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

From: "Mike Gibbons" <mikegibbons@proactech.com>
Subject: RE: [CANSLIM] cup-without-handle; "tightness" questions
Date: Wed, 7 Aug 2002 08:22:49 -1000

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A minor correction to Mike's observation - I believe WON says that a stock
can rise to 103% of the left cup rim before forming a handle, and that's the
default value I use. My interpretation of WON's rules for a CwH is here
http://www.cwhcharts.com/WON_cwh.htm.

Aloha,

Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of
michael_niemotka@baxter.com
Sent: Wednesday, August 07, 2002 6:26 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] cup-without-handle; "tightness" questions



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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