As of 10/03/2023   Indus: 33,002 -430.97 -1.3%     Trans: 14,682 -115.52 -0.8%     Utils: 789 +6.29 +0.8%     Nasdaq: 13,059 -248.30 -1.9%     S&P 500: 4,229 -58.94 -1.4%	YTD -0.4%    +9.6%   -18.4%    +24.8%    +10.2%	Targets    Overview: 09/15/2023     34,000 or 32,650 by 10/15/2023   15,500 or 14,200 by 10/15/2023   850 or 725 by 10/15/2023   13,750 or 12,700 by 10/15/2023   4,425 or 4,175 by 10/15/2023
Chart Pattern Indicator: on 9/15/23

As of 10/03/2023   Indus: 33,002 -430.97 -1.3%     Trans: 14,682 -115.52 -0.8%     Utils: 789 +6.29 +0.8%     Nasdaq: 13,059 -248.30 -1.9%     S&P 500: 4,229 -58.94 -1.4%	YTD -0.4%    +9.6%   -18.4%    +24.8%    +10.2%
Targets    Overview: 09/15/2023     34,000 or 32,650 by 10/15/2023   15,500 or 14,200 by 10/15/2023   850 or 725 by 10/15/2023   13,750 or 12,700 by 10/15/2023   4,425 or 4,175 by 10/15/2023
Chart Pattern Indicator: on 9/15/23

Bulkowski on Pattern Failures by Month

This article looks at the failures of chart patterns, sorted by the month in which the breakout occurred. First posted August 2015.

• Summary
• Background
• Methodology
• Results
• See Also.

Pattern Failures: Summary

I sorted chart patterns that failed to see price rise more than 10% after the breakout by their breakout date.

The average failure rate for all qualifying chart patterns in the study was 8%.

The fall/winter months (February and October through December) had fewer failures and the spring/summer months (March, April, June and July) had more failures.

Pattern Failures: Background

I received an email that asked if August showed more chart pattern failures than other months. Since it was an easy question to answer, I started the research and found the result a day later.

The results are discussed in this article.

Pattern Failures: Methodology

I looked at the breakouts from the following chart patterns.

• Broadening tops and bottoms
• Double bottoms (all four combinations of Adam & Eve)
• Double tops (all four combinations of Adam & Eve)
• Head-and-shoulders tops and bottoms
• Rectangle tops and bottoms
• Ascending, descending, and symmetrical triangles

I used 1,263 stocks and found 23,487 chart patterns from 1988 to 2015. Not all stocks covered the entire range.

I sorted the breakout date according to the month in which it occurred.

For this test, I defined a chart pattern failure as one in which price failed to rise more than 10% after an upward breakout (to keep the sample counts high). The results are for bull markets only and for chart patterns that appear on the daily charts.

Pattern Failures: Results

Table 1 shows the results, sorted by month. For example, in January 8% of the chart patterns failed to rise more that 10% after an upward breakout in a bull market (at the time of the breakout). The 8% value is the average failure rate for all qualifying chart patterns that I measured.

February showed fewer than average failures, as the "less" box in the "More/less" row signifies.

Based on the results, we can say that February, and October through December showed fewer failures and March, April, June and July showed more failures. Generally, the fall/winter months had fewer failures and the spring/summer months had more failures.

-- Thomas Bulkowski. Donate now to keep this website free.

See Also

• Best buy days. Which day of the week is the best one to buy or sell?
• Best buy months. Can buying at the end of the worst performing month and selling at the best performing be profitable?
• Tax loss selling. Which days of the month do stocks, ETFs, and mutual funds drop?
• Best buy price. The best buy price is $20 or below.
• Seasonality. What are the best months to buy and sell stocks?
• Holidays. Does the market rise or fall before and after holidays?
• Failure rates. Chart patterns fail more often than before.
• Market cap. Chart patterns in small cap stocks outperform.
• 1929 crash. Read about the crash of 1929 from a technical analysts perspective.
• Black Monday and crash of 1987. Are their any similarities to today's markets?
• The markets and 9-11. Discover how the markets reacted to the events on 9/11/2001.

 

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