ZM (To Infinite! but not beyond...)
Not exactly the cup and handle William O'Neill prescribes, but certainly worth consideration.
The dimensions of the C & H are textbook, and the handle is shaping up just as you would expect -- prices narrowing into a tight consolidation pattern, scaring shorts out of their positions, slowly adding fuel to the uptrend that we saw today. The handle is also fairly bullish (not too steep; no major takeout of the cup), which is why I think the stock could rapidly achieve its dénouement. I'm looking for a re-test of $500 with way above average volume pushing us up and over the green handle. A pullback after the breakout and bounce would be the point I'd consider opening a long position. The C & H formation isn't textbook, which is often a bearish signal; meaning, the breakout will happen and it'll climb a bit, but not necessarily to the height expected. The rim of the cup seems like a natural deflection point, and again, right in range with several trading strategies targets. Looking for a sharp sell-off around $560 w/price slippage. It would be great if this coincided with the peak declines we've seen in RSI since September 1. Not interested in opening a position in the slough.
The dimensions of the C & H are textbook, and the handle is shaping up just as you would expect -- prices narrowing into a tight consolidation pattern, scaring shorts out of their positions, slowly adding fuel to the uptrend that we saw today. The handle is also fairly bullish (not too steep; no major takeout of the cup), which is why I think the stock could rapidly achieve its dénouement. I'm looking for a re-test of $500 with way above average volume pushing us up and over the green handle. A pullback after the breakout and bounce would be the point I'd consider opening a long position. The C & H formation isn't textbook, which is often a bearish signal; meaning, the breakout will happen and it'll climb a bit, but not necessarily to the height expected. The rim of the cup seems like a natural deflection point, and again, right in range with several trading strategies targets. Looking for a sharp sell-off around $560 w/price slippage. It would be great if this coincided with the peak declines we've seen in RSI since September 1. Not interested in opening a position in the slough.
Comment:
In case it's not clear, a break below the handle is a strong bearish signal. Your price target is as good as mine as to where it'll end up from there. $420 is a good conservative starting point.
Comment:
Anyone else see the 2nd cup?
Comment:
C & H formation long in the tooth. O'Neil limits handle to 1/5 to 1/4 the cups length. Modern technicians argue there are new ways to look at C & H formations. In my personal experience, anything less than kosher typically fails to reach the zenith target of the depth of cup upon breakout above the handle. That said, the consolidation pattern and lack of sellers making up the ball-point of this mighty bullish pen leads me to believe this will breakout to the upside within the next week. We haven't seen enough volume to justify current price action as being in the distribution phase. If I had to guess, most of the buying volume in the past 5 days has been short sellers covering. Short interest is fading.