As of 09/29/2022
Indus: 29,226 -458.13 -1.5%
Trans: 12,258 -199.22 -1.6%
Utils: 906 -38.84 -4.1%
Nasdaq: 10,738 -314.13 -2.8%
S&P 500: 3,640 -78.57 -2.1%
|
YTD
-19.6%
-25.6%
-7.6%
-31.4%
-23.6%
|
 32,000 or 29,200 by 10/15/202213,800 or 11,800 by 10/15/2022990 or 900 by 10/15/202211,975 or 10,700 by 10/15/20223,800 or 3,500 by 10/15/2022 |
As of 09/29/2022
Indus: 29,226 -458.13 -1.5%
Trans: 12,258 -199.22 -1.6%
Utils: 906 -38.84 -4.1%
Nasdaq: 10,738 -314.13 -2.8%
S&P 500: 3,640 -78.57 -2.1%
|
YTD
-19.6%
-25.6%
-7.6%
-31.4%
-23.6%
|
|
32,000 or 29,200 by 10/15/202213,800 or 11,800 by 10/15/2022990 or 900 by 10/15/202211,975 or 10,700 by 10/15/20223,800 or 3,500 by 10/15/2022 | |
This article looks at the failures of chart patterns, sorted by the month in which the breakout occurred. First posted August 2015.
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.
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.
I looked at the breakouts from the following chart patterns.
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.
| Month | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
| Failure Rate | 8% | 7% | 10% | 10% | 8% | 11% | 11% | 8% | 8% | 6% | 6% | 7% |
| More/Less | Less | More | More | More | More | Less | Less | Less |
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.
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