Page 1192 - How to Make Money in Stocks Trilogy

Don’t Invest Blindly: Use Charts to See the Best Time to Buy and Sell 175

Cup-with-Handle

Most Common and Profitable Pattern
• Winning stocks often start their big runs by forming this pattern
• Resembles a teacup viewed from the side

Ideal Buy Point
(10 cents above peak in handle) Buying
Range
(Up to 5% above
Prior Uptrend
ideal buy point)

Depth % Handle

Base Length

What to Look For

How do you find winning stocks in the early stages of a major move? Learn
to spot a cup-with-handle. Year after year, the biggest winners often launch
their runs as they break out of this same pattern.
We’ll go through several examples below, but first let’s see what to look
for in a proper cup-with-handle.
As we do that, we’ll also take a look at what “story” the chart is telling as
the base forms. That will help you understand how chart patterns and buy
points work—and see how emotions and human nature play a big role.

Watch Your Chart-Reading Skills Grow with IBD TV
Tune in to free Daily Stock Analysis and Market Wrap videos to see
how to analyze charts–and build a timely watch list. See how at
www.investors.com/GettingStartedBook.