Trading the Cup & Handle Pattern

Darc said:
If you'd studied Minervini's strategy you'd understand Weinstein's stage analysis as it forms the basis of Minervini strategy (chapter 5).

Secondly, Minervini also exp!ains Jilers Cup n Handle, which you disputed.
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What is more interesting is how people is more interested about what I should do or not instead of waiting the publication or outcome of any trade and eventually discuss it.
No worries, you have just joined my ignore list along with the Elliot superstar and the other idiot that just opens his mouth to insult people.
 
almx said:
What is more interesting is how people is more interested about what I should do or not instead of waiting the publication or outcome of any trade and eventually discuss it.
No worries, you have just joined my ignore list along with the Elliot superstar and the other idiot that just opens his mouth to insult people.
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From Mark Minervini's first Book, Trade like a Stock Market Wizard

p64; " ... Stan’s approach was based on a timeless principle of the four stages that stocks go through ... "

p30; "... and from Jiler, chart patterns, including his famous saucer with platform, which is now known as the cup-and-handle pattern, popularized by William O’Neil..."

Just helping to correct your mistakes.
 
Halozyme Therapeutics (HALO)

Here comes my first trade that I made beginning of this month.

I will be recording some initial parameters that could help me in understanding what was right or wrong for a trade that worked or not, these parameters are:
Timing: Versus the General Market and within the Wyckoff cycles.
Fundamentals: CAN SLIM state of the stock at the time of entry.
Technicals: Quality of the cup, Behavior of the crowd (volume) and quality of the entry.

So here we go,

Timing.
After a recent correction, the stock market seems to be resuming its bullish trend. It's OK to enter a trade long.
The stock is out of one year accumulation phase and seems to be entering now the mark up cycle as it printed a fresh all time high.

Fundamentals.
Fundamentally, all is good at least today. This is not mandatory for me to enter the trade but only a plus.

Technicals.
All the EMAs are aligned which indicates that the stock is trending up and strong.

At the early stage of the move I see a cup without handle, yes, I see cups everywhere now :), that broke up with a gap and big volume, ok, just a retracement. Then I see the C&H in yellow. I missed it initially but I was able to enter at an acceptable level on the retracement that followed. The stock seems to confirm the move to the upside for now.
The C&H is a bit small in duration as per the standards that I have adopted from O'Neil, it should be of at least 6 weeks for the cup plus 1 week for the handle, this being the minimum. Well, this one is only 5 weeks from cup to breakout so it's a bit short. The volume seems also fine, there is a decrease in volume during the cup formation and the handle, with buy volume being always superior to selling volume, there is also an increase in volume near the breakout and recently when printing new highs.

Trade:
Long @ 54.18, stop 10%

HFdCH8y1
 
The Crazy Chicken "El Pollo Loco" Holdings, Inc. (LOCO)
A quick service restaurant franchise Small Cap company with 4632 employees.

Timing vs the General Market.
After a recent correction, the stock market seems to be resuming its bullish trend. It's OK to attempt a long trade.

Timing within the Wyckoff cycle.
The stock is out of 18 months of an accumulation phase and seems to be entering now a new mark up cycle as it's printing new 52 week highs.

Fundamentals.
Fundamentally, the numbers are good and the company is profitable. Again, this is not mandatory but a nice to have.

The Trend
The stock is in a clear up trend since more than a quarter now. It all started with a gap at the beginning of May, thanks to the earnings numbers that exceeded the expectations. Here clearly the fundamentals are driving the technicals.
​
The Cup & Handle Pattern.
It formed a rather small C&H but still within my requirements, a 6 weeks cup followed by a handle of 2+ weeks. The retracement was only of 30% which is a sign of strength and volume was as expected but generally at lower levels as this is a thinly traded stock.

The Entry.
I did a partial entry first as I was not convinced initially and entered again a few days later as the stock continued doing right. My final mean entry price sits at the
close of the breakout candle, so all is fine and it continued doing fine since.

The Trade.
Long @ 11.71 Stop Loss 10%

Qb0aCHgf
 
Purely technically I say yes to the first one on the 5 min but not to the second one as the cup is too deep, you have no volume information ? It's an important confirmation metric when the breakout happens.

Then ES is not a stock so I don't know if the rationale that is behind the patterns applies to it in the same way...
 
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