Good Morning unclewest, sorry to take so long to get back to you.
>>everyone reads charts a bit different<<
And that is what makes chart reading so interesting, and so dangerous, sometimes it is like looking at clouds, you can see many things...
>>in this case i am using o'neil's high low formula. here you want the mid point of the handle to be above the mid point of the cup.<<
I believe that guideline is an effort to determine the validity of the cup. If the handle begins to form at a point that is too low in the cup the pattern is not a good one. You want to see a fully formed cup before the handle appears. You are correct, that is the case here. I was commenting on the second factor, that after the cup is formed the pattern can still be faulty if the handle is "defective" to use O'Neils word. Signs of a defective handle might be if it is upward sloping, too steeply downward sloping or if the price variation in the handle is too great. The latter is the problem here.
Naturally, a chart pattern is just one of a great many factors to be considered in selecting a stock. And like so many other factors, it is merely an indicator, not a sure bet. And, although I have misgivings about jumping on this stock at this time based on its chart, I also can not understand how a company with the fundamentals, and growth pattern of this one can be trading for such a low price.
StockHawk |
