Price Patterns - Recurring Price Cycles Repeat Again and Again

For some stocks the upside and downside cyclical pattern repeats again and again for many years. In the Kulicke & Soffa (KLIC) price chart it's easy to see that each of the five cycles from June 1, 1992 to June 17, 2005 has an upside, peak and downside. Notice that the heights of the peak and duration of the upsides and downside vary from cycle to cycle. But in general the cycles have the same overall form of the upside, peak and downside. Other semiconductor stocks have similar price patterns.

The next two tables include a tabulation of the duration and returns for the upside and downside for each cycle. The upside and downsides durations for cycles 2, 3 and 5 were approximately the same number of days. Cycle 1 had a very brief downside relative to its upside. And cycle 4, the bubble cycle, had a very long downside relative to its upside. It had the longest duration of the five downsides. All upsides had impressive total gains and the total returns per day were similar.

Upside Durations and Returns
Cycle	Duration (Days)	Total Return	Total Return/Day
1	444	685.57%	1.54%
2	462	809.43%	1.75%
3	364	544.59%	1.50%
4	518	704.43%	1.36%
5	404	766.67%	1.90%

The downside losses were approximately the same for cycles 1, 2, 3 and 5. Cycle 4, the bubble cycle, lost 95%, the highest of the five cycles. The loss per day was very high for the first cycle and relatively low for the bubble cycle because its downside lasted so long.

Downside Duration and Returns
Cycle	Duration (Days)	Total Return	Total Return/Day
1	207	-67.98%	-0.33%
2	415	-79.99%	-0.19%
3	392	-81.87%	-0.21%
4	944	-95.33%	-0.10%
5	352	-68.75%	-0.20%

Percent Return Charts of Five Cycles

The percent returns chart for the five cycles shows the winning buy and sell combinations in green and the losers in red. The chart shows the peaks and valleys of the percent returns for every buy and sell combination for the five cycles. Of the 11,325 monthly buy and sell combinations 7,360 (64.99%) were winners and 3,965 (35.01%) were losers.

Note:The monthly closes produce the best looking 3-dimensional chart for a long price series. The resolution is very poor for 3-dimensional charts that include too many data points. Also the percent winners and percent losers have slightly different values for monthly, weekly and daily closes. But the differences are not large enough to be significant.

The table of percent winners shows the percent winners for each trade type for each cycle since 1992.The buying and selling on the upside is almost always profitable and that buying and selling on the downside is mostly unprofitable.

Percent Winners of Five KLIC Cycles
Cycle	All Trades	Buy Upside Sell Upside	Buy Upside Sell Downside	Buy Downside Sell Downside
1	75.15%	93.86%	68.04%	18.36%
2	68.09%	93.26%	81.70%	6.99%
3	42.86%	90.40%	36.32%	13.70%
4	54.26%	81.58%	63.78%	35.50%
5	65.42%	85.15%	76.01%	9.88%

Winners and Losers Map of Five Cycles

The winners and losers map shows the pattern of the winning and losing buy and sell combinations. The vertical areas of red represent the losing trades that resulted from selling at and around lows of the cycles. For example, the two large vertical red areas at the right side of the map represent the losing trades resulting from selling at or around the lows at the end of the fourth and fifth cycles.

The horizontal patterns of red represent losing trades resulting from buying at high prices and selling at many different sell prices.