Background
We started breakoutwatch.com in 2001 to provide the CAN SLIM® investor
with rapid access to watchlists of stocks that were in the chart
patterns, such as the cup and handle, identified in "How to Make Money in Stocks" by William O'Neil
as being the ones
with the most potential on breakout. At the time, it was necessary to
subscribe to Daily Graphs and browse thousands of charts to find those
in the desired patterns. It also required a detailed understanding of
the various chart patterns in order to be able to recognize them. Once
you found the charts you then had to perform your due diligence to
determine which charts met the CAN SLIM® guidelines.
Breakoutwatch.com provided a unique service that combined
identification of the CAN SLIM® recommended chart patterns with an
evaluation of each stock's technical and fundamental condition against
CAN SLIM® principles. We originally called this evaluation our "CANSLIM
Evaluator" but were forced to change that term when Data Analysis, Inc.
successfully
registered CAN SLIM® as a trademark. Recognizing that we were
emphasizing technical analysis and adding timing to the methodology, we
adopted the CANTATA acronym standing for Current
earnings, Annual growth, New highs,
Technical Analysis and Timing
Assistance.
Since 2003 we have developed a daily history of stocks in the
cup-with-handle chart pattern (which appeared to be O'Neil's
favorite), and others, that have allowed us to compare the performance
of stocks that broke out from the cup-with-handle pattern against the
CAN SLIM® principles. This history covers over 60,000 cup-with-handle
patterns over seven turbulent years of bull
and extreme bear markets and allows us to draw some conclusions about
what works and what doesn't. Here are some of the most important areas
where we differ with CAN SLIM®.
Differences
There are areas where our research has confirmed some CAN SLIM® principles. These are:
Remember, these points of agreement and disagreement apply only to
breakout stocks,
not to all growth stocks that might be identified by the CAN SLIM®
method. However, since CAN SLIM® also emphasizes the importance of
timing your entry, we think these guidelines, when applied to CAN SLIM®
style stocks will produce better returns. You can verify this for
yourself using our cup-with-handle
backtest tool.
Summary
The criteria ideal for a strong breakout are:
After purchase:
Further reading from our weekly newsletter:
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with Investor's Business Daily or with Mr. William O'Neil.
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