Advanced
Trades for the Inverted Cup with Handle
While doing research for determining how we would
use CupAlerts™ with the Inverted Cup with Handle symbols we discovered
some interesting facts. Remember
we developed the Inverted Cup with Handle Indicator to use during a bear
market when the Cup with Handle meets with poor performance.
We have been following the Inverted Cup with Handle for the past
year and a half. For the
most part the market has performed well during this period.
Therefore one would expect the Inverted Cup with Handle would
have little success. Success
for the Inverted Cup with Handle would be to breakout to the downside
and continue on down. That
certainly has not happened as one would expect.
During the bear market (2000-2003) we saw hundreds
of Cup with Handles break out only to retreat shortly thereafter and
head down. Sometimes they
would fall back into another Cup with Handle formation and sometimes
fall a long way. The
Inverted Cup with Handle has performed exactly the same way in this
latest bull market. We
found that after forming the Inverted Cup with Handle 72% of the stocks
actually completed a legitimate breakout (closed below the Pivot Point
Price on greater than 50 day average volume).
After breaking out 78% reversed back up and once they crossed
over the Pivot Point Price and closed above that price the stock would
go up for a nice gain. Many
times this turned into a large gain.
From this information we have developed a new CupAlert™ that
will send you an email when the price reaches the Pivot Point Price.
We will discuss this more later on.
We would expect a successful Inverted Cup with
Handle would be one that broke out and kept going down, just the
opposite of a successful Cup with Handle.
LAB would be considered a successful Inverted Cup with Handle
that you would short on breakout and make a large gain as it dropped in
price.
Of the stocks that brokeout only 8% of them were
successful at making such a drop. Of
course this would be much different in a bear market.
The second thing our research made obvious to us
was that 28% of the stocks that did not break out would fall back close
to the Pivot Point Price, appear to bounce off the Pivot Point Price
Line and takeoff for a nice gain. The chart for IMN below will
illustrate the point we want to make.
After forming the first Right Side (red RS) the
stock made a handle only to find resistance at the Pivot Point Line (red
line) and then it completed another cycle.
After completing the second Right Side the stock bounced off the
Pivot Point Line for a nice gain.
Another stock forming two Right Sides was NTIQ.
Notice at no time could the price close below the Pivot Point
Line. This is typical of
the Inverted Cup and Handle in a bull market.
Two Right Sides lead to a powerful move most of the time.
Another stock forming two Right Sides was TRB.
The difference here is the stock actually brokeout of the first
Right Side (Red Dot) only to take off the next day for a large gain.
The breakout bar for the first Right Side actually became the bar
for the second Right Side.
We don’t want to bore you with stocks that have
made double Right Sides but as you can see they are powerful.
After closing below the Pivot Point Line RIG took
off the next day. This is
the last of the double Right Sides we will show you.
We think you can get the picture.
In scanning for the Inverted Cup with Handle
patterns we use a 4 day handle same as our Standard Cup with Handle.
When forming the top of the handle they usually have one day
where they make a very strong upward move and then they start to move
sideways and trend downward toward the Pivot Point Line.
A day trader or swing trader may use these short moves to good
advantage. Once the price
approaches the Pivot Point Line on the downward move you may want to
exit any short position and wait to see if it bounces off the Pivot
Point Line where you would again enter a long position or wait for it to
break out below the Pivot Point Line.
In a bull market do not short the stock if it breaks out to the
downside. Wait for it to
Reverse back up and close above the Pivot Point Line and again enter a
long position. In a Bear
Market you would enter a short positon when the price crosses below the
Pivot Point Line. Our
Inverted Cup with Handle CupAlert will notify you when the price is
approaching the Pivot Point from the top side so you can make the
appropriate trade based on the type of market we are in at the time.
Look for the following in an Up Market.
If after breaking out to the down side of the Pivot Point Line
the stocks makes a strong move downward for a few days it usually makes
a rapid turnaround and takes off upward with great force.
This move will make up the Left Side of a new Inverted Cup with
Handle if the close on the lowest bar is lower than the close on the
Left Side of the previous Inverted Cup with Handle formation.
Wait to enter a long position when the price crosses over the
Pivot Point Line. This is
the best play we have found barring none.
Look for a long climb upward when this happens.
Many times at the end of this move will be the new Left Side of a
Standard Cup with Handle. It
would behoove you to start at the beginning of this paragraph and read
it over slowly so it has time to soak in.
It could make you a lot of money.
We use the Reversed Inverted Cup with Handle CupAlert to catch
this move.
We have spent years trying to develop an indicator
that would find the Left Side of the Inverted Cup with Handle so we
could take advantage of that great move.
The Inverted Cup with Handle will not of course find the first
one until the formation is complete but it will find those that follow.
You just have to know what to look for.
Now that you have read the previous paragraph you know.
The chart for SBIB below will illustrate what we mean.
The blue arrow on the left will show you the bar where the price
crossed over the Pivot Point Line.
This move will be a Reversed Inverted Cup with Handle Breakout.
Not all moves making the Reversed Inverted Cup with
Handle Breakout will form the Leftside as seen by the blue arrow on the
right side of the chart. Notice
the difference in the setup for the breakout move between the two
depicted on this chart. Remember
both of these moves are a result of failures in the Inverted Cup with
Handle because we were in a bull market.
By doing our homework and utilizing the CupAlerts you may make
good profits from this action. The
key is in knowing what to expect after the Reversed Breakout.
Microsoft (MSFT) above is a swing traders dream
stock. Notice how it formed
a Left Side after forming double Right Sides.
The Left Side is nearly always formed by a breakout to the
downside followed by a Reversed Upside Breakout.
Our Reversed Inverted Cup with Handle CupAlert™ will send you
an email just as soon as the price crosses over the extended Pivot Point
Line. The Left Side is
something you must develop the skill to recognize.
The charts we send you will not have the LS listed until the
corresponding RS is developed several months later.
Inverted Cup with Handles usually take a long time to develop.
Here it took 6 ˝ months from the LS to the RS.
We will list the stock in our DEL Report two bars past the RS
(Right Side). From this
chart you can see you could have made a good profit after each one of
them. The big gain will
come from recognizing the Left Side breakout and staying with it.
Also good trades may be made from shorting stocks after the rise
in price after the Right Side and just before it starts its downturn and
exit your short position before the Pivot Point Line.
Many stocks after forming the Right Side will take
off and not look back. Stocks
have made a large downturn before forming the Right Side and when they
take off like this it catches everyone by surprise.
Most people think that after a stock drops hard it will take a
“dead cat bounce” and then go down and stay there for a long period.
That does not happen with the Inverted Cup with Handle.
The “dead cat bounce” is supposedly created by those that
shorted the stock closing out their positions.
So it should be a short lived upturn.
Not necessarily so.
In conclusion remember the Inverted Cup with Handle
will provide us with good trades even in a good market if we take the
time to learn how to recognize and utilize them.
The double Right Sides, the Reversed Inverted Cup with Handle
Breakout, and the very predictable bounce off the Pivot Point Line.
GAS is a typical Bounce Off play.
Learn to play these and you will add a lot to your bottom line.
In the past many people have told us they pay very
little attention to the symbols listed
in the Inverted Cup with Handle section of the DEL Report.
Hopefully after reading this you will start including them in
your trading research. In a
strong bull market there will be few Inverted Cup with Handles.
When the market weakens and starts moving sideways or down they
will pick up in number. Regardless
of when they occur you may find good plays.
Everything we have said here about the Inverted Cup
with Handle will apply to the Standard Cup with Handle in a bear or weak
market. When the market
becomes bearish you can look for the Reversed Cup with Handle breakout
CupAlert™ to give you the jump for making a short entry.
If this all seems a little confusing to you the
first time through we suggest you study the material and follow the
charts until you understand each trade we have discussed.
Between the Cup with Handle and the Inverted Cup with Handle you
have all you need to be successful trading in any market.
Learn how to use them and they will tell you what type of market
we are in by their actions. When
the majority of Cup and Handles start failing the market is turning
bearish and likewise when the Inverted Cup with Handles start failing
you can expect to see the bulls back. Make your trades accordingly.
Between the DEL Report and the CupWatch CupAlerts™ we will
provide you with plenty of ammunition.
Homepage | Contact us | Order | What is an Inverted Cup with Handle
|
Trading the Inverted Cup with Handle
CupAlerts
Via Email |
Advanced
Trades |
Sample Report | FAQ's | Privacy policy
Copyright © 1998-2004 CupWatch
web site design
and promotion by Eagle
Web
