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To: Investor2 who wrote (108)	8/27/2000 1:48:56 AM
From: adairm	Read Replies (1) \| Respond to of 164

I2: I think I understand what I think you said! The handle is formed when the folks that bought at or near the old high sell in order to break even. These are the weak hands holding the stock that must be shook out before the stock will advance to new highs. There can be 'high handles' or 'low handles', not just those formed right at the old high. In fact, the pivot point is 1/8 point over the intraday high of the beginning of the handle. Note that the stock does not necessarily have to be making new highs to achieve this. (But it should be real close!) Now sometimes a pattern may trace many attempts to break out. It rises to the pivot point, and makes a smaller handle. If it does this 2 or 3 or even 4 times, that's great! Why? Because when the breakout does come, it will be even more powerful! It's like a coil being compressed tighter and tighter. A great way to spot these is by using Bollinger Bands. When the bands pinch real close together, a breakout (one way or another)is going to happen soon. Adairm

To: Investor2 who wrote (108)	8/27/2000 9:31:10 AM
From: Doug Robinson	Respond to 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.