As of 08/16/2019   Indus: 25,886 +306.62 +1.2%     Trans: 9,967 +202.83 +2.1%     Utils: 831 +2.56 +0.3%     Nasdaq: 7,896 +129.37 +1.7%     S&P 500: 2,889 +41.08 +1.4%	YTD  +11.0%    +8.7%    +16.6%    +19.0%    +15.2%	Targets    Overview: 08/15/2019     27,200 or 24,900 by 09/01/2019   10,700 or 9,550 by 09/01/2019   850 or 790 by 09/01/2019   8,200 or 7,400 by 09/01/2019   3,000 or 2,750 by 09/01/2019
Chart pattern indicator: on 8/16/19

As of 08/16/2019   Indus: 25,886 +306.62 +1.2%     Trans: 9,967 +202.83 +2.1%     Utils: 831 +2.56 +0.3%     Nasdaq: 7,896 +129.37 +1.7%     S&P 500: 2,889 +41.08 +1.4%	YTD  +11.0%    +8.7%    +16.6%    +19.0%    +15.2%
Targets    Overview: 08/15/2019     27,200 or 24,900 by 09/01/2019   10,700 or 9,550 by 09/01/2019   850 or 790 by 09/01/2019   8,200 or 7,400 by 09/01/2019   3,000 or 2,750 by 09/01/2019
Chart pattern indicator: on 8/16/19

Monday 8/19/19. The Week Ahead: Bullish Recovery

• My Prediction
• A Brief Look Back
• Options Expiration
• Swing and Position Traders: Chart Pattern Indicator
• Swing Traders: Pivot Points
• Consecutive Price Trends
• Earnings, Chart Patterns & Industries

My Prediction

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

If this were on the weekly scale, I'd call bottom A a horn bottom. It has the twin downward spikes separated by a price bar. Price confirms the pattern when it rises and closes above the top of the pattern. I'm working on horn bottoms for the next quiz, incidentally.

The AB turn looks to me like a double bottom, Adam & Adam, to be exact.

I'm thinking that this gives us a hint of what the indices will do in the next few weeks: Move up.

I show that by the red line. Whether it will happen as I show is anyone's guess. The index may move higher than the prior peak in a nice push upward (which I suspect it might do) or fall short in a 2B pattern.

We will, of course, have to wait and see.

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.

For the Week...

Year to Date...

Options Expiration

No options expire this week.

Swing and Position Traders: Chart Pattern Indicator

The chart pattern indicator is bullish with 2 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.

• 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:

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 either underway or should be starting soon. The sessions could be more volatile.

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

Friday 8/16/19. Pattern Trading Setups for the Weekend.

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 10 patterns found this week (excluding pipe bottoms; pipe tops and bottoms are found looking back 2 weeks) out of 588 stocks searched, or 1.7%. Based on the percentage, the stock market is trending since few consolidation patterns appear.

I found 1 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 5 bullish chart patterns this week and 2 bearish ones with any remaining (4) being undecided. The ratio of bullish to bearish patterns suggests the market is hinting of a coming bullish (up) 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

Weekly screen for chart patterns ending between 08/08/2019 and 08/15/2019. Many may be still in development. If no securities appear, then I have not identified any new patterns.

Industry: Chemical (Diversified)

Industry RS rank: 32 out of 58

Stock RS rank: 20 out of 583

8/15/19 close: $226.34

1 Month avg volatility: $4.36. Volatility stop (for upward breakout): $213.96 or 5.5% below the close.

Change YTD: 41.42%

Volume: 1,132,200 shares. 3 month avg: 1,051,743 shares.

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

 

Chart pattern: Broadening top, right-angled and descending continuation pattern from 07/03/2019 to 08/13/2019

Breakout is upward 51% of the time.

Average rise: 28%.

Break-even failure rate: 19%.

Throwbacks occur 52% of the time.

Price hits measure rule target 63% of the time.

Industry: Homebuilding

Industry RS rank: 17 out of 58

Stock RS rank: 408 out of 583

8/15/19 close: $11.31

1 Month avg volatility: $0.46. Volatility stop (for downward breakout): $12.52 or 10.7% above the close.

Change YTD: 19.30%

Volume: 239,000 shares. 3 month avg: 503,903 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 07/30/2019 to 08/13/2019

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.

Industry: Medical Supplies

Industry RS rank: 20 out of 58

Stock RS rank: 61 out of 583

8/15/19 close: $319.13

1 Month avg volatility: $7.45. Volatility stop (for upward breakout): $301.71 or 5.5% below the close.

Change YTD: 37.43%

Volume: 347,100 shares. 3 month avg: 180,103 shares.

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

 

Chart pattern: Triangle, symmetrical continuation pattern from 08/01/2019 to 08/15/2019

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: Electric Utility (West)

Industry RS rank: 6 out of 58

Stock RS rank: 76 out of 583

8/15/19 close: $72.07

1 Month avg volatility: $1.64. Volatility stop (for downward breakout): $75.98 or 5.4% above the close.

Change YTD: 26.95%

Volume: 2,419,000 shares. 3 month avg: 2,498,883 shares.

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

 

Chart pattern: Double Top, Eve and Adam reversal pattern from 07/31/2019 to 08/09/2019

Breakout is downward 100% of the time.

Average decline: 15%.

Break-even failure rate: 13%.

Pullbacks occur 64% of the time.

Price hits measure rule target 72% of the time.

Industry: IT Services

Industry RS rank: 4 out of 58

Stock RS rank: 6 out of 583

8/15/19 close: $340.98

1 Month avg volatility: $9.85. Volatility stop (for downward breakout): $362.24 or 6.2% above the close.

Change YTD: 82.34%

Volume: 248,200 shares. 3 month avg: 162,437 shares.

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

 

Chart pattern: Double Top, Adam and Eve reversal pattern from 08/01/2019 to 08/09/2019

Breakout is downward 100% of the time.

Average decline: 18%.

Break-even failure rate: 14%.

Pullbacks occur 59% of the time.

Price hits measure rule target 69% of the time.

Industry: Electronics

Industry RS rank: 50 out of 58

Stock RS rank: 327 out of 583

8/15/19 close: $9.68

1 Month avg volatility: $0.37. Volatility stop (for downward breakout): $10.72 or 10.8% above the close.

Change YTD: 27.20%

Volume: 3,467,500 shares. 3 month avg: 3,241,565 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: Bump-and-run reversal, top reversal pattern from 06/25/2019 to 08/13/2019

Breakout is downward 100% of the time.

Average decline: 19%.

Break-even failure rate: 5%.

Pullbacks occur 62% of the time.

Price hits measure rule target 78% of the time.

Industry: Drug

WARNING: This industry is within the top 7 that Dead-cat bounce often.

Industry RS rank: 37 out of 58

Stock RS rank: 266 out of 583

8/15/19 close: $80.61

1 Month avg volatility: $2.58. Volatility stop (for upward breakout): $74.43 or 7.7% below the close.

Change YTD: 26.77%

Volume: 1,181,700 shares. 3 month avg: 1,771,434 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: Triangle, symmetrical continuation pattern from 06/11/2019 to 08/15/2019

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: Biotechnology

Industry RS rank: 46 out of 58

Stock RS rank: 488 out of 583

8/15/19 close: $23.20

1 Month avg volatility: $2.64. Volatility stop (for downward breakout): $31.25 or 34.7% above the close.

Change YTD: -20.19%

Volume: 3,569,700 shares. 3 month avg: 906,888 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: Dead-cat bounce continuation pattern from 08/14/2019 to 08/14/2019

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Apparel

Industry RS rank: 56 out of 58

Stock RS rank: 566 out of 583

8/15/19 close: $19.45

1 Month avg volatility: $1.07. Volatility stop (for downward breakout): $24.41 or 25.5% above the close.

Change YTD: -42.37%

Volume: 26,315,600 shares. 3 month avg: 3,145,718 shares.

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

 

Chart pattern: Dead-cat bounce continuation pattern from 08/15/2019 to 08/15/2019

Breakout is downward 67% of the time.

Average decline: 18%.

Industry: Chemical (Specialty)

Industry RS rank: 42 out of 58

Stock RS rank: 210 out of 583

8/15/19 close: $17.48

1 Month avg volatility: $0.55. Volatility stop (for upward breakout): $16.29 or 6.8% below the close.

Change YTD: 10.21%

Volume: 69,700 shares. 3 month avg: 64,734 shares.

This security may be thinly traded (less than 100k 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: Pipe bottom reversal pattern from 07/29/2019 to 08/05/2019

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: Electric Utility (West)

Industry RS rank: 6 out of 58

Stock RS rank: 95 out of 583

8/15/19 close: $61.53

1 Month avg volatility: $1.14. Volatility stop (for upward breakout): $58.21 or 5.4% below the close.

Change YTD: 24.88%

Volume: 3,659,100 shares. 3 month avg: 3,202,808 shares.

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

 

Chart pattern: Rectangle top continuation pattern from 06/14/2019 to 08/15/2019

Breakout is upward 68% of the time.

Average rise: 39%.

Break-even failure rate: 9%.

Throwbacks occur 64% of the time.

Price hits measure rule target 80% of the time.

Thursday 8/15/19. Intraday Market Direction: Nasdaq

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, but only the last 2 days.

I wanted to zoom into today's (Wednesday's) trading action, hence the chart.

The market opened sharply lower (A), drifted down, and formed a symmetrical triangle (B). A zoom of this chart pattern appears at C. Rather, it's a zoom of the last few price bars.

Notice that it has closed near the bottom of the triangle (green dot). I was going to buy the dip, and I may do that but not at the open.

That is a 4-star doji, a sign of indecision. That doji appears when all four prices are the same. Often you see it in lightly traded shares and it's bogus. So bogus that I decided it wasn't worth studying.

A check of the candle pics shows that this could be bullish harami cross (which is really bearish) or a morning doji star, which is bullish. Go figure.

I think I'll watch the market and buy if it drops again. I've a number of stocks I want to add to. So that's how I think about the bond market's yield inversion and a threat to the bull market.

$ $ $

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

 

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