Guide · Breakouts & channels
Does P&F Double Top work?
Across 375 stocks, P&F Double Top cut the worst fall on 82%, beat buying and holding on risk-adjusted return on 23% and on raw return on 20%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
A point & figure chart ignores time and plots only moves of a set size, in columns of X's (rising) and O's (falling). Own the stock after an X column tops the one before it; sell after an O column breaks below the one before it.
- In on a double-top breakout: the current X column rises at least one box above the top of the previous X column.
- Out on a double-bottom breakdown: the current O column falls at least one box below the bottom of the previous O column.
- Otherwise the rule keeps the chart's last signal.
Breakouts & channels plays bet that when price escapes the range it has held for weeks, the move that follows tends to run. The family guide
How to use it
- Expect to be wrong more often than right: only 37% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Micro caps (50% beat holding on risk-adjusted return) and worst on Industrials & rentals (11%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
P&F Double Top did best against holding in the COVID drop (+16% median gap) and worst in the 2020–21 rally (−20%). 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 | |
|---|---|---|---|---|---|---|
| P&F Double Top | +13% | −6% | +16% | −20% | +3% | −7% |
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% | +0.02 |
| Real estate | 47% | -0.02 |
| Big tech | 33% | -0.11 |
| Energy & power | 27% | -0.09 |
| Financials | 27% | -0.05 |
| Industrials & materials | 25% | -0.11 |
| Software & devices | 21% | -0.11 |
| Consumer & retail | 21% | -0.17 |
| Media & telecom | 20% | -0.05 |
| Semiconductors | 17% | -0.21 |
| Sectors | 17% | -0.10 |
| Healthcare | 17% | -0.12 |
| Metals & mining | 16% | -0.17 |
| Indexes & ETFs | 14% | -0.09 |
| Industrials & rentals | 11% | -0.24 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
P&F Double Top holds 168 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.