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Strategies & Market Trends : Investor's Business Daily
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To: Investor2 who wrote (108)8/27/2000 9:31:10 AM
From: Doug Robinson   of 164
 
I2, O'Neil uses charts to time one's investments. Adairm has made some good points. I'd add the importance of determining the mid point in any chart pattern you look at. When a stock rises to a new high above the mid point you can start to look to see if it's developing a pattern for entry as long as you have had an appropriate base developed. If a handle starts to form, it shouldn't develop in the lower half (below the midpoint) of the pattern. Obviously, the higher the recent high as compared to the old high, the less the resistance. What many don't realize is that with time many of the weaker holders will sell out, so the accumulation/distribution process that takes place before a stock moves above it's midpoint is very important and will often allow a very successful entry at a price lower than the old high. Many people misunderstand the cup and handle formation, thinking that handle has to begin at a point higher than the high price at the top of the left hand side of the cup. That's not the case.

I'd recommend that you read his books, IBD and review the information on his site. There's a lot of excellent points to be considered in his books and frequently one reads them once or twice and misses a lot of important information.
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