Page 1197 - How to Make Money in Stocks Trilogy

180 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

Why Not Buy at the Bottom of the Cup-with-Handle?

Hindsight is indeed 20-20.
After a stock has completed the pattern, it’s easy to retroactively say, “I
would have made more money if I’d bought at the bottom.” That’s true—
that one time—in hindsight. But when the base is still forming, how do you
know if the stock has really hit bottom?
If you try to buy before the pattern is complete, you’re just taking on
unnecessary risk.
If you wait for the stock to finish the base and break out on heavy volume,
you dramatically reduce your risk and still leave plenty of potential for
major gains.

Launching Big Gains with the Cup-with-Handle
Below are examples of winning stocks that launched big runs from a cup-
with-handle pattern. Both the daily and weekly charts are included. The
weekly charts show the longer term trend, while the daily charts show the
action on the actual day of the breakout. Be sure to use both!
Don’t rush through the following examples. Take some time to study the
notes and see how these patterns met the key requirements of a proper cup-
with-handle. And as always, pay close attention to the price and volume
action within the base, and see how the concept of “support and resistance”
comes into play.
Also remember that IBD does a lot of the work for you. You’ll find high-
lights of stocks forming cup-with-handles and other patterns as you review
IBD 50, Your Weekly Review, Stock Spotlight and other features as part of
your daily and weekend routines (Chapter 4).