As of 04/02/2020   Indus: 21,413 +469.93 +2.2%     Trans: 7,446 +93.13 +1.3%     Utils: 729 +21.32 +3.0%     Nasdaq: 7,487 +126.73 +1.7%     S&P 500: 2,527 +46.40 +1.9%	YTD -25.0%   -31.7%   -17.0%   -16.6%   -21.8%	Targets    Overview: 03/15/2020     19,000 or 25,600 by 04/15/2020   6,700 or 9,000 by 04/15/2020   600 or 800 by 04/15/2020   7,000 or 8,400 by 04/15/2020   2,300 or 2,900 by 04/15/2020
CPI (updated daily): on 4/1/20

As of 04/02/2020   Indus: 21,413 +469.93 +2.2%     Trans: 7,446 +93.13 +1.3%     Utils: 729 +21.32 +3.0%     Nasdaq: 7,487 +126.73 +1.7%     S&P 500: 2,527 +46.40 +1.9%	YTD -25.0%   -31.7%   -17.0%   -16.6%   -21.8%
Targets    Overview: 03/15/2020     19,000 or 25,600 by 04/15/2020   6,700 or 9,000 by 04/15/2020   600 or 800 by 04/15/2020   7,000 or 8,400 by 04/15/2020   2,300 or 2,900 by 04/15/2020
CPI (updated daily): on 4/1/20

Bulkowski's Ugly Pattern Performance Study

Do perfectly shaped chart patterns perform better or worse than ugly ones? In a test of two chart pattern types, the uglier patterns outperformed the well-shaped ones.

Ugly Pattern Performance: Detailed Results

I looked at double bottoms and double tops to determine whether ugly (uneven) tops or bottoms performed better than those with even peaks or valleys. Here's what I found.

Numbers in parentheses are samples used in the test and the percentages are the average move post breakout. Double bottoms have the most samples. When the valleys are within 0 to 1% in price from each other, the rise averages 31.5%. When the valleys are 4 to 5% apart in price, the rise averages 42.8%. Thus, the uglier the chart pattern, the better the performance.

Ugly Pattern Performance: Definitions

I measured the rise or fall from the breakout price to the ultimate high or low. A breakout occurs when price climbs above the highest high between the double bottoms, or below the lowest low between the double tops. The ultimate high is the highest high before price tumbles at least 20%. The ultimate low is the lowest low before price rises at least 20%. In the test, I used 1,275 stocks covering 7/1991 to 3/2006. Not all stocks covered the entire period and only qualifying double tops and bottoms were used. I found 2,239 double top or bottom patterns, but not all of them had usable data (the ultimate high or low wasn't found yet because price hadn't reversed).

-- Thomas Bulkowski

 

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