As of 04/19/2024   Indus: 37,986 +211.02 +0.6%     Trans: 15,084 +136.79 +0.9%     Utils: 876 +15.31 +1.8%     Nasdaq: 15,282 -319.49 -2.0%     S&P 500: 4,967 -43.89 -0.9%	YTD  +0.8%   -5.1%   -0.7%    +1.8%    +4.1%	Targets    Overview: 04/12/2024     39,800 or 37,150 by 05/01/2024   16,200 or 15,000 by 05/01/2024   885 or 850 by 05/01/2024   16,700 or 15,800 by 05/01/2024   5,250 or 5,025 by 05/01/2024
Chart Pattern Indicator: on 4/1/24

As of 04/19/2024   Indus: 37,986 +211.02 +0.6%     Trans: 15,084 +136.79 +0.9%     Utils: 876 +15.31 +1.8%     Nasdaq: 15,282 -319.49 -2.0%     S&P 500: 4,967 -43.89 -0.9%	YTD  +0.8%   -5.1%   -0.7%    +1.8%    +4.1%
Targets    Overview: 04/12/2024     39,800 or 37,150 by 05/01/2024   16,200 or 15,000 by 05/01/2024   885 or 850 by 05/01/2024   16,700 or 15,800 by 05/01/2024   5,250 or 5,025 by 05/01/2024
Chart Pattern Indicator: on 4/1/24

Bulkowski on Reversal Times in the Stock Market

My book, Swing and Day Trading, shown on the left, discusses reversal times starting on page 191. The discussion also describes the time that sets the intraday high and low most often.

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This article discusses the times at which reversals occur during the trading day.

• Summary
• Methodology
• Results
• See Also.

Reversal Times: Summary

The research shows that the top three reversal minutes each hour are:

• A minute after each hour (10:01, 11:01, and so on)
• A minute after each half hour (9:31, 10:31, and so on)
• 51 minutes after the hour (9:51, 11:51, and so on)

This applies regardless of the price trend: Both peaks and valleys reverse most often at these minutes.

Reversal Times: Methodology

I used data on the 1-minute scale from 2/3/2003 to 12/30/2005 (bull market) and 2/1/2007 to 2/13/2009 (mostly bear market), but not all stocks covered the entire range. The analysis used almost 21 million price bars in 54 common stocks or the equivalent of 205 years of daily price data.

Once I had the data, I found all peaks and valleys within 5 price bars (5 bars before to 5 bars after, for a total of 11) with a second test using 10 price bars (21 bars total). In other words, the price bar was the highest high during the 11 or 21 bars, or the lowest low during the same periods. I used this method to automate the testing of the 21 million price bars because I certainly wasn't going to look at them all.

I logged the time at which those peaks and valleys occurred then counted how often they appeared during the same time for all 54 stocks. This is called a frequency distribution.

I sorted the results by peaks and valleys, bull and bear market, and methodology (5 or 10 bar). I found that the bull and bear market distinction didn't add value. That means the results were similar that they can be combined, which I did. Also, the 5 or 10 bar results also were similar with the 5 bars having higher sample rates, so I used that.

I sorted the results by hours and picked the top three minutes per hour that showed the most reversals.

I discuss results next. Honest.

More

Reversal Times: Results

I expected the results to be inconsistent but they are not. Reversals occur at the same time throughout the day, regardless of whether it is a peak or a valley.

The table shows the minute in which a reversal occurred and the number of reversals during that minute. Only the top three reversals appear per hour except that those minutes close together were ignored (such as 9:31 and 9:32).

Let me give you a few examples. Within a minute of the open, at 9:31, price reversed, representing 24% of all possible reversals at that minute (some stocks did not trade at the open). The first minute has the most reversals of the day, followed in second place by the close, with 10%. The remainder of the reversals show 7% to 9% of the total.

Another example: At 9:46, another peak occurred 3,667 times or 7% of all samples at that minute.

As you look down the columns, you will find a surprising result. Most of the reversals occur at the same time! Those not shown rank high (like 4th, which is not high enough to make the list).

The three reversal times are:

• A minute after each hour (10:01, 11:01, and so on)
• A minute after each half hour (9:31, 10:31, and so on)
• 51 minutes after the hour (9:51, 11:51, and so on)

The table shows the reversal times for peaks, not valleys but it might just as well have. The valley reversal times are similar.

-- Thomas Bulkowski

More

See Also

• Distribution days. Do distribution days foretell a coming price decline?
• Low priced patterns: Do they outperform? Yes. Best is $0-$10 range.
• Price doubles, then what? Stocks that double or drop in half show surprising performance a year later.
• Price recovery. Do stocks that decline least in a bear market rebound furthest?
• Price trends. Consecutively higher/lower closes before the breakout offers performance clues.
• Price trends. Price trends over the last year helps make buying stock easier.
• Price velocity is similar on entry and exit from chart patterns.
• Price volatility. Stocks with volatility too high or low hurt profits.

 

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