Price Patterns - Cascading Downside is Nasty

The price downside always leads to losses for most investors. And a downside that is includes precipitous drops in price resembles a cascading waterfall and is particularly nasty. You should avoid stocks with such a price pattern.

The price chart of Bausch & Lomb (BOL), an eye-care provider, shows a cascading downside with three significant prices drops.

The percent returns chart shows that only 3,855 (18.1%) of the 21,321 buy and sell combinations from July 6, 2005 through May 1, 2006 made money (green). The 17,466 (81.9%) losing trades are shown in red. Notice the cascading appearance of the red area on the right side of the chart.

This percent returns chart shows the 21,321 buy and sell combinations from a different perspective.

The winners and losers map shows the 3,855 profitable trades in green and the 17,466 unprofitable ones in red.

Posted May 3, 2006.