Re: [CANSLIM] cup-without-handle; "tightness" questions

From: michael_niemotka@baxter.com
Subject: Re: [CANSLIM] cup-without-handle; "tightness" questions
Date: Wed, 7 Aug 2002 11:25:33 -0500

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Ann,

I think I understand the question, but am not sure if there is an answer.
I know on Mike Gibbon's site, the defaults allow for the RH side to go up
to 105% of the LH edge, so it is possible that you would not form a handle
until going over the high price from the LH side. My guess would be that
volume action would provide the best clue, so that if you see a rise and it
is accompanied by a 50% or greater surge in volume, it could be a breakout.

My 2 cents worth,

Mike

Mike Niemotka , PE
Sr. Principal Engineer
Baxter Healthcare Corporation
Route 120 & Wilson Road
Round Lake, IL 60073
Tel (847) 270-4075
Fax (847) 270-4525
michael_niemotka@baxter.com

Ann
<annholly@attbi.com> To: canslim@lists.xmission.com
Sent by: cc:
owner-canslim@lists.xm Subject: Re: [CANSLIM] cup-without-handle; "tightness" questions
ission.com

08/07/2002 11:14 AM
Please respond to
canslim

Charley,

Maybe I didn't form my question right. How do I know, as the cup forms its
right side and approaches the previous high, whether it's going to be a cup
with a handle or without a handle? What if I am waiting for a handle to
form, but it doesn't form and goes straight to breaking out? Then it has
formed a cup-without-handle, but I have missed the breakout. Or do you just
have to be there at the time it is breaking out or catch it within 5%?

Or I might think that a stock is forming a cup-without-handle, buy it, and
then find out that it still has to form a handle.

Am I missing something?

Thanks for your response, though.
Ann
----- Original Message -----
From: Chazmoore@aol.com
To: canslim@lists.xmission.com
Sent: Wednesday, August 07, 2002 11:54 AM
Subject: Re: [CANSLIM] cup-without-handle; "tightness" questions

Ann: You will probably get several responses to your question but let me
give it a try.

The left side of the cup forms when the upward price pressure hits a point
of resistance; that is to say the sellers begin to out number the buyers.
The stock price falls, and may continue to fall, or move sideways, for
many months. At some point the buyers once again find the stock price
attractive and begin buying. Volume increases as the price rises. As the
price increases it crosses an important mid point that is half the
distance between the left side lip and the current low. (If the price does
not cross the mid point you cannot have a c/h formation.) As the price
approaches the height of the left side lip, it will once again hit a level
of resistance and begin to fall. The sellers once again outnumber the
buyers. This time however the volume is low and begins to dry up. This
tells us that the sellers are just about finished but the buyers are
lurking in the background waiting to pounce. On the chart this appears as
a downward turning line we call the handle. After a week or two the buyers
begin to come back in and the price heads north. Now we see a strong
increase in volume and we wait for our buy signal. When the price exceeds
the lip formed by the right side of the cup by .10, it is safe to buy. It
continues to be a safe buy until the price exceeds this pivot point by 5%.

I hope this helps. Be sure to refer to the new tool Mike has made
available to us since it clearly describes each part of the cup/handle on
the diagram. Charley

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