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. His books, including the best selling Encyclopedia of Chart Patterns, have been translated into many languages. He may be reached at

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Bulkowski's Market Cap and Performance

Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P 500 (^GSPC):

As of 05/21/2013

15,388 52.30 0.3%

6,519 8.01 0.1%

515 0.79 0.2%

3,502 5.69 0.2%

1,669 2.87 0.2%

YTD

17.4%

22.8%

13.8%

16.0%

17.0%

Tom's Targets Overview: 05/14/2013

15,500 or 14,850 by 06/01/2013

6,750 or 6,200 by 06/01/2013

525 or 500 by 06/01/2013

3,600 or 3,300 by 06/01/2013

1,700 or 1,600 by 06/01/2013

Test Portfolios and CPI

Indus. strength: -0.4%

Mutt Losers: 7.0%

Mutt Winners: 2.8%

Wilder RSI: 24.7%

CPI:

on 04/19/2013

Do small cap stocks outperform big caps? Yes. This study takes a closer look.

Background

Details

Results

Market Cap Background

Market capitalization is the number of shares outstanding multiplied by the stock price (or in this case, the chart pattern breakout price). I classify capitalization into three categories: small cap stocks (up to $1 billion), mid caps ($1 billion to $5 billion), and large caps (over $5 billion).

Market Cap Details

I measured the rise from the breakout price to the ultimate high (the highest high before price tumbled by at least 20%), or the decline to the ultimate low (the lowest low before price climbed by at least 20%). Then I sorted the stocks by market capitalization. I found that chart patterns in small cap stocks performed best, followed by mid caps, and then large caps.

For example, price after a head-and-shoulders bottom climbed an average of 42% in 154 samples taken from small cap stocks. Mid cap stocks (147 samples) climbed 33%, on average, after the breakout and large caps climbed 27% (64 samples) post breakout. Thus, small caps outperformed followed by mid and large cap stocks, respectively.

For more information (time period covered, sample size and so on), refer to my book, Trading Classic Chart Patterns. It shows the percentage rise or decline for each pattern, sorted by capitalization.

Market Cap Results

Nineteen patterns perform best in small cap stocks.

Adam & Adam double tops
Adam & Eve double tops
Ascending scallops (upward breakout)
Ascending triangles (upward breakout)
Broadening tops (downward breakout)
Broadening tops (upward breakout, tied with large cap stocks)
Descending scallops (upward and downward breakouts)
Descending triangles (upward breakout)
Diamond tops (downward breakout)
Eve & Adam double bottoms and tops
Eve & Eve double bottoms
Head-and-shoulder bottoms
Head-and-shoulders tops
Rectangles (upward breakout)
Symmetrical triangles (upward breakout)
Triple bottoms (tied with large cap stocks)
Triple tops

Six patterns perform best in mid cap stocks

Adam & Adam double bottoms
Adam & Eve double bottoms
Ascending scallops (downward breakout)
Ascending triangles (downward breakout)
Descending triangles (downward breakout)
Eve & Eve double tops

Three patterns perform best in large cap stocks

Broadening tops (upward breakout, tied with large cap stocks)
Symmetrical triangles (downward breakout)
Triple bottoms (tied with large cap stocks)

-- Thomas Bulkowski

Bulkowski's Market Cap and Performance

Market Cap Background

Market Cap Details

Market Cap Results

See Also