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Tuesday, August 24, 2010


RDWR went through a mini crash in April, which formed the left side of a beautiful cup and handle pattern. When it formed the right side, and hit the stiff resistance at 24, the price relative line broke out, betraying strength. The handle had a fairly severe downslope, the only real flaw here, but if you look ath the trend line on it (the blue line), it supplied a higher risk breakout point just above 21. As it turns out, on re-reading How to Make Money In Stocks, O'Neil also recognizes that point as a breakout point, although he also describes it as higher risk,  Look at how beautifully CMF follows the big money: it started to decline well before the April peak, as there was selling into strength, then it troughed just after the base hit bottom and shot back up as accumulation started the right side of the base.

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