%  
YTD
 +11.0%  
 +12.1%  
 +7.8%  
 +16.4%  
 +13.0%  
  Tom's Targets    Overview: 03/14/2019  
  Down arrow26,900 or 25,200 by 04/01/2019
  Down arrow10,700 or 9,900 by 04/01/2019
  Down arrow785 or 750 by 04/01/2019
  Down arrow7,900 or 7,300 by 04/01/2019
  Down arrow2,875 or 2,700 by 04/01/2019

 

February 2019 Headlines

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Older Headlines


Wednesday 3/20/19. Indicators: Possible Trend Change

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 green vertical bar on the far right of the chart says everything is peachy.

However, the CPI line, the thin blue one near the bottom of the chart, shows the line plummeting. To me, the indices appear to be pausing (not from his chart, but from others). The Dow utilities appear headed lower, for example. Perhaps the other indices will retrace some, too.

All of that suggests a trend change. Let's see what the next chart shows.

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, 41% of stocks in my database are in bear market territory (down at least 20% from their 1-year high).
A week ago, it was 44%.
The fewest was 21% on 07/09/2018.
And the most was 80% on 12/24/2018.
Shown as a blue line on the above chart...
The 493 stocks in my database are down an average of 19% from their yearly high.
A week ago, the average was 19%.
The peak was 12% on 06/12/2018.
And the bottom was 33% on 12/24/2018.

The red line, the more sensitive of the two, had a good week (as measured from a week ago). Only 41% of the stocks I follow are down from their 1-year highs by 20% or more. Forty-one percent is huge but it beats the prior week's value of 45%. That's almost half and far below the 80% posted the day before Christmas.

This chart shows what happened but it's not that good at predicting what will happen.

The prior chart is better at predicting what will happen, so I'm in favor of weakness here. Of course, the markets might zoom higher tomorrow and change the focus, but that's what I see.

-- Thomas Bulkowski

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Tuesday 3/19/19. Price Mountain in Bitcoin

Slide 1: Bitcoin Weekly Scale

The first slide shows Bitcoin on the weekly scale. A pattern that I call a price mountain appears. I studied those patterns and you can read more at the link. I wanted to know how long it would take before price returned to the top of the mountain.

Answer: at least six years. The time lengthens each time I redo the study because many of the patterns I looked at when the study was completed had not topped the mountain.

Novice traders and investors who contemplate trading a price mountain justify their investment by saying, "It peaked at $x. It can reach it again."

That may be true, but the odds suggest it'll take years before it does.

And because we're talking about a mountain, the slope trends downward, often for years. The next chart shows an example.

1 / 3
Bitcoin on the weekly scale shows a price mountain
Bitcoin (BTC) on the weekly scale.
2 / 3
Intel on the yearly chart
Price mountain in Intel, monthly scale
3 / 3
Bitcoin on the daily chart showing a symmetrical triangle
Daily chart of Bitcoin showing a symmetrical triangle


Slide 2: Intel Monthly Scale

To illustrate my point, this slide (2) shows intel (INTC) on the monthly scale. It formed a price mountain in 2000 and reached a price of 75.69. In 19 years, it only reached a high of 57.60 last year. That's 24% below the mountaintop. If you bought above $60, you'd still be waiting to break even and even longer to turn a profit.

That's 19 years and it still hasn't topped the mountain. Notice the price trend. It bobbles up and down but it bottomed in 2009. So if you bought anywhere near the peak, you'd probably have lost money at least for nine years.

Slide 3: Bitcoin Daily Scale

The last slide of the three, shows Bitcoin on the daily chart. There's a cloud bank pattern, the bottom of which I show with a horizontal green line.

I like trading cloud banks (investing really) because you can double your money. Of course, you have to wait for price to rise. How long does it take to reach the cloud base? Almost half will make it in one year. Seventy-four percent will make it in 2 years.

A symmetrical triangle appears in the last few months. It broke out upward as I show on the chart. That's a buy signal. Target: the base of the cloud for a potential gain of about 50%. I like to see a double, so this misses the mark.

NOTE: I'm NOT making a buy recommendation! I'm just analyzing the chart.

-- Thomas Bulkowski

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Monday 3/18/19. Market Monday: S&P Rising Slowly

My Prediction

Picture of the S and P on the daily scale.

I show the S&P 500 index on the daily scale.

For grins, I drew a curving trendline along the peaks. It's possible the index will follow this path but it's also unlikely. Why?

I really don't have an answer except that I'm guessing. So the chances that I have guessed right are slim.

Having said that, the index seems hesitant to move higher. So it might be trying for a 2B pattern.

That's where the security peaks above the prior minor high and then reverses.

The index does appear to be rising at a slower rate, following a curve. And that means a top in the index. The red line really doesn't do the curve justice because it should flatten out more on the top than what I show. However, the pic and the line does give you one idea of how price action might unfold in the coming weeks.

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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 200.64 points.
Tuesday: Down 96.22 points.
Wednesday: Up 148.23 points.
Thursday: Up 7.05 points.
Friday: Up 138.93 points.

For the Week...

The Dow industrials were up 398.63 points or 1.6%.
The Nasdaq composite was up 280.39 points or 3.8%.
The S&P 500 index was up 79.41 points or 2.9%.

Year to Date...

Dow Industrials
     1.5% down from the high of 26,241.42 on 02/25/2019.
     14.2% up from the low of 22,638.41 on 01/03/2019.
Nasdaq
     0.3% down from the high of 7,714.96 on 03/15/2019.
     19.1% up from the low of 6,457.13 on 01/03/2019.
S&P 500
     0.3% down from the high of 2,830.73 on 03/15/2019.
     15.5% up from the low of 2,443.96 on 01/03/2019.

Options Expiration

No options expire this week.

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Swing and Position Traders: Chart Pattern Indicator

As of 03/15/2019, the CPI had:

11 bearish patterns,
57 bullish patterns,
415 patterns waiting for breakout.
The CPI signal is 83.8%, which is bullish (>= 65%).

The chart pattern indicator is bullish with 1 of 3 half 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.

IndexS2S1PivotR1R2
Dow Industrials (^DJI): Daily  25,531  25,690  25,809  25,968  26,087 
Weekly  24,942  25,395  25,662  26,115  26,382 
Monthly  24,467  25,158  25,700  26,390  26,932 
S&P500 (^GSPC): Daily  2,801  2,812  2,821  2,832  2,841 
Weekly  2,717  2,770  2,800  2,853  2,883 
Monthly  2,659  2,741  2,786  2,868  2,913 
Nasdaq (^IXIC): Daily  7,622  7,655  7,685  7,718  7,748 
Weekly  7,343  7,516  7,615  7,788  7,888 
Monthly  7,140  7,414  7,565  7,839  7,989 

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 48.0%   Expect a random direction. 
 1 month down 21.8%   Expect a reversal soon. 
 S & P 500 (^GSPC) 1 week up 47.7%   Expect a random direction. 
 3 months up 40.9%   Expect a random direction. 
 Nasdaq composite (^IXIC) 1 week up 48.8%   Expect a random direction. 
 3 months up 30.7%   The trend may continue. 

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.

 Found Chart Pattern Name
21Double Top, Adam and Adam
11Triangle, symmetrical
9Head-and-shoulders top
7Double Top, Eve and Eve
5Double Top, Adam and Eve
5Pipe top
5Dead-cat bounce
4Flag, high and tight
3Pennant
3Triangle, ascending

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 WeekLast Week
1. Semiconductor Cap Equip.1. Precision Instrument
2. Precision Instrument2. Electric Utility (East)
3. Electric Utility (East)3. Semiconductor Cap Equip.
4. Electric Utility (Central)4. Computer Software and Svcs
5. Computer Software and Svcs5. Electric Utility (Central)

-- Thomas Bulkowski

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Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns Bumper's Story Head's Law
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