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Periodically, retailers announce
same-store sales (sometimes called existing store sales or comparable store sales) numbers.
Usually, these are the sale results for stores open at least
a year. After the announcement of better than expected same-store sales, the stock jumps up
but price soon falters and drops. Discovered by Thomas Bulkowski in the fall of 2003.
For more information see pages 921 to 933 of the book
Encyclopedia of Chart Patterns,
Second Edition and the following...
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 Good same store sales
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Important Bull Market Results
Overall performance rank for up breakouts (1 is best): 4 out of 6
Break even failure rate for up breakouts: 20%
Average rise: 23%
Throwback rate: 59%
Percentage meeting price target for up breakouts: 82%
Identification Guidelines
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Characteristic |
Discussion |
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Price trend |
Usually found in a price uptrend
(continuation patterns) but reversals perform better. |
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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 intraday price swing over the last month. |
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Upward breakout |
A breakout occurs when price
closes above the highest high 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 bull 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 A) from the high
(B) and multiply it by the above “percentage
meeting price target.” Add the result to the intraday high
(B) to get a price target
(C). |
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Confirmation |
Wait for price to confirm the pattern
because traders may push price down instead. An upward breakout (confirmation) happens when price closes above the high posted
on the announcement day. |
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Buy |
Buy when the pattern confirms
but be prepared to sell quickly. |
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Yearly low |
Patterns with breakouts within a
third of the yearly low have the best performance. |
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Top |
Price may top out quickly. Forty-four
percent in a bull market top out in less than 2 weeks, so be prepared to sell if price falters. Twenty-nine percent show continued
upward strength through 70 days. |
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Short |
If price begins weakening, rounds
over and starts down, consider shorting the stock. Watch for a throwback in which price returns to the breakout price and
then rebounds upward. |
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 The Measure Rule
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Example
The above figure shows an example of a good same-store sales event pattern. Price trends downward into the event
pattern and then price forms a tall white candle on the announcement day. Price moves up in a straight-line run,
peaking at A before dribbling lower over the coming days.
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