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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Dead-Cat Bounce by Industry

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 01/18/2017
19,805 -22.05 -0.1%
9,141 41.29 0.5%
664 -0.93 -0.1%
5,556 16.92 0.3%
2,272 4.00 0.2%
YTD
0.2%
1.1%
0.6%
3.2%
1.5%
Tom's Targets    Overview: 01/18/2017
19,250 or 20,250 by 02/01/2017
8,800 or 9,500 by 02/01/2017
685 or 630 by 02/01/2017
5,700 or 5,400 by 02/01/2017
2,200 or 2,350 by 02/01/2017
Indus strength: None YTD
Mutt Losers: None YTD
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., has an entire section dedicated to event patterns. Dutch auctions are not covered in the second edition, but 10 others are. I show a picture of the book on the right.

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This page shows how often dead-cat bounce event patterns occur in an industry. The fewer that occur, the better the industry is for traders and investors.

For example, suppose you are looking to invest in a new industry. Which one should you choose?

You've found an appealing stock in oilfield services and another in building materials. The below list tells you that the dead-cat bounce rate is 32.8 for oilfield services and 70.1 for building materials. Thus, the chance of owning a stock that declines over 15% in one session is 70.1/32.8 or twice as high in the building materials industry than it is in the oilfield services industry.

All else being equal, you would invest or trade a stock from the oilfield services industry because it is safer.

 

 
 
 

Top 10 Industries -- All Years

The following table shows the dead-cat bounce rate sorted by the industries showing the fewest 1-day declines of at least 15% using all available price data, ending August 24, 2009.

RankIndustryDCB Rate
1Electric Utility (Central)4 Best
2Electric Utility (East)6.6
3Electric Utility (West)6.8
4Natural Gas (Diversified)6.9
5Household Products8
6Diversified Co.9
7Aerospace/Defense11
8Food Processing12
9Petroleum (Integrated)14
10Chemical (Diversified)15

Worst 10 Industries -- All Years

The following table shows the dead-cat bounce rate sorted by the industries showing most 1-day declines of at least 15% using all available price data, ending August 24, 2009.

RankIndustryDCB Rate
47Alternate Energy249 Worst
46Internet117
45Insurance (Life)93
44Biotechnology82
43Telecom. Equipment81
42Coal79
41Building Materials70
40Shoe64
39Semiconductor56
38Semiconductor Cap Equip.55
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Industries Sorted Alphabetically -- All Years

This is an alphabetical list of industries and their dead-cat bounce rates using all available price data ending August 24, 2009.

RankIndustryDCB Rate
7Aerospace/Defense10.8
19Air Transport27.9
47Alternate Energy248.7 Worst
35Apparel50.8
44Biotechnology82.4
41Building Materials70.1
15Cement and Aggregates21.6
16Chemical (Basic)23.0
10Chemical (Diversified)14.8
23Chemical (Specialty)32.8
42Coal78.8
34Computers and Peripherals49.7
6Diversified Co.9.0
29Drug43.3
1Electric Utility (Central)3.9 Best
2Electric Utility (East)6.6
3Electric Utility (West)6.8
8Food Processing12.3
31Furn/Home Furnishings44.0
28Homebuilding42.9
5Household Products8.4
22Human Resources31.7
30Insurance (Diversified)43.5
45Insurance (Life)93.3
17Insurance (Prop/Casualty)24.2
46Internet116.7
21Machinery31.3
26Medical Supplies39.8
27Metal Fabricating41.6
36Metals and Mining (Div.)52.7
12Natural Gas (Distributor)16.7
4Natural Gas (Diversified)6.9
24Oilfield Svcs/Equipment32.8
11Packaging and Container16.0
9Petroleum (Integrated)14.0
20Petroleum (Producing)30.6
18Precision Instrument26.3
33Retail (Special Lines)49.6
13Retail Building Supply17.9
14Retail Store18.1
37Securities Brokerage53.6
39Semiconductor56.0
38Semiconductor Cap Equip.54.9
40Shoe64.1
43Telecom. Equipment80.6
32Toiletries/Cosmetics46.8
25Trucking/Transp. Leasing39.0

Industries Sorted by DCB Rate -- All Years

This is a list of industries sorted by their dead-cat bounce rates using all available price data ending August 24, 2009.


RankIndustryDCB Rate
1Electric Utility (Central)3.9 Best
2Electric Utility (East)6.6
3Electric Utility (West)6.8
4Natural Gas (Diversified)6.9
5Household Products8.4
6Diversified Co.9.0
7Aerospace/Defense10.8
8Food Processing12.3
9Petroleum (Integrated)14.0
10Chemical (Diversified)14.8
11Packaging and Container16.0
12Natural Gas (Distributor)16.7
13Retail Building Supply17.9
14Retail Store18.1
15Cement and Aggregates21.6
16Chemical (Basic)23.0
17Insurance (Prop/Casualty)24.2
18Precision Instrument26.3
19Air Transport27.9
20Petroleum (Producing)30.6
21Machinery31.3
22Human Resources31.7
23Chemical (Specialty)32.8
24Oilfield Svcs/Equipment32.8
25Trucking/Transp. Leasing39.0
26Medical Supplies39.8
27Metal Fabricating41.6
28Homebuilding42.9
29Drug43.3
30Insurance (Diversified)43.5
31Furn/Home Furnishings44.0
32Toiletries/Cosmetics46.8
33Retail (Special Lines)49.6
34Computers and Peripherals49.7
35Apparel50.8
36Metals and Mining (Div.)52.7
37Securities Brokerage53.6
38Semiconductor Cap Equip.54.9
39Semiconductor56.0
40Shoe64.1
41Building Materials70.1
42Coal78.8
43Telecom. Equipment80.6
44Biotechnology82.4
45Insurance (Life)93.3
46Internet116.7
47Alternate Energy248.7 Worst
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Methodology

I looked through 572 stocks in 47 industries from the start of data (which varies from stock to stock, but used a total of 2,359,214 daily price bars, or about 16 years of data for each stock) to 8/24/2009 (encompassing both bull and bear markets) or for shorter periods as shown in the tables above. All industries contained at least 5 stocks with the average of 12 stocks per industry. I located all days where price dropped 15% or more in one session, measured from the prior close to the next day's low. I added these drops for each stock in an industry and divided the result by the sum of the total number of days searched for stocks in the industry. I multiplied the ratio by 10,000 to slide the decimal over and give the DCB rate shown in the table.

For example, the 20 stocks in the apparel industry had 393 event declines (what I call dead-cat bounces) appear in 77,340 days of daily price data, for a DCB rate of 50.81 or 10,000 x 393/77,340.

Top 10 Industries -- 2007-2009 Bear Market

The following table shows the dead-cat bounce rate sorted by the industries showing the fewest 1-day declines of at least 15% using price data from the 2007 to 2009 bear market.

RankIndustryDCB Rate
1Electric Utility (West)9.4 Best
2Electric Utility (East)11.2
3Aerospace/Defense14.0
4Electric Utility (Central)17.2
5Packaging and Container23.2
6Household Products23.7
7Internet31.6
8Food Processing33.1
9Drug33.7
10Medical Supplies36.8

Worst 10 Industries -- 2007-2009 Bear Market

The following table shows the dead-cat bounce rate sorted by the industries showing most 1-day declines of at least 15% using price data from the 2007 to 2009 bear market.

RankIndustryDCB Rate
47Coal356.8 Worst
46Alternate Energy295.3
45Insurance (Life)284.2
44Homebuilding242.1
43Insurance (Diversified)239.5
42Securities Brokerage186.0
41Metals and Mining (Div.)179.2
40Insurance (Prop/Casualty)177.8
39Petroleum (Producing)155.5
38Oilfield Svcs/Equipment135.2
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Industries Sorted Alphabetically -- 2007-2009 Bear Market

This is an alphabetical list of industries and their dead-cat bounce rates using price data from the 2007 to 2009 bear market.

RankIndustryDCB Rate
3Aerospace/Defense14.0
32Air Transport107.9
46Alternate Energy295.3
37Apparel130.5
35Biotechnology112.9
34Building Materials111.8
33Cement and Aggregates108.3
36Chemical (Basic)124.4
13Chemical (Diversified)51.2
23Chemical (Specialty)76.8
47Coal356.8 Worst
15Computers and Peripherals52.6
16Diversified Co.53.6
9Drug33.7
4Electric Utility (Central)17.2
2Electric Utility (East)11.2
1Electric Utility (West)9.4 Best
8Food Processing33.1
31Furn/Home Furnishings105.3
44Homebuilding242.1
6Household Products23.7
20Human Resources69.6
43Insurance (Diversified)239.5
45Insurance (Life)284.2
40Insurance (Prop/Casualty)177.8
7Internet31.6
18Machinery63.2
10Medical Supplies36.8
27Metal Fabricating84.2
41Metals and Mining (Div.)179.2
17Natural Gas (Distributor)63.2
19Natural Gas (Diversified)64.9
38Oilfield Svcs/Equipment135.2
5Packaging and Container23.2
30Petroleum (Integrated)96.8
39Petroleum (Producing)155.5
11Precision Instrument40.0
28Retail (Special Lines)84.2
14Retail Building Supply51.8
26Retail Store81.0
42Securities Brokerage186.0
22Semiconductor72.4
12Semiconductor Cap Equip.40.5
29Shoe86.3
25Telecom. Equipment78.7
21Toiletries/Cosmetics71.6
24Trucking/Transp. Leasing77.9

Industries Sorted by DCB Rate -- 2007-2009 Bear Market

This is a list of industries sorted by their dead-cat bounce rates using price data from the 2007 to 2009 bear market.


RankIndustryDCB Rate
1Electric Utility (West)9.4 Best
2Electric Utility (East)11.2
3Aerospace/Defense14.0
4Electric Utility (Central)17.2
5Packaging and Container23.2
6Household Products23.7
7Internet31.6
8Food Processing33.1
9Drug33.7
10Medical Supplies36.8
11Precision Instrument40.0
12Semiconductor Cap Equip.40.5
13Chemical (Diversified)51.2
14Retail Building Supply51.8
15Computers and Peripherals52.6
16Diversified Co.53.6
17Natural Gas (Distributor)63.2
18Machinery63.2
19Natural Gas (Diversified)64.9
20Human Resources69.6
21Toiletries/Cosmetics71.6
22Semiconductor72.4
23Chemical (Specialty)76.8
24Trucking/Transp. Leasing77.9
25Telecom. Equipment78.7
26Retail Store81.0
27Metal Fabricating84.2
28Retail (Special Lines)84.2
29Shoe86.3
30Petroleum (Integrated)96.8
31Furn/Home Furnishings105.3
32Air Transport107.9
33Cement and Aggregates108.3
34Building Materials111.8
35Biotechnology112.9
36Chemical (Basic)124.4
37Apparel130.5
38Oilfield Svcs/Equipment135.2
39Petroleum (Producing)155.5
40Insurance (Prop/Casualty)177.8
41Metals and Mining (Div.)179.2
42Securities Brokerage186.0
43Insurance (Diversified)239.5
44Homebuilding242.1
45Insurance (Life)284.2
46Alternate Energy295.3
47Coal356.8 Worst
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Top 10 Industries -- Post 2007-2009 Bear Market

The following table shows the dead-cat bounce rate sorted by the industries showing the fewest 1-day declines of at least 15% using price data after the 2007 to 2009 bear market.

RankIndustryDCB Rate
1Aerospace/Defense0.0 Best
2Electric Utility (Central)0.0 Best
3Electric Utility (East)0.0 Best
4Electric Utility (West)0.0 Best
5Household Products0.0 Best
6Natural Gas (Diversified)0.0 Best
7Chemical (Diversified)5.8
8Precision Instrument8.1
9Food Processing11.6
10Natural Gas (Distributor)13.6

Worst 10 Industries -- Post 2007-2009 Bear Market

The following table shows the dead-cat bounce rate sorted by the industries showing most 1-day declines of at least 15% using price data after the 2007 to 2009 bear market.

RankIndustryDCB Rate
47Homebuilding210.0 Worst
46Furn/Home Furnishings197.6
44Insurance (Diversified)172.8
45Insurance (Life)172.8
43Trucking/Transp. Leasing154.5
42Chemical (Basic)147.8
41Insurance (Prop/Casualty)144.5
40Building Materials142.3
39Alternate Energy133.0
38Biotechnology107.4
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Industries Sorted Alphabetically -- Post 2007-2009 Bear Market

This is an alphabetical list of industries and their dead-cat bounce rates using price data after the 2007 to 2009 bear market.

RankIndustryDCB Rate
1Aerospace/Defense0.0 Best
35Air Transport101.6
39Alternate Energy133.0
34Apparel97.6
38Biotechnology107.4
40Building Materials142.3
24Cement and Aggregates46.5
42Chemical (Basic)147.8
7Chemical (Diversified)5.8
33Chemical (Specialty)96.1
21Coal40.7
12Computers and Peripherals23.2
25Diversified Co.51.7
19Drug32.5
2Electric Utility (Central)0.0 Best
3Electric Utility (East)0.0 Best
4Electric Utility (West)0.0 Best
9Food Processing11.6
46Furn/Home Furnishings197.6
47Homebuilding210.0 Worst
5Household Products0.0 Best
28Human Resources56.3
44Insurance (Diversified)172.8
45Insurance (Life)172.8
41Insurance (Prop/Casualty)144.5
11Internet17.4
17Machinery27.1
13Medical Supplies24.4
20Metal Fabricating37.0
36Metals and Mining (Div.)105.7
10Natural Gas (Distributor)13.6
6Natural Gas (Diversified)0.0 Best
18Oilfield Svcs/Equipment30.0
14Packaging and Container24.4
15Petroleum (Integrated)24.4
29Petroleum (Producing)68.8
8Precision Instrument8.1
30Retail (Special Lines)81.3
23Retail Building Supply45.2
26Retail Store56.3
31Securities Brokerage81.3
16Semiconductor25.4
27Semiconductor Cap Equip.56.3
32Shoe89.4
22Telecom. Equipment42.8
37Toiletries/Cosmetics105.7
43Trucking/Transp. Leasing154.5

Industries Sorted by DCB Rate -- Post 2007-2009 Bear Market

This is a list of industries sorted by their dead-cat bounce rates using price data after the 2007 to 2009 bear market.


RankIndustryDCB Rate
1Aerospace/Defense0.0 Best
2Electric Utility (Central)0.0
3Electric Utility (East)0.0
4Electric Utility (West)0.0
5Household Products0.0
6Natural Gas (Diversified)0.0
7Chemical (Diversified)5.8
8Precision Instrument8.1
9Food Processing11.6
10Natural Gas (Distributor)13.6
11Internet17.4
12Computers and Peripherals23.2
13Medical Supplies24.4
14Packaging and Container24.4
15Petroleum (Integrated)24.4
16Semiconductor25.4
17Machinery27.1
18Oilfield Svcs/Equipment30.0
19Drug32.5
20Metal Fabricating37.0
21Coal40.7
22Telecom. Equipment42.8
23Retail Building Supply45.2
24Cement and Aggregates46.5
25Diversified Co.51.7
28Human Resources56.3
26Retail Store56.3
27Semiconductor Cap Equip.56.3
29Petroleum (Producing)68.8
30Retail (Special Lines)81.3
31Securities Brokerage81.3
32Shoe89.4
33Chemical (Specialty)96.1
34Apparel97.6
35Air Transport101.6
36Metals and Mining (Div.)105.7
37Toiletries/Cosmetics105.7
38Biotechnology107.4
39Alternate Energy133.0
40Building Materials142.3
41Insurance (Prop/Casualty)144.5
42Chemical (Basic)147.8
43Trucking/Transp. Leasing154.5
44Insurance (Diversified)172.8
45Insurance (Life)172.8
46Furn/Home Furnishings197.6
47Homebuilding210.0 Worst
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Inverted Dead-cat bounce industry performance

Below is a list of industries sorted by their inverted dead-cat bounce rates using price data after the 2007 to 2009 bear market.

An inverted dead-cat bounce occurs when price climbs at least 5%, however the below list shows the results of stocks in which price climbs by 15%. I wanted the dead-cat bounce and inverted dead-cat bounce numbers to be comparable.

When an inverted dead-cat bounce occurs, it's a good event if you are long, so look for industries having many inverted dead-cat bounces. Unfortunately, the table also shows that those stocks having many inverted dead-cat bounces also have the bad kind: dead-cat bounces. It shows that the higher the reward, the higher the risk. The lower the reward, the lower the risk.

The results suggest that you can make money by buying a stock after it plunges at least 15% in one session. The rebound might be worth looking at. I have not specifically looked into this idea but did some related research. The possible flaw in that idea is one stock can have a dead-cat bounce but another one might see price climb by 20% (an inverted dead-cat bounce). So, you will want to check if the same stock shows a recovery.

Let's discuss the numbers. Skip down a few rows to "Electric Utility (East)," highlighted in bold. That row shows that the inverted dead-cat bounce rate was 5.4. I found one stock that had price climb by at least 15% as measured from the prior close to the next day's high, out of 1,860 price bars searched. Multiplied by 10,000, that gives a rate of 10,000 * 1/1,860 or 5.4. That places the inverted dead-cat bounce rank at 5 since the other four tie at 1, and the rate is poor. I list the dead-cat bounce rank as 1, also, since few dead-cat bounces occurred in utility stocks (which is a good thing).

At the bottom end of the table you will find industries that have higher inverted dead-cat bounce and dead-cat bounce rankings.

IndustryInv DCB RateInverted DCB RankDCB Rank
Aerospace/Defense0.01 Worst1 Best
Electric Utility (Central)0.011
Electric Utility (West)0.011
Natural Gas (Diversified)0.011
Electric Utility (East)5.451
Petroleum (Integrated)8.1615
Household Products20.271
Natural Gas (Distributor)20.2810
Chemical (Diversified)23.097
Food Processing28.8109
Computers and Peripherals34.61112
Internet40.31211
Precision Instrument40.3138
Medical Supplies52.41413
Oilfield Svcs/Equipment63.71518
Semiconductor70.61616
Drug80.61719
Air Transport90.71835
Metal Fabricating95.31920
Telecom. Equipment97.62022
Diversified Co.110.02125
Machinery125.42217
Petroleum (Producing)136.52329
Packaging and Container161.32414
Retail (Special Lines)166.02530
Semiconductor Cap Equip.167.52628
Cement and Aggregates172.82724
Retail Building Supply179.22823
Human Resources210.92926
Shoe225.83032
Securities Brokerage228.53131
Metals and Mining (Div.)233.93236
Retail Store235.73327
Apparel246.03434
Trucking/Transp. Leasing258.13543
Chemical (Basic)271.33642
Biotechnology300.23738
Toiletries/Cosmetics306.53837
Coal309.13921
Chemical (Specialty)315.24033
Insurance (Prop/Casualty)340.54141
Building Materials393.14240
Furn/Home Furnishings426.54346
Alternate Energy439.94439
Insurance (Diversified)514.14544
Insurance (Life)584.74645
Homebuilding611.647 Best47 Worst

-- Thomas Bulkowski

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Of course there's no reason for it. It's just our policy.