I want to watch this one because I haven’t come across this situation yet. Stan Weinstein talks about a Stage 3 possibly breaking back into a Stage 2, instead of 4. I believe that might be what’s happening here. From my stage analysis it looks like a big Stage 3 C&H, which is currently in the handle. If that’s the case, I want to watch and see if there is a BO at the PoLR and catch a new Stage 2 at the very beginning.
Typically, I’d do a Stage 2 criteria analysis here. However, I don’t think we are in Stage 2. If I’m correct, you can see from the chart above it’s in a large Stage 3 C&H that looks to have the potential to break back into a new Stage 2.
Again, as above, I would usually do a base structure analysis here. But since it’s not a Stage 2, there are no bases yet to analyze.
I am concerned about the magnitude of drop on the left side of the cup. Typically, anything more than a 50% drawdown creates too much overhead supply. However, in this case, the left side of the cup went up over 300% on big volume, which should have absorbed all that supply.
Also, the RS within the Technology sector is a strong 86.42%. However, the Technology sector is underperforming the SPX by 6.06%. The sector performance could be a drag on the price.
|>= 30% uptrend prior to cup with improving RS and increases in volume||YES, prior to the cup was a Stage 2 advance of over 1,300%|
|7 – 65 weeks (typically 3 – 6 months)||NO, just over at about 70 weeks|
|Correction from top to bottom of cup is 12-33%||NO. 73.84%, see comment above|
|More “U” than “V” bottom||YES|
|Decline < 2.5X market||YES|
|Upper 1/2 of cup||YES|
|Above 50-day MA||YES|
|Price drift down to lower low||YES|
|>= 1 week||YES, 2 weeks|
|Price range tight||YES|
|Volume dried up||YES, volume has decreased significantly|
|Past 2 quarters EPS growth >= 25%||YES, 94.23% and 1.96%|
|Past 2 quarters margin growth >=25%||YES, 76.06% and 0.74%|
|EPS growth >= 25% in past 3 – 5 years||YES, 80.36%, -1.89% and 142.86%|
|EPS surprises||N/A no estimates available|
|EPS break out||YES, 2 Q’s ago 750% QoQ|
|ROE >= 17%||N/A|