As of 10/03/2022
  Indus: 29,491 +765.38 +2.7%  
  Trans: 12,465 +406.70 +3.4%  
  Utils: 915 +26.32 +3.0%  
  Nasdaq: 10,815 +239.81 +2.3%  
  S&P 500: 3,678 +92.81 +2.6%  
YTD
-18.8%  
-24.4%  
-6.7%  
-30.9%  
-22.8%  
  Targets    Overview: 09/15/2022  
  Up arrow30,800 or 27,500 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow950 or 850 by 10/15/2022
  Up arrow11,500 or 9,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 10/3/22
As of 10/03/2022
  Indus: 29,491 +765.38 +2.7%  
  Trans: 12,465 +406.70 +3.4%  
  Utils: 915 +26.32 +3.0%  
  Nasdaq: 10,815 +239.81 +2.3%  
  S&P 500: 3,678 +92.81 +2.6%  
YTD
-18.8%  
-24.4%  
-6.7%  
-30.9%  
-22.8%  
  Targets    Overview: 09/15/2022  
  Up arrow30,800 or 27,500 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow950 or 850 by 10/15/2022
  Up arrow11,500 or 9,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 10/3/22

Bulkowski on Stock Rating Upgrades

Stock Rating Upgrade Event Pattern: Summary

A stock rating upgrade by a broker is a bullish event, but only for a time. Price may breakout upward but it soon collapses. Discovered by Thomas Bulkowski in the fall of 2003.

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My book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book. pictured on the left, takes an in-depth look at 63 chart and event patterns, including performance statistics.

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-- Tom Bulkowski

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upgrade.jpg
Stock Rating Upgrade Pattern

 

Stock Upgrades: Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 2 out of 6; 5 out of 5 (worst)
Break even failure rate for up/down breakouts: 18%; 38%
Average rise/decline: 24%; 12%
Throwback/pullback rate: 63%, 37%
Percentage meeting price target for up/down breakouts: 81%, 67%

Stock Upgrades: Identification Guidelines

CharacteristicDiscussion
AnnouncementA broker publicly upgrades the stock.
Wide swingLook for announcements in which price makes a large intraday swing, 2 or 3 times the average daily intraday price swing over the last month.
Upward breakoutThe breakout is usually upward, and it occurs when price closes above the high made on the announcement day.
Downward breakoutDownward breakouts occur when price closes below the announcement day's low.
VolumeHeavy on the announcement day.
BehaviorFor upward breakouts, price rises, rounds over, and then declines. For downward breakouts, price drops but pulls back almost half the time.

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Stock Upgrades: Trading Tips

Do not trade this in a bear market; it's the worst performing event pattern. Upward breakouts see price rise but only for a time. Downward breakouts have a tendency to bottom in less than 2 weeks, so they are not good short candidates either.

Trading TacticExplanation Stock rating upgrades event pattern measure rule
The Measure Rule
Measure ruleSee the Measure Rule figure to the right. Using the announcement day, subtract the intraday low (point B) from the high (A) and multiply the difference by the above “percentage meeting price target.” Add the result to the intraday high (A) for upward breakouts, or subtract it from the intraday low (B) for downward breakouts to get a price target (C, shown for upward breakouts only).
ConfirmationPrice confirms the pattern when it closes above the announcement day high, or closes below the announcement day low. Wait for price to confirm the pattern because the breakout can be in any direction.
BuyAfter a downward breakout, price should bottom and then begin moving up. When that happens, buy, but be aware that it may be a pullback and price may tumble once the pullback completes.
SellAfter an upward breakout, price peaks and turns down. If that happens, sell or sell short.

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Stock Upgrades: Example

Stock rating upgrades event pattern example

The above figure shows an example of a stock rating upgrade event pattern. On August 9, a broker raised its rating on the stock. The stock closed above the intraday high posted on the day of upgrade 3 days later, signaling an upward breakout. Price rounded over and headed lower, bottoming 22% below the close on the upgrade day.

-- Thomas Bulkowski

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See Also

 

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My novels:  Bedroom to Boardroom book Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book

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