The Post-Surge Pullback
— Why Hitting +15% Ends in a Loss
Sometimes a signal is right and you still don't make money. That's because "reaches +15% within 20 days" and "your return 20 days later" are completely different questions. We show you this gap with real measured data.
Same Signal, Opposite Scorecards
When DawnScan evaluates a signal, it looks at three labels at once.
- MFE — did the high within 20 trading days reach +15% (did the move happen at all)
- Path — did a large decline come before touching +15% (could you have held through it)
- Final return — is it actually positive after 20 trading days (would holding it have made money)
In real measurement, two flagship signals passed on MFE and flipped on final return.
As of 2026-08-14 · 9,729 live episodes (9,673 with a path verdict) · base rates: MFE 26.8% / path 22.6% / final return >0 55.3%
| Signal | Sample | MFE (+15% Reached) | Path | 20-Day Final Return |
|---|---|---|---|---|
| Stochastic bounce | 1,136 | +3.3%p | −0.6%p | −7.1%p |
| Relative-strength (RS) edge | 2,482 | +6.1%p | +4.7%p | −8.6%p |
These numbers are the difference (lift) versus the base rate. In plain terms: "a stock with this signal has a higher-than-average chance of touching +15% within 20 days. But if you're still holding it 20 days later, you're actually worse off than average."
This table looked like this at first publication in 2026-07 — stochastic bounce: sample 410 / MFE +13.3%p / path +7.1%p / final return −10.1%p, relative strength: sample 1,383 / +9.7%p / +8.5%p / −9.7%p. As the sample grew 2–3x, the MFE edge shrank to less than half, and the stochastic signal's path metric flipped sign, from +7.1%p to −0.6%p. It's common for an effect that looks large in an early sample to shrink as the sample builds up. We leave the changed facts in place instead of erasing them.
That said, the core point of this article — MFE positive, final return negative — holds for both signals as-is. The stochastic signal's path metric has since broken down too, making the "touches it, then reverses" character even clearer.
Why This Happens
① A Surge Comes With a Pullback Attached
A large share of a short-term surge comes from a supply/demand imbalance (short covering, a momentary spike in attention). This kind of move is often a temporary price distortion, not a sustainable re-rating. It reverts back toward its prior level within a few days.
② The High Can Be "a Price That Was Only Touched in Passing"
MFE (peak-price basis) only checks "did it touch that price even once." If a stock was +15% for just a few minutes intraday and closed the day at +3%, that counts as "a hit" on an MFE basis, but almost no one actually sold at that price.
③ A Signal Doesn't Tell You "When to Sell"
Most technical signals carry information about the entry point. Without an exit rule, no matter how good the signal is, your final P&L is left to chance.
How to Actually Use This
- Match your holding period to the signal — don't use a short-term spike-type signal as a reason to hold long-term.
- Set your exit rule first — fix a target price, a time-based stop, and a stop-loss line before you enter.
- Check the definition of "hit rate" — when a service quotes a hit rate, ask whether it's on a peak-price basis or a final-return basis. The two are completely different numbers.