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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 Study: Do Low Priced Patterns Outperform?

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Busted
Patterns
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Patterns
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Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 05/26/2017
21,080 -2.67 0.0%
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720 -0.08 0.0%
6,210 4.93 0.1%
2,416 0.75 0.0%
YTD
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1.5%
9.2%
15.4%
7.9%
Tom's Targets    Overview: 05/15/2017
21,400 or 20,450 by 06/01/2017
9,500 or 8,700 by 06/01/2017
730 or 700 by 06/15/2017
6,350 or 6,000 by 06/01/2017
2,450 or 2,375 by 06/15/2017

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.

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Do chart patterns in low priced stocks outperform those from higher priced stocks? This page answers that question.

 

Low Priced Patterns: Overview

I looked at 16,664 chart patterns of various types (head-and-shoulders, double bottoms, and so on) in 958 stocks from 1991 to early 2005, encompassing both bull and bear markets. Not all stocks covered the entire period.

Low Priced Patterns: Bull Market Results

Price
Range
Up
Breakout
Samples
Down
Breakout
Samples
$0-10
61%
1,457
21%
1,091
10-20
42%
2,145
19%
1,879
20-30
33%
1,330
18%
1,215
30-40
30%
605
18%
587
40-50
24%
293
17%
280
50-60
24%
113
19%
117
60-70
21%
48
19%
40
>70
23%
39
25%
40

The above table shows bull market results for both upward and downward breakout directions. For example, the 1,457 chart patterns with breakouts priced over $0 and equal to or below $10, had an average rise of 61% after the breakout and before price tumbled by at least 20%, or closed below the chart pattern low, whichever came first. The 1,091 samples with downward breakouts showed declines averaging 21% before price climbed by at least 20% or rose above the top of the chart pattern, whichever came first.

Upward breakouts do best for low priced stocks and performance deteriorates as the breakout price rises until the samples skew the results. Downward breakouts show the same trend, with low priced stocks outperforming the high priced ones until the low sample counts skew the results.

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Low Priced Patterns: Bear Market Results

Price
Range
Up
Breakout
Samples
Down
Breakout
Samples
$0-10
49%
318
25%
321
10-20
37%
822
25%
706
20-30
27%
709
23%
570
30-40
24%
449
25%
432
40-50
22%
267
23%
268
50-60
16%
163
25%
146
60-70
17%
69
31%
46
>70
19%
56
31%
43

The above table shows the bear market results for both up and down breakouts using the same methodology described earlier. For upward breakouts, the trend is clear with low price stocks outperforming the more expensive ones until the samples become few. Downward breakouts hold steady with declines averaging between 23% and 25% until samples become few.

-- 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. My wife is like an angel, always up in the air harping on something.