failed_double_bottom
Failed Double Bottom Breakdown
Bullish reversal: price broke below support (double bottom breakdown) but then rises back above the support level. Bears are trapped. Failure threshold normalized by daily volatility.
Signal family
Pattern — Formal chart-pattern detectors (double tops / bottoms, failed breakouts, HH/HL structure).
Parameters
| Name | Description | Default | Range |
|---|---|---|---|
| peak_order | Peak detection window | 15 | 5–25 |
| tolerance_zscore | Tolerance (z-scores of daily vol) | 1.5 | 0.5–3.0 |
| failure_window | Max days for failure after breakdown | 60 | 20–120 |
Historical context
77,180 triggers on 20,144 tickers, 1993-01-29 → 2026-05-01. Universe: global — all covered exchanges (mcap ≥ $100,000,000, price ≥ $1). Long-only convention: BUY at open T+1, hold the horizon, compare to S&P 500 Equal Weight over the same window.
Methodology footnotes
Benchmarks shown in the detail tables: spxew (S&P 500 Equal Weight — primary, median-stock view, avoids the 2020+ megacap-concentration distortion), spx (S&P 500 cap-weighted, distorted post-2020), msci (MSCI World USD). Per-stock regime tags: trending = ADX(14) ≥ 25, high vol = 20d realized annualized vol ≥ 20%. 1d return = intraday T+1 open→close; 20d = open T+1 to close T+20.
At a glance — alpha vs S&P 500 Equal Weight, global universe
Holding-period sensitivity. Bullish columns: positive = signal worked (long the trigger beat the index). Bearish columns: negative = signal worked (the flagged stock underperformed).
| Horizon | Bullish α |
|---|---|
| 5-day | -0.32% |
| 20-day | -0.34% |
| 60-day | -0.59% |
| 1-year | +0.85% |
Sign flip across horizons. Bullish raw alpha moves from -0.32% (5d) to +0.85% (1y). Check the permutation rows for those horizons before reading the longer-hold number as edge — raw alpha alone does not distinguish signal timing from universe drift.
Failed Double Bottom Breakdown is a single-direction signal — only the bullish side is meaningful.
Where does FAILED_DOUBLE_BOTTOM actually fire?
The bucket distribution often reveals what the signal really is, regardless of its textbook label. Heavy concentration in "non-trending + high vol" = it's mostly a chop-market event. Heavy in "trending + low vol" = it picks up the smooth grinds. Read the chart before the alpha numbers — context shapes everything that follows.
Does it work in every regime?
Trigger alpha split by the host stock's own regime on the trigger date — trending or ranging, high-vol or low-vol. This is the 20-day alpha a trade taken on the trigger would have captured. This signal is bullish-only, so positive bars mark the regimes where it worked and negative bars mark regimes to avoid. One strong bar beside three flat ones is not a "20-day alpha" signal — it is a "20-day alpha when the stock is X" signal. Bar labels carry the sample size; a cell built on a handful of triggers is noise, not a regime finding.
Does it work in every era?
A multi-year average can hide major instability. The sample splits into three windows: 2015–2019 (pre-COVID), 2020–2022 (pandemic + 2022 bear), and 2023+ (post-ZIRP + AI megacap rally). All three carrying the sign that favours the trade means the signal is durable; one era doing all the work means a regime-specific edge that may not repeat. The greater the variance across eras, the smaller the position it justifies.
↑ Bullish triggers
| Bench | Metric | 1d | 5d | 20d | 60d | 252d |
|---|---|---|---|---|---|---|
| spxew | Stock % | -0.06% | -0.09% | +0.69% | +2.04% | +12.26% |
| Bench % | +0.04% | +0.23% | +0.98% | +2.56% | +10.90% | |
| Alpha % | -0.12% | -0.32% | -0.34% | -0.59% | +0.85% | |
| Median alpha | -0.17% | -0.55% | -1.37% | -2.85% | -7.73% | |
| Hit rate (α>0) | 46.6% | 44.9% | 43.9% | 42.5% | 40.7% | |
| p (naive) | <0.001 | <0.001 | <0.001 | <0.001 | <0.001 | |
| p (HAC) | <0.001 | <0.001 | <0.001 | <0.001 | 0.0701 | |
| N | 74,461 | 71,265 | 70,149 | 68,334 | 62,433 | |
| spx | Stock % | -0.06% | -0.09% | +0.69% | +2.04% | +12.26% |
| Bench % | +0.03% | +0.31% | +1.21% | +3.34% | +14.74% | |
| Alpha % | -0.11% | -0.40% | -0.53% | -1.36% | -2.47% | |
| Median alpha | -0.15% | -0.66% | -1.53% | -3.50% | -11.32% | |
| Hit rate (α>0) | 46.6% | 44.1% | 43.2% | 40.9% | 37.1% | |
| p (naive) | <0.001 | <0.001 | <0.001 | <0.001 | <0.001 | |
| p (HAC) | <0.001 | <0.001 | <0.001 | <0.001 | <0.001 | |
| N | 75,016 | 72,384 | 71,522 | 69,310 | 64,153 | |
| msci | Stock % | -0.06% | -0.09% | +0.69% | +2.04% | +12.26% |
| Bench % | +0.06% | +0.28% | +1.00% | +2.84% | +12.12% | |
| Alpha % | -0.12% | -0.38% | -0.33% | -0.82% | -0.61% | |
| Median alpha | -0.20% | -0.65% | -1.36% | -3.04% | -9.17% | |
| Hit rate (α>0) | 45.8% | 44.2% | 43.8% | 42.1% | 39.0% | |
| p (naive) | <0.001 | <0.001 | <0.001 | <0.001 | 0.0025 | |
| p (HAC) | <0.001 | <0.001 | <0.001 | <0.001 | 0.1939 | |
| N | 74,445 | 71,544 | 70,580 | 68,957 | 62,640 |
Permutation null detail — all horizons × each benchmark
| Horizon | Bench | Observed lift | Null mean | Null 95% CI | pperm |
|---|---|---|---|---|---|
| 1d | spxew | +0.03% | +0.08% | [+0.07%, +0.10%] | 1.000 |
| 1d | spx | +0.02% | +0.09% | [+0.08%, +0.11%] | 1.000 |
| 1d | msci | +0.04% | +0.10% | [+0.08%, +0.11%] | 1.000 |
| 5d | spxew | +0.11% | +0.37% | [+0.33%, +0.42%] | 1.000 |
| 5d | spx | +0.07% | +0.39% | [+0.34%, +0.44%] | 1.000 |
| 5d | msci | +0.08% | +0.39% | [+0.35%, +0.44%] | 1.000 |
| 20d | spxew | +0.86% | +1.22% | [+1.12%, +1.30%] | 1.000 |
| 20d | spx | +0.89% | +1.25% | [+1.14%, +1.33%] | 1.000 |
| 20d | msci | +0.98% | +1.26% | [+1.16%, +1.35%] | 1.000 |
| 60d | spxew | +1.89% | +2.62% | [+2.46%, +2.77%] | 1.000 |
| 60d | spx | +1.86% | +2.69% | [+2.54%, +2.83%] | 1.000 |
| 60d | msci | +1.96% | +2.70% | [+2.56%, +2.86%] | 1.000 |
| 252d | spxew | +5.15% | +5.25% | [+5.02%, +5.49%] | 0.756 |
| 252d | spx | +5.67% | +5.59% | [+5.35%, +5.86%] | 0.264 |
| 252d | msci | +5.38% | +5.50% | [+5.28%, +5.76%] | 0.836 |
Example triggers on US large-caps (2023+, mcap ≥ $30B)
Six recent bullish FAILED_DOUBLE_BOTTOM triggers on US mega-caps, ranked within this sample of six: the top three and the bottom three, with extreme outliers excluded. Ranking is relative, not absolute — where the signal did well across the sampled names, even the bottom three can have beaten the benchmark, so the alpha printed on each panel is what settles it. Both groups are tail outcomes by construction; read them as the range, not the typical result.
Best three of the six sampled
Weakest three of the six sampled — not necessarily losses
Stock-regime quadrants (2×2 per-stock, 20d alpha detail table)
| Quadrant | N | Stock % (spxew) | Bench % (spxew) | Alpha % (spxew) | p (HAC) | Stock % (spx) | Bench % (spx) | Alpha % (spx) | p (HAC) | Stock % (msci) | Bench % (msci) | Alpha % (msci) | p (HAC) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Trending + Low vol Clean directional grind, low whipsaw | 2,212 | -0.24% | +0.33% | -0.54% | 0.0007 | -0.24% | +0.59% | -0.78% | <0.001 | -0.24% | +0.44% | -0.65% | <0.001 |
| Trending + High vol Crisis selloff or parabolic rally | 31,904 | +0.80% | +1.18% | -0.49% | <0.001 | +0.80% | +1.45% | -0.70% | <0.001 | +0.80% | +1.12% | -0.42% | <0.001 |
| Non-trending + Low vol Quiet chop, summer doldrums | 4,710 | +0.19% | +0.38% | -0.20% | 0.0749 | +0.19% | +0.52% | -0.34% | 0.0027 | +0.19% | +0.41% | -0.22% | 0.0486 |
| Non-trending + High vol Classical "whipsaw zone" for momentum | 38,354 | +0.71% | +0.88% | -0.22% | 0.0013 | +0.71% | +1.14% | -0.40% | <0.001 | +0.71% | +0.95% | -0.24% | 0.0004 |
Sub-period breakdown table (20d alpha)
| Period | N | Alpha % (spxew) | p (HAC) | Alpha % (spx) | p (HAC) | Alpha % (msci) | p (HAC) |
|---|---|---|---|---|---|---|---|
| 2015-2019 2015-01-01 → 2020-01-01 | 20,632 | -0.99% | <0.001 | -1.07% | <0.001 | -0.87% | <0.001 |
| 2020-2022 2020-01-01 → 2023-01-01 | 25,424 | +0.30% | 0.0032 | +0.37% | 0.0002 | +0.66% | <0.001 |
| 2023-2026 2023-01-01 → 2099-01-01 | 31,100 | -0.48% | <0.001 | -0.95% | <0.001 | -0.81% | <0.001 |
Methodology and caveats
How to read. Entry at open of T+1 (one trading day after the signal fires on close of T). 20d = open T+1 to close T+20. Alpha = stock return − benchmark return over the same window (Convention A, single-sided, textbook). For bullish triggers, POSITIVE alpha = signal was right. For bearish triggers, NEGATIVE alpha = signal was right (stock underperformed market). No sign-flipping; the direction of the bet determines what "good" looks like. Per-stock regime is each stock's own ADX(14) and RV(20) at the trigger date — not market-wide state.
Three p-values, three robustness tests. (a) p_naive: scipy one-sample t-test on winsorized alphas. Optimistic because overlapping 20d windows on the same ticker inflate effective N. (b) p_hac: Newey-West HAC with lag = horizon — corrects for the overlap and is the academic-finance standard. (c) p_perm: one-sided fraction of 200 random-date null iterations falling in the “signal was right” tail (mean ≥ observed for bullish; mean ≤ observed for bearish). Tests whether the signal beats random date selection at all. A signal that clears all three (pnaive, phac, pperm all < 0.05) has real information; a signal that fails pperm has not beaten random timing whatever the t-test says — and because the test is one-sided, a pperm up at its 1.000 ceiling is not "no edge" but inverted edge: every random draw served the claimed direction better than the trigger dates did.
Caveats. (i) Universe reflects today's active tickers; delisted losers pruned → survivorship bias. (ii) Mcap ≥ $100M filter uses today's snapshot, not point-in-time — mild lookahead on which stocks enter the sample, not on returns. (iii) Means and p-values use winsorized alphas (1/99 percentile) to prevent data errors from dominating. Medians and hit rates use raw data. (iv) Zero transaction costs assumed. Realistic bid-ask + commissions remove 20–40bps from 20d alpha on US large-caps, more on small-cap. Sub-20bps alpha is noise in practice. (v) Past performance does not predict future results.
How to use this
1 · When to reach for this signal
Not a standalone entry trigger at 20 days. Bullish 20d alpha is -0.34% — worse than random : firing on random dates would have done better. This signal fires bullish-only — there is no bearish variant. Fires are screening context inside a composite (section 4), not entries.
These verdicts are 20-day holds vs S&P 500 Equal Weight. Longer horizons can differ in either direction — check the permutation detail tables below before extrapolating.
2 · When it works — the setups that drive it
- Least-bad bullish cell: Non-trending + Low vol — alpha -0.20% / 20d on 4,710 triggers — still wrong-signed; no bullish cell produced positive alpha.
- Best era for bullish: 2020-2022 — alpha +0.30% / 20d on 25,424 triggers.
3 · When it fails — common false positives
- Weakest bullish cell: Trending + Low vol — alpha -0.54% / 20d on 2,212 triggers.
- Worst era for bullish: 2015-2019 — alpha -0.99% / 20d on 20,632 triggers.
Signal-specific failure patterns
4 · Pairing inside a screen
The statements below describe how this signal relates to others by construction — which indicator family it belongs to, and where same-family redundancy might reduce the independence of evidence inside a Daily Report. These are taxonomic classifications drawn from standard technical-analysis texts; they are not pairing backtests. Measured pair results — same-day co-fires put through the pair backtest — follow under “Measured pairings” below.
Sequential with completed pattern
Failed double bottom and double-bottom breakdown are two stages of the same underlying structure: the breakdown signal fires when price closes below the shared support by the breakdown margin; the failed version fires when that breakdown is negated — price closes back above the support within the failure window (Edwards & Magee, Technical Analysis of Stock Trends, 11th ed. 2018; Bulkowski, Encyclopedia of Chart Patterns, 3rd ed. 2021). They are sequential rather than concurrent — one signal replacing the other as the setup evolves, so seeing both on the same chart is one piece of evidence, not two.
Measured pairings — Bonferroni survivors
Beyond the literature pairings above, these are the same-day co-fire combinations involving Failed Double Bottom Breakdown that cleared the pair backtest's Bonferroni cut on the full 2016–2026 sample (549 pairs × 5 horizons = 2,745 hypotheses), on universes filtered to ADV ≥ $5M, price ≥ $5 and market cap ≥ $100M. That cut is two-sided: it asks only whether the co-fire's α is reliably different from zero, in either direction, so a pair can survive by reliably underperforming — every row below happens to be positive on the full sample, but that is not what the test asked. The same run holds out 2023+: the Test columns are that held-out window, printed for every row with enough held-out co-fires to measure, so a survivor that did not repeat out of sample is visible rather than hidden. All α figures here are for holding the stock long after the co-fire — no shorting assumed, and no sign flip for bearish legs. So positive α means the co-fire was followed by outperformance and negative α by underperformance, whichever way either leg points — a bearish leg does not flip the reading. Survivors are rare by design — absence of a pair here means it did not clear the cut, not that it was untested. Ranked by held-out (2023+) α. Historical tendencies, not recommendations.
China A-shares
| Pair (same-day co-fire, long) | Full α | Test α (2023+) | Test N | p_perm test |
|---|---|---|---|---|
| failed_double_bottom bullish + weekly_change bearish | +9.65% | +10.09% | 73 | 0.002 |
| failed_double_bottom bullish + ma_crossover bearish | +4.44% | +5.28% | 38 | 0.054 |
| failed_double_bottom bullish + vwap_cross bullish | +1.31% | +2.14% | 1,368 | 0.002 |
| failed_double_bottom bullish + hh_hl_streak bullish | +1.85% | +1.89% | 644 | 0.002 |
| failed_double_bottom bullish + macd bullish | +1.42% | +1.82% | 756 | 0.002 |
5 of this universe's 138 surviving pairs involve this signal · α vs 83188.HK.
China A-share survivor α runs large but skews toward small-caps, where trading costs and thin liquidity claim a large share of any measured edge — screening context, not a capturable spread.
What would likely rescue this signal
This block calls out the data or conditions that could turn a technically weak signal into a usable one in a composite screen. Based on signal mechanics and the observed failure patterns above; individual combinations are not yet backtested.
- Require a fundamental anchor — A failed double bottom in a name with improving fundamentals is a structurally different bet than a bare pattern completion. The fundamentals filter on Daily Reports (live) can restrict triggers to names clearing profitability or valuation thresholds, separating recoveries with a real anchor from purely technical short-cover bounces.
- Check the shortest horizons first — If a trapped-bears squeeze carries any edge, it should show in the shortest horizon columns and fade from there — the mechanical bounce plays out in days, not months. A profile that decays or flips between the 1-5d and 20d+ columns in the live tables is consistent with a squeeze fading and the underlying weakness reasserting.
- Use as the failure diagnostic of another pattern — Even when it is not an entry trigger, the signal has diagnostic value: it marks the exact moment a bearish breakdown thesis is invalidated. For anyone positioned short on the double-bottom breakdown, the failed version is the mechanical exit bell — and for docs purposes it is a clean illustration of why classical pattern completions need out-of-sample verification.
See also Why technical-only signals don't survive on their own for the broader argument.
5 · Before acting — a 5-point checklist
- Normal trading day? Rule out earnings (within ±3 days), ex-dividend, or known corporate-action dates — the signal is almost certainly reading noise, not momentum, in those windows.
- Where is price vs its own 50 / 200 DMA? Pattern signals carry their own structural context; check that the implied support/resistance levels have historical relevance, not just the most-recent 3-month range.
- What's the sector breadth doing? An isolated signal in a broadly down-trending sector is a lower-confidence setup than one firing with the rest of its peer group.
- Is ADV20 enough for the intended size? A $1M notional order in a $500M name moves the tape by itself. A useful floor is adv20d ≥ 5% of the intended position.
- What invalidates the trade? Define a price level in advance (for longs: a close below the trigger-day low; for shorts: a close above the trigger-day high) and honour it. The backtest alpha is an average; any single trade can land at either tail.
Execution notes
Read tradability off the live tables, not the textbook: if the bullish side beats the random-date null in the current at-a-glance table, failed double bottoms can serve as a long-side candidate screen; if it does not, treat fires as context on names already under coverage. Any squeeze edge is mechanically front-loaded, so weigh the short-horizon columns before the 60-day ones. Triggers are computed on closing prices; the earliest realistic entry is the next session's open. Historical tendency, not a recommendation.