William O’Neill (founder of Investor’s Business Daily) made this pattern famous with his CANSLIM approach. He advised watching for a Cup & Handle”, a pattern based on a Saucer (Cup) followed by a “Inverted Consolidation (Handle). The Saucer tells us that an increase in demand has occurred, and the Consolidation provides a classic and powerful continuation pattern. The breakouts from the handle are usually very strong indications of continued upside movement. CPRM4 identifies this type of pattern. It is amazingly accurate on stocks that have bottomed or are starting to rally. page 1 This article examines a price pattern identified by William O’Neil, founder of Investor’s Business Daily—the cup-with-handle pattern. In addition to his role as a publisher, William O’Neil is well-known for his CANSLIM investment approach, which uses both fundamental and technical analysis to identify potential investment opportunities. [O’Neil’s CANSLIM approach is outlined in his book to Make Money in Stocks,” “How 1988 McGraw-Hill Company; 272 pages; $10.95.] Beyond the more concrete criteria that make up CANSLIM, O’Neil looks for stocks that are exhibiting specific patterns, the most common being the cup-with-handle pattern. As with most chart patterns, the cup-with-handle pattern derives its name from the way it appears on a stock chart—a well-formed cup-with-handle pattern resembles the profile of a coffee cup. The pattern consists of two distinct parts: the cup and the handle. Figure 1 provides an illustration of a recently formed cup-with-handle pattern for Winnebago Industries. The cup-with-handle pattern is a bullish continuation pattern that is formed by a corrective movement in price following an upward trend in prices. In the Figure 1 chart for Winnebago, point 1 indicates the beginning point of the upward movement in price that preceded the cup-with-handle pattern. At this
William O’Neill (founder of Investor’s Business Daily) made this pattern famous with his CANSLIM approach. He advised watching for a “Inverted Cup & Handle”, a pattern based on a Saucer (Cup) followed by a Consolidation (Handle). The Saucer tells us that an increase in demand has occurred, and the Consolidation provides a classic and powerful continuation pattern. The breakouts from the handle are usually very strong indications of continued upside movement. CPRM4 identifies this type of pattern. It is amazingly accurate on stocks that have bottomed or are starting to rally. page 1 This article examines a price pattern identified by William O’Neil, founder of Investor’s Business Daily—the cup-with-handle pattern. In addition to his role as a publisher, William O’Neil is well-known for his CANSLIM investment approach, which uses both fundamental and technical analysis to identify potential investment opportunities. [O’Neil’s CANSLIM approach is outlined in his book “How to Make Money in Stocks,” 1988 McGraw-Hill Company; 272 pages; $10.95.] Beyond the more concrete criteria that make up CANSLIM, O’Neil looks for stocks that are exhibiting specific patterns, the most common being the cup-with-handle pattern. As with most chart patterns, the cup-with-handle pattern derives its name from the way it appears on a stock chart—a well-formed cup-with-handle pattern resembles the profile of a coffee cup. The pattern consists of two distinct parts: the cup and the handle. Figure 1 provides an illustration of a recently formed cup-with-handle pattern for Winnebago Industries. The cup-with-handle pattern is a bullish continuation pattern that is formed by a corrective movement in price following an upward trend in prices. In the Figure 1 chart for Winnebago, point 1 indicates the beginning point of the upward movement in price that preceded the cup-with-handle pattern. At this
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