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Strategies & Market Trends : Trend Setters and Range Riders
MSFT 470.36+1.0%3:59 PM EST
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To: TWICK who wrote (23455)10/23/2002 7:48:48 AM
From: Doug Robinson  Read Replies (1) of 26752
 
O'Neill's Cup and Handle pattern is a timing pattern for stocks that meet his CANSLIM criteria. It's one of the most powerful patterns in a secular bull market that's in the beginning of a new up trending cyclical bull move. It works pretty well during the cyclical bull move in a secular bear market so it's one to watch.

The pattern's reliability for stocks that don't meet the CANSLIM pattern is random. In markets that are trading down or sideways it's very risky. More importantly, it provides players with deep pockets with a great opportunity to make some quick money at the expense of those that don't recognize the weakness of the pattern in markets that aren't trending upwards.

These players will position themselves early in the pattern. Then they will start the run into the pivot point and sell their shares during the breakout as all the cup and handle disciples come rushing in. Many will then short the issue and watch the folks that buy on the breakout cover at their 5% to 10% stop loss points as the stocks price falls back through the pivot point once the temporary buying enthusiasm diminishes.

It's a strategy that has worked very well during the past two years.
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