Cup with high handle?

[Harry]

Hello Mike,

I notice on this weeks High Growth list, FB made the cut. Being new to HG investing, I am not familiar with 'cup and high handle' formations. Are these pattern formations more volatile and failure prone than compared to a classic cup with handle? If so, would you employ a bit more room (>7% sell stop from buy point) or instead keep the sell stop tighter?

Thanks for all you help and quality posts,
Harry

[Mike]

Hello Mike,

I notice on this weeks High Growth list, FB made the cut. Being new to HG investing, I am not familiar with 'cup and high handle' formations. Are these pattern formations more volatile and failure prone than compared to a classic cup with handle? If so, would you employ a bit more room (>7% sell stop from buy point) or instead keep the sell stop tighter?

Thanks for all you help and quality posts,
Harry

Harry,

High handle formations on a cup shaped base are a little more failure prone than the standard cup with handle pattern. A normal handle usually forms a little less than the left hand base high price and it should form in the upper half of the base formation. Early in a new bull market almost all these base patterns can work and we should get more choosy in a late stage bull market (like now). If the market is acting well FB could break out and work but I would place the odds around 50%. The handle is a little more than 5% above the left hand high, about as far as I would go in this market.

I would prefer to buy FB on a 10-day moving average volume trigger alert if it were to materialize.

[Harry]

Thanks Mike!

Harry