As of 11/11/2019
  Indus: 27,691 +10.25 +0.0%  
  Trans: 11,030 -37.61 -0.3%  
  Utils: 830 -5.55 -0.7%  
  Nasdaq: 8,464 -11.03 -0.1%  
  S&P 500: 3,087 -6.07 -0.2%  
YTD
 +18.7%  
 +20.3%  
 +16.4%  
 +27.6%  
 +23.1%  
  Targets    Overview: 10/31/2019  
  Up arrow27,750 or 26,900 by 11/15/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,500 or 8,000 by 11/15/2019
  Up arrow3,150 or 2,950 by 11/15/2019
As of 11/11/2019
  Indus: 27,691 +10.25 +0.0%  
  Trans: 11,030 -37.61 -0.3%  
  Utils: 830 -5.55 -0.7%  
  Nasdaq: 8,464 -11.03 -0.1%  
  S&P 500: 3,087 -6.07 -0.2%  
YTD
 +18.7%  
 +20.3%  
 +16.4%  
 +27.6%  
 +23.1%  
  Targets    Overview: 10/31/2019  
  Up arrow27,750 or 26,900 by 11/15/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,500 or 8,000 by 11/15/2019
  Up arrow3,150 or 2,950 by 11/15/2019

Bulkowski's Big M

 

Updated with new statistics on 11/13/17.

The Big M chart pattern is a double top with tall sides. Price often approaches the low of the left side trend start (the launch point -- see the below picture) before recovering.

 

Important Results
Identification Guidelines
Trading Tips
Time Performance
Example
See Also

Big M chart pattern

Ideal example of a Big M

Big M: Important Bull Market Results

Overall performance rank (1 is best): 9 out of 53
Break even failure rate: 13%
Average decline: 17%
Median decline: 14%
Pullback rate: 67%
Percentage meeting price target: 59%

The above numbers are based on 1,713 samples using 712 stocks data from July 1991 to October 2017. See the glossary for definitions.

Big M: Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the pattern.
ShapeA big M shape with twin peaks and tall sides.
Reversal patternLook for a double top reversal pattern at the top of the big M.
Tall sidesThe double top should have twin peaks with highs less than 4% apart, but be flexible.
Drop between topsThe drop between the peaks of the double top is 10% to 20% or more, but be flexible.
Breakout confirmationThe pattern confirms as a valid one when price closes below the lowest valley between the two tops.
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Big M: Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation Big M measure rule
The Measure Rule
Measure ruleCompute the height from the highest peak (A) to the lowest valley (B). Subtract the height from the confirmation point (B) to get a target (D). The result is the target price. The link to the left explains the measure rule. If you are lucky, price will bottom (D) at the launch price (E). For a closer target, use half the height in the above steps instead of the full height.
BreakoutDownward breakouts occur when price closes below the confirmation price (the lowest valley between the two peaks, B in this case).
StallFor swing traders, sell short at the second double top peak (F) and ride price downward to confirmation of the double top (the price of B). If price rises above the highest peak in the pattern (A), consider exiting the position because price is likely to continue higher. If price confirms the Big M, expect the decline to approach the left side low (E). It usually does not make it all the way down, but it will be close.
Position tradersWait for confirmation of the Big M (price to close below B) before taking a position and be prepared to exit the position as the stock nears the price of the left side low (E).
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Big M: Time Performance

Bull Market Performance Over Decades
 Breakout Direction  1990s  2000s  2010s 
Down (average)19%15%16%
Down (median)17%13%13%
Samples717592404

The above table shows the performance of Big M chart patterns in bull markets over the last three decades. The 1990s outperformed the other two periods with the 2010s placing second.

Big M chart pattern example

Big M: Example

The figure on the right shows an example of an unusual Big M chart pattern. In this example, a triple top (ABC) replaces a double top (AB) in the Big M. In my trading (but not for the statistics in this article where I use only double tops), I allow many reversal patterns, such as ascending, descending or symmetrical triangles, triple tops, and so on, to replace the double top.

In this example, price breaks out when it closes below the horizontal red confirmation line then pulls back before resuming the downward march. Price at E, reaches the launch price of D almost exactly before staging a recovery. Notice the tall, straight-line run up from D to A and the slower decline from C to E. That's typical.

-- Thomas Bulkowski

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See Also

 

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My novels:      New                  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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