Guide · Mean reversion
Does Connors %b work?
Across 375 stocks, Connors %b cut the worst fall on 97%, beat buying and holding on risk-adjusted return on 18% and on raw return on 12%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
In a long-term uptrend, buy after the close has sat near or below the bottom of its Bollinger Bands for three days running, and sell once it gets near the top.
- %b shows where the close sits in its Bollinger Bands: 0 at the lower band, 1 at the upper.
- In at the close when the stock is above its 200-day average and %b has closed below 0.2 on each of the last 3 days.
- Out at the close when %b is above 0.8.
Mean reversion plays bet that short, sharp moves tend to snap back. The family guide
How to use it
- It sits in cash much of the time (holding on about 18% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Micro caps (50% beat holding on risk-adjusted return) and worst on Big tech (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Connors %b did best against holding in the 2008 crash (+42% median gap) and worst in the 2020–21 rally (−31%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Connors %b | +42% | −12% | +14% | −31% | +17% | −11% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Micro caps | 50% | -0.05 |
| Software & devices | 29% | -0.18 |
| Sectors | 25% | -0.07 |
| Healthcare | 22% | -0.22 |
| Industrials & rentals | 22% | -0.09 |
| Real estate | 21% | -0.21 |
| Media & telecom | 20% | -0.10 |
| Metals & mining | 20% | -0.13 |
| Consumer & retail | 18% | -0.21 |
| Energy & power | 17% | -0.22 |
| Indexes & ETFs | 14% | -0.16 |
| Industrials & materials | 12% | -0.22 |
| Financials | 12% | -0.28 |
| Semiconductors | 9% | -0.20 |
| Big tech | 0% | -0.35 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Connors %b holds 88 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.