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Registered User
Joined: 12/2/2004
Posts: 1,775
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CFL is a very recent IPO sporting a strong technical setup in addition to fine overall fundamentals. CFL is the well known Brink's home and business security alarm company. The chart shown here displays a well defined cup with handle, with a buy signal being a breakout over highs of handle on above avg. volume. It's easy to spot the shape of the pattern but what many investors don't understand is that there are a dozen criteria in a legit cup/handle pattern and the vast majority need to be present before the risk/reward of entering its breakout is worth the trouble. The cup/handle is not the most reliable of bull patterns, but its forte is that when the pattern does work it does so in grand fashion as William O'Neil has documented and published in detail for every year going back almost 50. CFL has most of those required traits with one obvious flaw being that the left side of the cup has higher red volume vs. the green volume in buildup of cup's right side. But some slack is allowed imo because the stock is still so young. The positives far outweigh any negatives in the pattern...note the ideal depth of the cup of 25% (any depth over 35% is a flaw). Note the required prior uptrend of 25%+ from Nov. to Feb. that leads up to the current pattern and how overall price and relative strength past few weeks have held up superbly. The handle's depth passes the test (should not exceed 15%), and its location relative to the cup is above the cup's midpoint level. The length of the handle passes with 5 days and longer. Overall daily price ranges in pattern are relatively tight and smooth, especially when compared to the first two or three months of IPO date. Also the overall length of entire formation (start of left side of cup to last day of handle) passes the test of not being shorter than 7 weeks. Average daily volume passes the test. CFL is the number one overall rated stock in its group of 53 stocks. I'm not sure if lockup has expired; could not find the date, but if the usual 6 mos. then could be close by with potential for pre IPO investors to sell, fwiw.
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Registered User
Joined: 12/2/2004
Posts: 1,775
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Two weeks since original post and pattern still intact. I see a continued tightening of the daily price ranges; I think today was the tighest range day in weeks if not months. Often times this is a cue price is getting close to making a move one way or the other but a move nonetheless and odds favor a move in the predominant trend...up. What are those odds? Beats me, just a little edge. Price made a fakeout move over the 25 buy signal three days ago but above avg. volume buying pressure wasn't present. And that goes back to the pattern's biggest weakness again, lighter green volume in right side of base vs. the heavier red volume as price carved out left side of base. Ideally you want to see the opposite. A little slack cut because of the very young ipo date of only six months, not many eyes on it. Another possible silver lining is that despite the heavier red volume the last half of February, the correction was only 24%. Great thing about fishing for young public companies is that if one gains serious traction you can often times get in it during a first stage base where stocks often make their biggest and fastest moves.
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Registered User
Joined: 7/1/2008
Posts: 889
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You are clearly disciplined in the CANSLIM way.
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Registered User
Joined: 7/1/2008
Posts: 889
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How do you like this one? No flaws in this cup & handle. As an added bonus, it's bouncing off the 20 ema
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Registered User
Joined: 12/2/2004
Posts: 1,775
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Hey Ben, I like SLGN's setup, thanks for posting the graphic. I just pulled it up on my screen and first thing I always do is try to find a pattern's weakest part and compare to its postiives, always hoping positives far outweigh any negatives. Love the high green volume in the early Feb. buildup that formed peak of cup's left side. I can't find a serious weakness, maybe too much red volume in handle area, but I think the pattern is at least as strong as CFL's and maybe better. SLGN is excellent overall, technical and fundamental, number one in its industry group. Good find.
I'm not a slave to IBD and its canslim method, as I also like to find and watch/trade pure short term technical setups, like the SBUX setup which is definitely not an IBD/canslim type of stock currently.
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Registered User
Joined: 12/2/2004
Posts: 1,775
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As much as I like SLGN, another stock in its group, CCK, had a great high volume breakout today, so I bought CCK at the close. But I'm thinking SLGN may benefit from CCK's good earnings report near term at least. It had its own nice little move on good volume...looks like it wants to bust out of its handle.
CFL had another failure at the 25 level. Price has bumped up against the 25 area about ten times in past couple months...maybe one day.
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Registered User
Joined: 12/2/2004
Posts: 1,775
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Sorry to sound like a broken record, but CFL once again at resistance, moving over the 25 area on volume surge past hour or so, though still not impressive for full day. Maybe volume will finally do something by the close and offer a legit buy signal this time. Technically if you judge actual intraday highs (not the close) as a real resistance level, then price needs to get over 25.72 from earlier this month. I ain't that picky...a close over 25 has never happened, so any level above 25 on the close with higher volume is good enough, with a move over 25.72 as a good add-on area. Anyway, i count about 12 tests of 25 since February...one of these days Alice.
The origninal handle in first post has evolved into its own pattern, more of a flat base now, or even an ascending triangle. Main thing is that price pattern past few weeks has not broken down. As always need the market to help and that's not looking too good at moment, we'll see.
MDAS making a good breakout today on superb volume. Its earnings though in a week, so a short term trade (all or half position at minimum) if price is still doing well by then.
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