luis: Well, this is really more of a saucer and handle. From just a quick look at the chart, I see several problems. 1) it's a real low priced stock. Less than $5. Most mutual funds won't touch it. Personally, I won't buy any stock less than about $20. (Not to say that some stocks I've bought started out over $20 then dropped to less than $5 <g>. 2) Valid cup and handles occur after the stock has made a strong advance from a previous base. This stock started off as an IPO at $10 back in 1993, and has drifted lower ever since. The concept of the cup and handle is not just the shape, but also that the pivot point of the right side of the cup is at/near a new all time high.
Why are the new all time highs important? When a stock is making new all time highs, everyone that owns the stock has a profit. There are no disgruntaled shareholders just waiting until the stock reaches their buy point so they can get out even. Oh, there will be sellers, just not as many, and those that are sellers will be less aggressive. (Unless the stock is considered wildly overvalued. That might cause short sellers to target the stock, but that's a different discussion.)
This stock probably has lots and lots of overhead resistance (sellers just waiting to get out even.) Yes, at one point it dropped as low as $0.20, so it's price today is much higher than that. But it's not a 'classic' cup and handle chart formation.
If you want to sell a good Cup and Handle, look at BRCM.
Adairm |
