The Cup-with-Handle Pattern – The Key to Big Gains

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The 2nd half of the newsletter is a briefing on 1-3 stocks in the news. Read it. Then click on the links to see the corresponding charts inside the original articles. This will accelerate your ability to read the charts.

Learning to how to trade will change your life.

✅ What the cup-with-handle pattern looks like and why it works.
✅ How to identify proper entry points and avoid false breakouts.
✅ The exact criteria William O’Neil used to spot monster winners forming this base.

If you’ve ever missed a huge move in a stock because you bought too early—or too late—you’re not alone.
The cup-with-handle pattern solves that problem. It tells you exactly when to buy and why the stock is ready.

📖 William O’Neil’s Insight:

It’s no coincidence that virtually every major winning stock formed a cup-with-handle before launching into a major uptrend. Let’s dive into how it works and how to trade it properly.

🔹 The Cup:

🔹 The Handle:

🔹 The Breakout:

📖 Example:

🚨 Avoid these traps:
❌ Buying too early inside the handle – Wait for a proper breakout with volume.
❌ Cup is too deep (>50%) – This indicates volatility and lack of institutional support.
❌ Handle is too wide or sloppy – Ideally the handle forms in 5–10 days, not several weeks.
❌ Breakout volume is weak – No volume, no conviction. Don’t chase a breakout without confirmation.

📖 Jesse Livermore’s Take:

✅ The cup forms over 6+ weeks and has a rounded bottom, not a sharp V.
✅ The handle slopes downward slightly and stays tight and shallow (no more than 10–15% pullback).
✅ The breakout happens at the top of the handle, on 40–50%+ above-average volume.
✅ The stock has strong earnings, RS > 80, and ideally is near new highs.
✅ Check for institutional support—volume clues, sponsorship, and fund ownership.

✅ Log into:

✅ Screen for stocks forming cup-with-handle bases with:

👉 Journal your top 3 candidates and watch for breakout volume.

📌 Next Lesson: How Volume Confirms Breakouts – Don’t Buy Without This
We’ll explore how to tell if a breakout is the real deal—or a bull trap—based on volume signals.

🚀 Stay disciplined & keep learning!

📌 Understanding stock price growth:
Look up the historical stock chart of Apple (AAPL) from 2004 to 2024. Notice how the stock’s price has risen steadily over time with some pullbacks.

Use these market tools to scan for and review stocks:

✅ MarketSmith (MarketSurge) – Premium Market Analysis and Scanner Tool
✅ Charts.com – Budget-Friendly Charting Option
✅ TradingView – Free & Subscription Stock and Crypto Charts
✅ DeepVue – MarketSurge Inspired Analysis and Scanner

👀 Seeing real-world stock patterns helps train your eye for long-term trends.

Our Sister Newsletter. Because everyone’s a Beginner in something.

I’ve been watching defense stocks closely... and L3Harris (LHX) just fired off a major signal. Two big upgrades in one shot. That’s not something you see every day. Why? Because Wall Street sees something brewing — and it’s tied to rising U.S. defense spending expected through 2025.

This isn’t just about war talk or headlines. It’s about money moving. Analysts are betting that L3Harris is back in business — faster growth, better margins, and more military contracts on the table. If you're looking for a comeback story in defense, this might be it. The stock’s chart is waking up too… and smart money is noticing.

👉 Read the full scoop here before the next move hits the charts.

Category: Healthcare – Physical Therapy & RehabilitationPattern: Cup with HandleBuy Point: 103.83Composite Rating: 96 (Best in its group)

When markets get rocky, investors tend to look for safe havens. Enter Encompass Health (EHC) — the largest U.S. provider of inpatient rehab services, specializing in physical therapy for patients recovering from serious conditions like strokes and hip fractures. With 166 hospitals across 38 states and Puerto Rico, EHC treats one in every three inpatient rehab patients nationwide. That’s a dominant footprint in a non-discretionary, recession-resistant niche.

While tech and manufacturing sectors continue to wobble under the weight of tariffs and macroeconomic concerns, Encompass Health has held steady, posting 23% earnings growth last quarter and forecasting up to $5.9B in revenue for the full year. The stock is forming a bullish cup-with-handle pattern — a classic setup for an upward breakout. Its Relative Strength line is at all-time highs, signaling that it’s outperforming the broader market.

For long-term investors or swing traders looking for stability in uncertain times, EHC offers both strong fundamentals and technical setup. With a manageable average true range (ATR) of 3.02%, it's a less volatile name — ideal for busy professionals who don’t want to micromanage every market move.

5 referrals How to Make Money in Stocks Complete Investing System by O’Neill

10 referrals How to Make Money in Stocks Success Stories by O’Neill

15 referrals How to Make Money in Stocks, Getting Started by Matthew Galgani

30 referrals Trade Like a Stock Market Wizard by Mark Minervini

50 referrals Lifetime access to the upcoming video courses and 50% off live events and digital products

Thank you for reading. We’re all Beginners in something!

-Beginners in Stock Trading Team