As of 09/25/2020
Indus: 27,174 +358.52 +1.3%
Trans: 11,270 +152.52 +1.4%
Utils: 808 +12.20 +1.5%
Nasdaq: 10,914 +241.29 +2.3%
S&P 500: 3,298 +51.87 +1.6%
|
YTD
-4.8%
+3.4%
-8.1%
+21.6%
+2.1%
|
 28,650 or 26,000 by 10/15/202011,750 or 10,600 by 10/01/2020845 or 775 by 10/01/202011,800 or 10,400 by 10/01/20203,600 or 3,200 by 10/01/2020 |
As of 09/25/2020
Indus: 27,174 +358.52 +1.3%
Trans: 11,270 +152.52 +1.4%
Utils: 808 +12.20 +1.5%
Nasdaq: 10,914 +241.29 +2.3%
S&P 500: 3,298 +51.87 +1.6%
|
YTD
-4.8%
+3.4%
-8.1%
+21.6%
+2.1%
| |
|
28,650 or 26,000 by 10/15/202011,750 or 10,600 by 10/01/2020845 or 775 by 10/01/202011,800 or 10,400 by 10/01/20203,600 or 3,200 by 10/01/2020 | ||
This article describes findings for a chart pattern that I call a vertical run up. That's when price goes vertical, climbing day after day with little or no overlap between price bars. I provide a few performance statistics in the Results section.
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Vertical Run Up (Red)
|
When searching for a vertical run up, follow these guidelines.
| Characteristic | Discussion |
| Vertical Run | Price moves up in a steep run for at least four sessions. |
| Overlap | There is minimal overlap from price bar to bar. However, the median overlap is 33%. |
| Flag* | Price can pause along the vertical run, occasionally multiple times. This pause (which I call a flag, regardless of the shape) happens 18% of the time. |
* The only "flag" (congestion area) I found was when price peaked and then failed to make a higher high for at least three days. That scenario happened 18% of the time.
The figure on the right shows the results from a study of 3,024 vertical runs in 247 stocks in the three bull markets from July 1995 to January 2014.
After a vertical run occurs (black price bars from A to B), price continues to climb 21% of the time. That means price first closes above the top of the pattern and moves up, but not as swiftly as it did from A to B. The near-vertical move of the vertical run up, is over.
The remainder of the time (79%), price first closes below the last price bar in the pattern before retracing all or a portion of the AB move. The median (midway) retrace is 52%. Half of the vertical moves will retrace more and half will retrace less.
A full 22% will retrace the complete AB move. A frequency distribution shows that a full retrace is the most frequent retrace amount.
Turning to time, it takes a median of 27 days for a stock to recover from the retrace after a vertical run. By that, I mean it takes price a median of 27 days to close above the top (B) posted by the vertical run.
The following table shows trading tactics for the vertical run split into trading styles.
| Trading Tactic | Explanation |
| Buy and hold | The retrace is short-lived so hold onto existing positions. Seventy-eight percent of vertical runs take less than three months to make a new high. |
| Position traders | Just 21% of vertical runs suffer a trend change (a drop of at least 20%). Thus, position traders should hold onto their stocks, but situations vary. |
| Swing and day traders | Use a close above the top or below the bottom of the last price bar in the vertical run as the trading signal. If price closes up, then ride the new trend, but expect that the rise won't be as swift as in the vertical run. If price closes down, then sell an existing holding or anticipate a retrace by shorting the stock. |
Shown are pictures on the daily chart of two vertical runs. The first is from 3M.
This vertical run begins at A when price leaves a loose congestion area of sideways price movement. It makes a swift move up to B, rising almost vertically.
After B, the stock moves higher, but at a more sedate pace, to C.
This is an example of the 21% that move higher after the vertical run ends. Price first closes above the top of the pattern three bars after peaking at B.
For statistical purposes, the full retrace from C to D does not count as a "full retrace" since price moved up, not down, after peaking at B.
This is another example of a vertical run on the daily charts, in ADTRAN.
Price begins the vertical run at A and ends it at B. This time, however, the stock retraces the AB move when it drop from B to C. I did not measure the amount of retrace in this stock, but it appears to be about 50% of the AB move. That's near the median retrace of 52%.
Notice how the exhaustion gap signals the end of the vertical move.
-- Thomas Bulkowski
See Also
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