The Best Dressed Chart Patterns of 2020

Peter Brandt is my trading hero. Whether it’s a blog post or an interview for Market Wizards, Brandt has an intoxicating way of describing classical charting principles. Indescribably one can’t help but get excited about charting when reading Brandt’s work. It’s one of the reasons why I re-read Diary of A Commodities Trader every January.  My other annual Brandt read is his Best Dressed List. The Best Dressed List is Brandt’s review of the best classical charting patterns he found during the year. You can read his 2019 Best Dressed report hereAlright, back to the charts!

Each section represents a specific chart pattern and the best set-ups in those patterns. We’ll also provide details like chart pattern length and number of days to reach the price target. In an ode to the legend Brandt himself, please enjoy our Macro Ops Best Dressed List of 2020. 

Rectangle

Nautilus (NLS) 

  • Chart Pattern Length: 32.4 weeks
  • Days To Reach Price Target: 4

NLS was a great example of a stock breaking out and never testing its chart pattern boundary. Those that took profits at the profit target were spared the massive crash in March. 

That said, the stock now trades >$19/share. There’s always a give and take to profit targets. 

Limited Brands (LB)

  • Chart Pattern Length: 28 weeks
  • Days To Reach Price Target: 11 

LB broke out of its 28-week rectangle trading range and never looked back. We were lucky to catch the earnings pop, which got us to our profit target in less than two weeks. 

Highpoint Resources (HPR)

  • Chart Pattern Length: 45 weeks
  • Days To Reach Price Target: 8

HPR was a picture perfect short trade based on its breakdown from the rectangle chart pattern. Notice that the stock broke down below its 20MA and 200MA. 

American Eagle (AEO)

  • Chart Pattern Length: 15 weeks
  • Days To Reach Price Target: 2

AEO developed serious volatility compression which coincided with a breakdown from its rectangle chart pattern. Price broke down below its 20MA and 200MA, adding higher probability to our bearish thesis. Those that held beyond the price target were handsomely rewarded. 

A Mark Precious (AMRK)

  • Chart Pattern Length: 23 weeks
  • Days To Reach Price Target: 3

AMRK is one of our biggest winners of the year. Traders that held past the price target received $30/share in profit on the trade.

Notice that the stock breaks out above 20MA and 200MA without seriously testing our stop-loss placement. Then the stock rides the 20MA without breaking below that line until August 2020. 

Dermtech (DMTK) 

  • Chart Pattern Length: 77 weeks
  • Days To Reach Price Target: 3 days

DMTK was an interesting play. Look at the first two tests of the support boundary. Notice how the stock traded below the support line then closed either at or above the line. This shows buyers are willing to pay at that price. The stock broke out above the 20MA and 200MA and never tested the stop-loss placement. 

Tobii AB (TOBII)

  • Chart Pattern Length: 14 weeks 
  • Days To Reach Price Target: 12 

TOBII broke out of its 14-week rectangle reversal base and never retested the chart pattern. The stock closed with a strong bullish candle, retraced for two days, and rocketed higher. Those that held past the price target were handsomely rewarded. 

New York Times (NYT)

  • Chart Pattern Length: 10.6 weeks
  • Days To Reach Price Target: 9

NYT broke out of a volatile rectangle pattern. The pattern formed in 11 weeks and closed with a strong daily bull bar. The stock never looked back and rode the 20MA to the price target (and beyond).

Epiroc AB (EPI_A)

  • Chart Pattern Length: 11 weeks
  • Days To Reach Price Target: 22

EPI_A is another testament to the power of a stock respecting its 20MA. After a minor retest of the chart pattern boundary, EPI rocketed to its price target in only 22 days. Those that held after the price target generated even greater returns. 

Volvo (VOLV_B)

  • Chart Pattern Length: 9.8 weeks
  • Days To Reach Price Target: 10 days

VOLV was a beautiful trade for a couple reasons. First, it had a clean breakout and well-positioned Last Day Rule stop-loss. This allowed us to size big while risking (at most) 100bps. The stock hit our price target in 10 days before reversing in a sharp correction. 

Peloton (PTON)

  • Chart Pattern Length: 5.4 weeks
  • Days To Reach Price Target: 9

PTON was one of our largest winners. As you can tell, the stock originally broke out of a long-term inverse Head and Shoulders pattern. The rectangle we traded was a continuation pattern on the daily time frame. Those that held beyond the price target generated upwards of $100/share in profit. 

Celsius (CELH)

  • Chart Pattern Length: 32 months
  • Days To Reach Price Target: 44 days

CELH broke out of a 32-month rectangle base and never looked back. The stock rocketed >120% in less than two months. CELH is a perfect example of the power of longer-term chart pattern developments. Stocks that breakout of long-term bases have a lot of dry powder behind them. 

Ligand Pharmaceuticals (LGND)

  • Chart Pattern Length: 35 days
  • Days To Reach Price Target: 3 

LGND broke out of its rectangle pattern and quickly reached our price target in 3 trading days. This is the perfect trade because we can turn over our edge faster. Leading to greater compounded gains. 

Ascending / Descending Triangles

Ciner Resources (CINR)

  • Chart Pattern Length: 20 weeks
  • Days To Reach Price Target: 8 days

CINR showed signs of price weakness before the March crash as it broke below its support of a 20-week descending triangle. It took 8 days to hit our price target but those that held longer received much higher returns. 

County Bancorp (ICBK)

  • Chart Pattern Length: 11 weeks
  • Days To Reach Price Target: 3 days

I don’t like trading banks. But sometimes a chart appears so tantalizing I can’t help myself. ICBK was that chart. The stock broke below its 20MA and 200MA and took 3 days to reach our price target. That said, those that held longer generated ~$10/share in profits. 

Westlake (WLK)

  • Chart Pattern Length: 12 weeks
  • Days To Reach Price Target: 53

WLK broke out of its 12 week ascending triangle pattern and reached our price target in 53 trading days. The breakout coincided with a sharp rebound in the overall market. Again, we use individual stocks to time our entries and exits, not the general market. 

The stock experienced a sharp pullback on its way to the price target. Those that used the 200MA as their stop-loss target stayed with the trend the entire time. 

Midea Group (000333.HK)

  • Chart Pattern Length: 30 months
  • Days To Reach Price Target: 85 

Midea Group is another example of the power of long-term price consolidations. The stock broke out of a 30-month ascending triangle and reached its price target in 85 days. Notice how the stock never broke below the 20MA on the weekly chart on its way to the price target. 

Aesthetic Medical (AIH)

  • Chart Pattern Length: 12 weeks
  • Days To Reach Price Target: 16

AIH completed a perfect descending triangle after breaking below its support and 20/200MA. The stock took ~2 weeks to reach its price target without once testing the chart pattern boundary line. 

Editas Medicine, Inc. (EDIT)

  • Chart Pattern Length: 16 weeks
  • Days To Reach Price Target: 7

EDIT became one of the year’s best trades by accident. We featured the name as a potential H&S top (you can see the formation if you look closely). Yet as the stock failed to break down we noticed a potential break out from a descending triangle. 

We alerted members to this chart “morphology” (as PLB calls it). The stock took off and reached its price target in 7 trading days. Those that held a few more days generated another ~$38/share in profits. 

Symmetrical Triangle

Uber Technologies (UBER)

  • Chart Pattern Length: 19 weeks
  • Days To Reach Price Target: 23

Normally I prefer more uniform symmetrical triangles (like the ones you’ll see below). But we added it here for two reasons. First, UBER was forming this massive symmetrical triangle after an IPO. I love watching IPOs develop trading bases as these can lead to aggressive moves (in either direction). Second, the stock never tested the chart pattern boundary and reached its price target in ~3 weeks. 

Rimini Technologies (RMNI)

  • Chart Pattern Length: 14 weeks
  • Days To Reach Price Target: 2

RMNI was one of the most explosive trades of the year. After failing to reach our 2% breakout threshold, the stock traded lower (testing the support boundary) before closing at the confirmed breakout level. The stock took two days to reach our price target. Those that held a couple of days longer would’ve doubled their profits-per-share. 

Employers Insurance Group (EIG)

  • Chart Pattern Length: 26 months
  • Days To Reach Price Target: 34

EIG completed its 26-month bearish symmetrical triangle pattern after breaking below the 20MA and 200MA. The stock took 34 days to reach its price target. 

Aflac, Inc. (AFL)

  • Chart Pattern Length: 31 weeks
  • Days To Reach Price Target: 7 

AFL was one of the best short opportunities we featured in 2020. The stock took 7 days to reach its price target. Yet those that held saw prices fall 50% before returning higher. 

Staar Surgical (STAA)

  • Chart Pattern Length: 20 months
  • Days To Reach Price Target: 96 

STAA broke out of a beautiful 20-month symmetrical triangle and took 96 days to reach the price target. The stock met resistance around new all-time-highs (ATHs) and retracted to its 20MA on the weekly time frame. 

Spotify, Inc. (SPOT)

  • Chart Pattern Length: 21 weeks
  • Days To Reach Price Target: 22

SPOT was another beautiful failed IPO base breakout. Like UBER (see above), the stock developed a long-term symmetrical triangle and broke out on a strong weekly candle. It took 22 days for the stock to reach its price target. Investors that held their shares for a larger move saw nearly $100/share extra in profits. 

Brink’s Company (BCO)

  • Chart Pattern Length: 32 weeks
  • Days To Reach Price Target: 11

BCO was a classic Gap-and-Go trade. The stock broke out with a strong gap breakout candle and never tested the Last Day Rule stop-loss price. We didn’t alert many Gap-and-Go trades this year. It’s hard finding these with any consistency. 

Sharpspring Inc (SHSP)

  • Chart Pattern Length: 54 days
  • Days To Reach Price Target: 2 

SHSP was a beautifully quick trade for a decent profit. The stock broke out and closed with a slight hammer bar. The next day SHSP took off and reached its profit target in two days. After hitting our price target the stock retraced back to the breakout line. 

Bed Bath & Beyond (BBBY)

  • Chart Pattern Length: 49 days
  • Days To Reach Price Target: 24 days

We nailed the brick-and-mortar long trade with this beautiful breakout from a symmetrical triangle. The stock never tested the Last Day Rule, though it did test the 20MA on its way to reaching the price target. 

Dillards, Inc. (DDS)

  • Chart Pattern Length: 26 weeks
  • Days To Reach Price Target: 6 

DDS was a classical high short-interest stock that broke out strong on large volume. We love trading high short-interest names because there’s tons of dry powder on the long side. They don’t always work but it tilts the odds in our favor of a strong, aggressive breakout. 

CADUSD Currency Pair

  • Chart Pattern Length: 39 days
  • Days To Reach Price Target: 8 

Canadian Dollar Futures (MCD!) presented a beautiful symmetrical triangle breakout and reached its price target in nine days. While we spent most of the year trading equity markets, we’re not afraid of alerting high-quality chart patterns in any market. 

Head & Shoulders Top

Big Lots (BIG)

  • Chart Pattern Length: 43 days
  • Days To Reach Price Target: 9 days

BIG was the picture-perfect example of a Head & Shoulders top. It’s one of those patterns that you can put in a classical charting book and identify the pattern 50 years from now. The stock had a clean breakdown and never tested the chart pattern boundary. 

Byline Bancorp (BY)

  • Chart Pattern Length: 44 days
  • Days To Reach Price Target: 5

BY broke down below the 20MA and 200MA. After completing the chart pattern the stock proceeded to close at or near its lows 3 out of the next four trading days. It took a mere 5 days to hit the price target. 

Inverse Head & Shoulders

Yandex (YNDX.RU)

  • Chart Pattern Length: 44 days
  • Days To Reach Price Target: 36

YDNX was one of our biggest winners in 2020. The stock tested the chart pattern boundary a couple of weeks after the breakout, but never put the Last Day Rule stop-loss in danger. It took 36 days to reach the price target. But investors that held past the price target saw another RUB1,700+ profit per share. 

Avantor (AVTR)

  • Chart Pattern Length: 15 months
  • Days To Reach Price Target: 15 weeks

AVTR was another one of our favorite IPO-base breakouts. The stock traded to ridiculously low prices during the COVID crises. As such, we used the low of the week after the outlying wick as our price target measured move. The stock hit our price target in 15 weeks. 

B Riley Financial Inc (RILY)

  • Chart Pattern Length: 51 weeks
  • Days To Reach Price Target: 34

RILY broke out of a perfect downward-sloping inverse H&S pattern and reached its chart pattern price target in 34 days. The stock broke out above its 20MA and 200MA without testing the chart pattern boundary. Notice how many white (bullish) bars appear after the breakout. 

AUD/USD Currency Pair

  • Chart Pattern Length: 59 days
  • Days To Reach Price Target: 25 

Australian Dollar Futures (M6A!) broke out of a 59-day inverse H&S pattern and never tested the Last Day Rule stop-loss placement. It took AUD 25 days to reach our price target. Again notice how the stock breaks out above the 20MA and 200MA. 

Bitcoin ($BTCUSD)

  • Chart Pattern Length: 68 weeks
  • Days To Reach Price Target: 35 

BTC was one of our top calls in 2020. The crypto broke out of its 68-week inverse H&S pattern and never looked back. It took only 35 days for the stock to reach its price target. 

Soybean Futures (XK!)

  • Chart Pattern Length: 29 weeks
  • Days To Reach Price Target: 19

Soybean Futures (XK!) broke out of a 29-week inverse H&S on a strong weekly candle. It took 19 days for the commodity to reach its price target. Those that held past the price target saw substantial profits. 

Cup and Handle

Advanced Micro Devices (AMD)

  • Chart Pattern Length: 21 weeks
  • Days To Reach Price Target: 6

AMD was one of our best cup-and-handle breakouts of the year for obvious reasons. The stock never tested the Last Day Rule stop-loss and gapped up twice on its way to a six-day price target profit. 

Fulgent Technologies (FLGT)

  • Chart Pattern Length: 22 weeks
  • Days To Reach Price Target: 7

FLGT completed its cup-and-handle chart pattern with a strong bullish breakout candle. The stock quickly gapped up and reached the price target in seven trading days. 

Wrapping Up

There’s no doubt we missed some great charts when compiling this list. Unfortunately not every trade looked as pretty as the above examples. We got a lot wrong this year. But by keeping those losses small (100bps loss at most) we’re able to end the year with substantial positive profits. 

We’re excited to bring you bigger and better features in 2021 as we ramp up our Classical Breakouts service.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

AK

Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.