Sean: There's a three-page summary of the cup-and-handle pattern in the "Investor's Business Daily guide to the Markets." If you see it in a bookstore, you might want to read the section, starting on Page 128. IBD calls it one of the more reliable chart patterns. The pattern, which looks like the outline of a cup and handle seen from the side, starts with a dip down, due maybe to profit-taking. The stock pulls back, usually from 12 to 33 percent, IBD says. Volume falls at the bottom of the cup, and that's an indication that the selling is beginning to stop. Volume then increases, and the stock starts to climb again. The price runs into resistance at the old high; people who bought there before are waiting for an opportunity to get out and recover their money. IBD says about the handle, "What is occurring in the handle of the chart pattern is a shakeout of the last of the potential sellers." Cup-and-handle patterns usually last from seven to 65 weeks, IBD says.
ATMS appears to have a nice cup and handle (lasting about eight weeks). Before this shorter-term cup, there's a longer one, too, from January through June. Also, notice the double bottom in the most recent shorter-term cup.
Notice in the increasing volume in the past two days, too.
Brooke |
