As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20
As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20

Bulkowski on Reversal Times in the Stock Market

 

My book, Swing and Day TradingSwing and Day Trading: Evolution of a Trader book., shown on the left, discusses reversal times starting on page 191. The discussion also describes the time that sets the intraday high and low most often.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

This article discusses the times at which reversals occur during the trading day.

Reversal Times: Summary

The research shows that the top three reversal minutes each hour are:

This applies regardless of the price trend: Both peaks and valleys reverse most often at these minutes.

Reversal Times: Methodology

I used data on the 1-minute scale from 2/3/2003 to 12/30/2005 (bull market) and 2/1/2007 to 2/13/2009 (mostly bear market), but not all stocks covered the entire range. The analysis used almost 21 million price bars in 54 common stocks or the equivalent of 205 years of daily price data.

Once I had the data, I found all peaks and valleys within 5 price bars (5 bars before to 5 bars after, for a total of 11) with a second test using 10 price bars (21 bars total). In other words, the price bar was the highest high during the 11 or 21 bars, or the lowest low during the same periods. I used this method to automate the testing of the 21 million price bars because I certainly wasn't going to look at them all.

I logged the time at which those peaks and valleys occurred then counted how often they appeared during the same time for all 54 stocks. This is called a frequency distribution.

I sorted the results by peaks and valleys, bull and bear market, and methodology (5 or 10 bar). I found that the bull and bear market distinction didn't add value. That means the results were similar that they can be combined, which I did. Also, the 5 or 10 bar results also were similar with the 5 bars having higher sample rates, so I used that.

I sorted the results by hours and picked the top three minutes per hour that showed the most reversals.

I discuss results next. Honest.

Top of page More

Reversal Times: Results

I expected the results to be inconsistent but they are not. Reversals occur at the same time throughout the day, regardless of whether it is a peak or a valley.

Reversals for Up Trends
 Morning Session  Afternoon Session 
  Time   Reversals 
Found
  Time   Reversals 
Found
9:31 9,385 (24%) 12:01 4,347 (8%) 
9:46 3,667 (7%) 12:16 4,123 (8%) 
9:51 3,777 (7%) 12:31 4,441 (8%) 
10:01 5,144 (9%) 1:01 4,134 (8%) 
10:31 4,456 (8%) 1:31 4,251 (8%) 
10:46 4,190 (8%) 1:51 4,143 (8%) 
11:01 4,259 (8%) 2:01 4,648 (9%) 
11:31 4,430 (8%) 2:31 4,633 (8%) 
11:51 4,130 (8%) 2:46 4,372 (8%) 
Copyright © 2011 by
Thomas Bulkowski
and ThePatternSite.com
All rights reserved
3:31 4,953 (9%) 
3:51 4,928 (8%) 
4:00 5,980 (10%) 

The table shows the minute in which a reversal occurred and the number of reversals during that minute. Only the top three reversals appear per hour except that those minutes close together were ignored (such as 9:31 and 9:32).

Let me give you a few examples. Within a minute of the open, at 9:31, price reversed, representing 24% of all possible reversals at that minute (some stocks did not trade at the open). The first minute has the most reversals of the day, followed in second place by the close, with 10%. The remainder of the reversals show 7% to 9% of the total.

Another example: At 9:46, another peak occurred 3,667 times or 7% of all samples at that minute.

As you look down the columns, you will find a surprising result. Most of the reversals occur at the same time! Those not shown rank high (like 4th, which is not high enough to make the list).

The three reversal times are:

The table shows the reversal times for peaks, not valleys but it might just as well have. The valley reversal times are similar.

-- Thomas Bulkowski

Top of page More

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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