Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30 years of stock market experience and widely regarded as a leading expert on chart patterns. His four books, including the best selling Encyclopedia of Chart Patterns, have been translated into seven languages. He may be reached at

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Bulkowski's Pattern Frequency Study

Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P 500 (^GSPC):

As of 02/03/2012

12,862 156.82 1.2%

5,369 63.27 1.2%

451 1.52 0.3%

2,906 45.98 1.6%

1,345 19.36 1.5%

YTD

5.3%

7.0%

-2.9%

11.5%

6.9%

Tom's Targets Overview: 02/03/2012

13,100 or 12,400 by 02/15/2012

5,500 or 5,150 by 02/15/2012

470 or 440 by 02/15/2012

3,100 or 2,800 by 02/15/2012

1,375 or 1,300 by 02/15/2012

Test Portfolios and CPI

Indus. strength: 4.3%

Mutt Losers: None YTD

Mutt Winners: 2.4%

Wilder RSI: None YTD

CPI:

on 12/20/2011

How often does a chart pattern appear? To answer that, I scanned my database of 500 stocks during the bull market of July 1991 to July 1996. Here are the results of the top five frequently appearing chart patterns for up and down breakouts.

Upward breakouts: 1 is most common out of 35	Average Rise Rank	Failure Rate Rank	Overall Rank
1. Pipe bottoms	4 out of 22	5 out of 16	2 out of 23
2. Ascending triangles, up breakout	12	12	17
3. Ascending scallops	16	10	16
4. Head-and-shoulders bottoms	9	3	7
5. Bump-and-run reversal bottoms	9	2	8

For example, pipe bottoms occur most often in the database followed by ascending triangles with upward breakouts, and so on down the list. Each of those patterns have the associated performance rankings, for reference. The rankings had nothing to do with how often a pattern appears.

The average rise measures from the breakout price to the ultimate high before price tumbles at least 20%. Failures are a count of how many chart patterns fail to rise at least 5% after the breakout. The overall rank is the average rise rank plus the failure rate rank plus the change after the trend ends rank (not shown). A rank of 1 is best. Ties were given the same rank.

Downward breakouts: 1 is most common out of 34	Average Decline Rank	Failure Rate Rank	Overall Rank
1. Bump-and-run reversal tops	5 out of 10	10 our to 19	3 out of 20
2. Descending triangles	8	3	10
3. Head-and-shoulders tops	2	14	1
4. Inverted and descending scallops	6	2	6
5. Pipe tops	4	8	4

Performance for downward breakouts is the same as upward breakouts, but I looked for the lowest low before price climbed by at least 20%.

To download an Excel spreadsheet of the complete list along with performance data, click here.

-- Thomas Bulkowski

Bulkowski's Pattern Frequency Study

See Also