Go to Jeff Salisbury LWGate Home Page.From: "Patrick Wahl" <pjwahl@attbi.com>
Subject: [CANSLIM] C&H
Date: Fri, 22 Mar 2002 20:33:59 -0700
Next Article (by Author): Re: [CANSLIM] AAII stock screener "Rich W"
Previous Article (by Author): Re: [CANSLIM] ESA "Patrick Wahl"
Articles sorted by: [Date]
[Author]
[Subject]
I've posted this a few times, oldtimers on the list (tom, tim, dave, etc, skip this), but since there seems to have been an influx of new folks, thought they might find this useful. Its a Cup and Handle definition that I copied out of Technical Analysis of Stocks and Commodities magazine several years ago, written by a canslim practioner, a fairly clear and concise definition of a cup and handle. - ------------------------------------------------------------------------------------------------------ The cup of the pattern typically forms during intermediate-term market corrections and is usually 3 to 6 months in duration, but can be as long as 12 months during bear markets or as short as seven weeks during bull markets. The left side of the cup is a downtrend correcting the previous uptrend. The stock price bottoms and begins to advance, forming the right side of the cup. "During the formation of the cup's right side, the stock becomes subject to profit-taking at its old highs - the beginning of the cup formation - from sellers who bought at the cups bottom. In addition, investors who bought the stock near its old highs on the left side of the cup are anxious to sell." "The handle of the cup is usually more than one or two weeks long and should drift down on very low volume and form in the upper half of the pattern, preferably the upper third. A handle that drifts lower is important because it indicates that enough disbelievers are still active at that point. "... At this point, the volume should be light, indicating a lack of sellers. During the formation of the handle, new buyers step in and smart money adds to their positions, supporting the stock. When the stock breaks out from its handle, volume must surge by 40% above its avg. daily volume to confirm that demand is present at the stock's earliest emergin point." "Handles may also form in slightly new high ground when the right side of the cup drives somewhat higher than the cup's left side. ... Whatever the variation, the breakouts above the handle's high - the high on the right side of the cup - is what the investor wants to buy, which may or may not be a new high for the stock." " Many C&H patterns are 12-20% in depth, and can be as deep as 35-40% following market corrrections. Unless a bear market is present, depths of more than 45% are too excessive, making it difficult for a stock to successfully break out once the pattern is complete." - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
Next Article (by Author): Re: [CANSLIM] AAII stock screener "Rich W"
Previous Article (by Author): Re: [CANSLIM] ESA "Patrick Wahl"
Articles sorted by: [Date]
[Author]
[Subject]