As of 09/18/2020
  Indus: 27,657 -244.56 -0.9%  
  Trans: 11,432 -120.44 -1.0%  
  Utils: 798 -12.86 -1.6%  
  Nasdaq: 10,793 -117.00 -1.1%  
  S&P 500: 3,319 -37.54 -1.1%  
YTD
-3.1%  
 +4.9%  
-9.2%  
 +20.3%  
 +2.7%  
  Targets    Overview: 09/14/2020  
  Up arrow29,400 or 26,700 by 10/01/2020
  Up arrow11,750 or 10,600 by 10/01/2020
  Up arrow845 or 775 by 10/01/2020
  Up arrow11,800 or 10,400 by 10/01/2020
  Up arrow3,600 or 3,200 by 10/01/2020
CPI (updated daily): Arrows on 8/18/20
As of 09/18/2020
  Indus: 27,657 -244.56 -0.9%  
  Trans: 11,432 -120.44 -1.0%  
  Utils: 798 -12.86 -1.6%  
  Nasdaq: 10,793 -117.00 -1.1%  
  S&P 500: 3,319 -37.54 -1.1%  
YTD
-3.1%  
 +4.9%  
-9.2%  
 +20.3%  
 +2.7%  
  Targets    Overview: 09/14/2020  
  Up arrow29,400 or 26,700 by 10/01/2020
  Up arrow11,750 or 10,600 by 10/01/2020
  Up arrow845 or 775 by 10/01/2020
  Up arrow11,800 or 10,400 by 10/01/2020
  Up arrow3,600 or 3,200 by 10/01/2020
CPI (updated daily): Arrows on 8/18/20

Bulkowski on Stock Price Mountains

 

My book, Trading BasicsTrading Basics: Evolution of a Trader book., discusses price mountains starting on page 112 in the section titled, "26. Avoid Price Mountains." I show a picture of the book on the left.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

What is a Price Mountain?
2013 Price Mountain Update
Price Mountain Summary
Price Mountains: Time to Make a New High
Price Mountains: Bull Run
Price Mountains: Failure to Make New Highs
See Also

Stock Price Mountains: What Are They?

Picture of the Nasdaq composite on the 5 minute scale.

A price mountain is just like it sounds. Price makes a substantial rise and then reverses, leaving a peak on the price chart. This article describes statistics on the recovery after a price mountain.

Shown on the right is an example of a price mountain. The chart is on the monthly, linear/arithmetic (not semi-log) scale.

Price forms a tall peak that the stock hasn't surpassed yet.

Stock Price Mountains: 2013 Update

I ran another test on price mountains in August 2013. Here are the details of that test.

I programmed my computer to find price mountains under the following circumstances.

I found 415 stocks with price mountains which gave me 749 samples. The time for price to reach or exceed the top of the mountain was 6 years. However, 35% of the samples have not exceeded the top of the mountain. Thus, the six years understates the actual value.

This test is different from the ones that follow since it does not bracket time into yearly highs.

Top of page More

Stock Price Mountains: Summary

Stock Price Mountains: Time to Make a New High

For this study, I looked at 428 stocks from as early as 1981 to July 25, 2006, but few stocks covered that entire range. The data used a minimum of 5,598 samples. For each year, I found the yearly high (calendar year) and the date price exceeded that high. It took price 1.3 years (477 days) to exceed the calendar year high, on average.

If you include stocks not yet exceeding the yearly high (out of data), then the average time to exceed the yearly high reaches 1.6 years (598 days). The difference includes those stocks not making a higher high...yet.

Stock Price Mountains: Bull Run

Top of page More

What about stocks that trend up, as in the bull run to the peak in 2000? How long does it take a stock to recover and make a new high?

Up Trend
Length (years)
Recovery
Time (years)
Recovery Time (years) for All Stocks
Including Those not Making New Highs
22.63.1
32.83.3
42.93.6
53.03.7
63.34.0
73.54.5

The table shows that when price makes a higher high the following year and then drops (that is, no higher high a year later), it takes an average of 2.6 years before price reaches the old high. If the upward price trend lasts for 3 consecutively higher yearly highs, then it takes 2.8 years to post a new high, on average.

If you assume that the end of data signifies a new high (that is, it includes all stocks whether they made a new high or not), then it would take 3.1 years to post a new high after trending up for 2 years (as of the date of the original study).

This has a major assumption and that being price making a new high the following year represents a higher trend. Most often, that is the case. But I didn't check to see if a higher low was also made (the common definition of an up trend is a higher high and a higher low). Nor does this analysis assume a straight-line run up.

The longer price trends upward, the longer it will take to recover and post a new high after a decline, on average. For example, if price makes a higher yearly high two years in a row and then declines (fails to make a higher high during the third year), it will take an average of 3.1 years before price makes a higher high.

Stock Price Mountains: Failure to Make New Highs

How many stocks fail to make a new high? The table on the right shows the answer.

Years to
New High
Fail to Make
a New High
138%
219
311
47
54
62

In words, 38% fail to make a higher high in 1 year. Nineteen percent fail to make a new high within 2 years. And so on.

-- Thomas Bulkowski

Top of page More

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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