How to Make Money in Stocks — Chapter 2: Cup-with-Handle & Double Bottom Breakouts

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William O'Neil's How to Make Money in Stocks Chapter 2: Deconstruct the Cup-with-Handle, Double Bottom, and Flat Base breakout patterns.

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How to Make Money in Stocks — Chapter 2: Cup-with-Handle & Double Bottom Breakouts

"A cup with a handle pattern is your highest probability setup for institutional breakouts." — William O'Neil

Financial Context

Chapter 2 details classic chart patterns preceding institutional markup phases.

Wall Street Application

1. Cup-with-Handle Anatomy

  • The Cup: U-shaped base (12%–33% depth) shaking out weak hands over 7–65 weeks.
  • The Handle: Downward drift in upper half of base (8%–12% pull-back) with volume drying up.
  • Pivot Buy Point: Price crosses handle high backed by 40%+ volume surge.

Trading Execution Rules

  1. Verify U-Shape Base: Avoid V-shaped bases.
  2. Confirm Volume Drying in Handle: Ensure volume shrinks on handle pullbacks.
  3. Execute at Pivot Price: Buy as price crosses pivot on heavy volume.