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

From: Chazmoore@aol.com
Subject: Re: [CANSLIM] cup-without-handle; "tightness" questions
Date: Wed, 7 Aug 2002 18:29:58 EDT

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ZillaGirl: You asked if I would try to explain the double/triple bottom. This
is just my opinion but I suspect they are formations that started out to be
cups with handles and were mutated along the way.
They start with the selloff at a point of price resistance, which is
technical talk meaning the sellers overpowered the buyers, or simply, more
sellers came to the party than buyers. (When I see this happening I feel like
the smart buyers are just taking a profit they helped to create. Nothing
basically wrong with the stock, its just time to move some money from the
table.) At some point the price looks so attractive the buyers return. They
are buying a company they like at discount prices.
With volume, the price moves up the right side and crosses the mid point
between the high and low prices. The something unexpected happens. It could
be troubling news about the company or the market, and the buyers turn to
sellers and the price heads south again. This time, the stock makes a new
low, maybe one or two points below the old low. The buyers look for the all
clear and resume buying. Now it gets tricky for CANSLIMers. As the price
exceeds the middle of the W, the buy rules kick in. However, it is possible
for a double bottom to form a handle at this stage, and if it does, then the
buy signal changes to the peak, plus .10, of the right leg of the W.

As I under it, the rare triple bottom is the same as a double bottom, but
with one more sell off.

Charley

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<HTML>ZillaGirl: You asked if I would try to explain the double/triple bottom. This is just my opinion but I suspect they are formations that started out to be cups with handles and were mutated along the way.
 They start with the selloff at a point of price resistance, which is technical talk meaning the sellers overpowered the buyers, or simply, more sellers came to the party than buyers. (When I see this happening I feel like the smart buyers are just taking a profit they helped to create. Nothing basically wrong with the stock, its just time to move some money from the table.) At some point the price looks so attractive the buyers return. They are buying a company they like at discount prices.
 With volume, the price moves up the right side and crosses the mid point between the high and low prices. The something unexpected happens. It could be troubling news about the company or the market, and the buyers turn to sellers and the price heads south again. This time, the stock makes a new low, maybe one or two points below the old low. The buyers look for the all clear and resume buying. Now it gets tricky for CANSLIMers. As the price exceeds the middle of the W, the buy rules kick in. However, it is possible for a double bottom to form a handle at this stage, and if it does, then the buy signal changes to the peak, plus .10, of the right leg of the W.
 
 As I under it, the rare triple bottom is the same as a double bottom, but with one more sell off.
 
 Charley</HTML>

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