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Periodically, retailers announce same-store sales numbers
(sometimes called ’comparable store sales’). Usually, these are sales results
for stores open at least a year. Bad same-store sales make an event pattern on which you can
trade. Discovered by Thomas Bulkowski in the fall of 2003. For more information see pages
908 to 920 of the book
Encyclopedia of Chart Patterns, Second Edition and read the following...
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 Bad same store sales
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Important Bull Market Results
Overall performance rank (1 is best): 1 out of 5
Break even failure rate: 26%
Average decline: 12%
Pullback rate: 53%
Percentage meeting price target: 68%
Identification Guidelines
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Characteristic |
Discussion |
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Price trend |
Usually found in a price downtrend. |
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Announcement |
The company announces monthly
or quarterly same-store sales numbers. |
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Wide swing |
Look for announcements in which
price makes a large intraday swing, 2 or 3 times the average daily price swing over the last month. |
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Downward breakout |
A breakout occurs when price
closes below the lowest low posted on the announcement day. |
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Volume |
Above the 30-day average, usually |
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Market |
Works best in a bear market. |
Trading Tips
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Trading Tactic |
Explanation |
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Measure rule |
Reference The Measure Rule figure to the right.
On the announcement day, subtract the intraday low
(point B) from the high
(A) and multiply it by the above “percentage
meeting price target.” Subtract the result from the intraday low
(B) to get a price target
(C). |
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Confirmation |
Wait for price to confirm the pattern
because traders may push price up instead. A downward breakout (confirmation) happens when price closes below the low posted
on the announcement day. |
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Sell |
Sell a long holding or short
the stock after confirmation. |
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Repetition |
Another bad same-store sales announcement
often follows the first one. |
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Yearly middle |
Patterns in the middle third of
the yearly price range show the best performance. |
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Bottom |
Price may bottom quickly. Over 60%
bottom in less than 2 weeks in a bull market, 57% in a bear market. |
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 The Measure Rule
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Example
The above figure shows an example of a same-store sales event pattern. Price leaves a consolidation region at
A and shoots up to B. Then the stock begins a long slide
downward. Along the way, the same-store sales number becomes public and the results send the stock down. Price attempts
a pullback in February, but then price resumes the downward move.
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