Sunday, March 8, 2009
Cup and Handle theories (and another pick)
Another stock that looks very interesting is Geoeye Inc., symbol GEOY. The trend has turned upward out of a 6-month correction marked by a relatively flat, rounded out bottom, especially toward the end of the pattern in the second half of January where we saw the charatcteristic volume dry-up as the price quieted down along the lows.
After a correction, this kind of action (actually lack of action) can indicate that all the weak hands have been wrung out and the stock is now set for a rally. Sure enough, the quiet time came to an abrupt end with a huge shot volume and a sharp move upward past the initial pivot point at the apex of the handle established on 1/28.
This is just the type of cup and handle pattern we like to see. We see them prior to new high breakouts, but also they happen as bottoms are formed.
The Relative Strength Rank is 77, which is high but with room to expand. Plotted as an indicator it shows a series of higher highs and higher lows, confirming the new uptrend, and indicating that it's outperforming 77% of all the stocks in the database (approximately 3000 symbols are currently being updated, with many more for historical research).
To top it all off there was a small, subtle Climax Low signal on Friday. This would be the perfect entry point on a classic cup and handle bottom, basically an entry on a pullback in a confirmed uptrend. Too good to pass up, so we're adding it to the list for Monday's buy in the hypothetical portfolio.
We plan to invest 33% of the hypothetical 100k portfolio between this and the symbols mentioned below, leaving room for additional buy signals.
After a correction, this kind of action (actually lack of action) can indicate that all the weak hands have been wrung out and the stock is now set for a rally. Sure enough, the quiet time came to an abrupt end with a huge shot volume and a sharp move upward past the initial pivot point at the apex of the handle established on 1/28.
This is just the type of cup and handle pattern we like to see. We see them prior to new high breakouts, but also they happen as bottoms are formed.
The Relative Strength Rank is 77, which is high but with room to expand. Plotted as an indicator it shows a series of higher highs and higher lows, confirming the new uptrend, and indicating that it's outperforming 77% of all the stocks in the database (approximately 3000 symbols are currently being updated, with many more for historical research).
To top it all off there was a small, subtle Climax Low signal on Friday. This would be the perfect entry point on a classic cup and handle bottom, basically an entry on a pullback in a confirmed uptrend. Too good to pass up, so we're adding it to the list for Monday's buy in the hypothetical portfolio.
We plan to invest 33% of the hypothetical 100k portfolio between this and the symbols mentioned below, leaving room for additional buy signals.
// posted by gigascanner @ 9:33 AM 
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