Cup w/ Handles

[brd]

nice call on KYPH. high-vol breakout today.

BTW, Doug, I'm still holding this one from 7/5 when I read about it in your email update. I didn't even realize what it did today until I read IBD's Big Picture and saw it in the Stocks Up on Big Volume section. Up 24% on 1400% increased volume!

The only problem is that I bought it in my smaller account and did a small buy, so 24% was just a few hundred bucks. Of course, that account increased by 5% today, so not too shabby.

I definitely owe you a beer!

[IIC]

BTW, Doug, I'm still holding this one from 7/5 when I read about it in your email update. I didn't even realize what it did today until I read IBD's Big Picture and saw it in the Stocks Up on Big Volume section. Up 24% on 1400% increased volume!

The only problem is that I bought it in my smaller account and did a small buy, so 24% was just a few hundred bucks. Of course, that account increased by 5% today, so not too shabby.

I definitely owe you a beer!

Sounds good...Glad to hear it...I thot I missed it myself

[IIC]

Our Cups w/ Handles list for this week is updated at http://SharpTraders.com

This is by far the shortest list we've ever had...so many handles were just too far down to list.

Make sure you check out the Patterns of Interest too...Many of our winners come from that list.

One last thing...Don't forget to use our new Handy Dandy List Converter Tool where you can convert horizontal lists to vertical or vice-versa for easy copy/paste into your streamer or scanner.

And please make it a point to tell at least 100 of your closest friends to use the List Converter Tool too...Thanks...Doug(IIC)

[spikefader]

From your Cups list this week, Doug, here are the S8 signals:

VII SIGM RELV ACY BMRN DPM DWA BRKS

http://technicaltrades.net/Scuttlebutt/viewtopic.php?p=3036#3036

33% of your list are S8s; pretty high considering all things I reckon.

Oh, and I note that ACY is off my weekly S8 list (filtered from the Voodootrader Top 100) and the random number picker selected it for my DMC contest pick.

[IIC]

33% of your list are S8s; pretty high considering all things I reckon.

Maybe you and I are more similar than we thot???...

[billyjoe]

Doug,
I've got a good cup w/handle for you. Look at last 11 months AATI. Up today at last check 9.61.

---------billyjoe

[IIC]

SIGM f/p is 32.86

[IIC]

Doug,
I've got a good cup w/handle for you. Look at last 11 months AATI. Up today at last check 9.61.

---------billyjoe

I see the pattern you are talking about but we prefer a run up to the left side hi. Would like that run up to be 20%+ but admittedly many of mine are not Classic...Thanks

[billyjoe]

I see the pattern you are talking about but we prefer a run up to the left side hi. Would like that run up to be 20%+ but admittedly many of mine are not Classic...Thanks

Doug,
Big Charts shows left side high 10.00 right side high 10.50. We're in the window of the handle at 9.47 with low being around 5 several months ago.

-----------billyjoe

[IIC]

Doug,
Big Charts shows left side high 10.00 right side high 10.50. We're in the window of the handle at 9.47 with low being around 5 several months ago.

-----------billyjoe

Yes...you are right...I added it to our list...Many that I list don't meet every requirement...although I don't think there actually is an Official definition...Even WON changes his.

[billyjoe]

Doug,
I wasn't taking the depth of the cup into consideration. I wonder how much difference it makes.

-----------billyjoe

[skiracer]

Doug,

I wasn't taking the depth of the cup into consideration. I wonder how much difference it makes.

-----------billyjoe

I like to see them with a much more rounded pattern than as jagged as these examples below. I bet if you were to post a number of them randomly the ones with the more conforming rounded bottom with a handle that developes as O'Neil states in his definition would provide a much higher percentage of breakouts than the ones that aren't as close to his definition. I think there is a percentage written somewhere defining the maximum percentage of drop in the handle. The farther you get away from the accepted and held definitions the lower the reliability of the pattern following thru with a breakout. Stockcharts definition below states that the handle shouldn't drop more than 1/3 the depth of the cup. Of course many will argue that you can call it what you want and develope your own definitions and parameters, and you can, but the true percentages usually hold only when the accepted parameters are met.


The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks.
As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.

1. <LI class=level1>Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.
   <LI class=level1>Cup: The cup should be "U" shaped and resemble a bowl or rounding bottom. A "V" shaped bottom would be considered too sharp of a reversal to qualify. The softer "U" shape ensures that the cup is a consolidation pattern with valid support at the bottom of the "U". The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.
   <LI class=level1>Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which is conforms with Dow Theory.
   <LI class=level1>Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement is, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.
   <LI class=level1>Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.
   <LI class=level1>Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.
2. Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.

As with most chart patterns, it is more important to capture the essence of the pattern than the particulars. The cup is a bowl-shaped consolidation and the handle is a short pullback followed by a breakout with expanding volume. A cup retracement of 62% may not fit the pattern requirements, but a particular stock's pattern may still capture the essence of the Cup with Handle.

• <LI class=level1>Trend: EMC established the bull trend by advancing from 10 and change to above 30 in about 5 months. The stock peaked in March and then began to pull back and consolidate its large gains.
  <LI class=level1>Cup: The April decline was quite sharp, but the lows extended over a two month period to form the bowl that marked a consolidation period. Also note that support was found from the Feb-99 lows.
  <LI class=level1>Cup Depth: The low of the cup retraced 42% of the previous advance. After an advance in June and July, the stock peaked at 32.69 to complete the cup (red arrow).
  <LI class=level1>Handle: Another consolidation period began in July to start the handle formation. There was a sharp decline in August that caused the handle to retrace more than 1/3 of the cup's advance. However, there was a quick recovery and the stock traded back up within the normal handle boundaries within a week. I believe the essence of the formation remained valid after this sharp decline.
  <LI class=level1>Duration: The cup extended for about 3 months and the handle for about 1 1/2 months.
  <LI class=level1>Volume: In early Sept-00, the stock broke handle resistance with a gap up and volume expansion (green arrow). In addition, Chaikin Money Flow soared above +20%.
• Target: The projected advance after breakout was estimated at 9 points from the breakout around 32. EMC easily fulfilled this target over the next few months.

[IIC]

Doug,
I wasn't taking the depth of the cup into consideration. I wonder how much difference it makes.

-----------billyjoe

I have no documented research to back this up but I've found some of the best ones come from my Patterns of Interest list. The PoI's IMO anyway have more faults as far as the criteria I use than the ones I put in the main CwH list...Sometimes it is a tough call to decide which list to put it in...But for my own personal use it doesn't matter too much because I can watch both lists in R/T at the same time.

As Rob pointed out early on the fundamentals may play a major part too.

[Matt]

acronym question?

Doug,

You said SIGM is f/p 32.86. What is f/p? Thanks

[IIC]

Doug,

You said SIGM is f/p 32.86. What is f/p? Thanks

f/p = flash point which is 1 cent above the right side cup high

p/p = pivot point which is 10 cents above the right side cup high

a/p = action point which is the most important...But only you can set your own action point.

On SIGM I went in pre (attempted) breakout in the 32.70's...I was lookin' pretty good as it went up to 33.20 although the vol was above average it was not Breakout type volume which IMO is at least 1.5x ADV. However it pulled back and I'm up a very little bit...I held over...Doug