Stocks are selected for inclusion on our cup-with-handle (CwH) watchlist in a two step process.

1. We first pre-select candidates that are common stocks (excluding closed-end funds) or index tracking funds which

• meet minimum price and average daily volume (ADV) requirements
• have shown outperformance to the market
• and are currently in consolidation.

These stocks, referred to as “Watchlist Candidates,” may be in the earliest stages of a cup with handle base even if they have not yet formed a handle, formed the handle at the appropriate spot in the cup with handle pattern, or formed a cup with handle pattern that meets all the desired characteristics simultaneously.

2. Watchlist Candidates are then tested to see if they meet the desirable cup with handle characteristics in anticipation of a potential breakout attempt on the next trading day. Those that meet all criteria are placed on our watchlist entitled “CwH Watch^SM.” Intraday breakout attempt alerts are issued only on stocks contained in CwH Watch.

Watchlist Candidates that do not meet all the required criteria are placed on our watchlist entitled “BaseWatch™.” [Available in a future release.] You may wish to monitor stocks in BaseWatch in order to get an early start on due diligence, but we do not issue intraday alerts for stocks in BaseWatch. If on a later date they meet all the necessary requirements, they will move to BreakoutWatch.

Watchlists are updated at the end of each trading day using closing prices and volumes. The watchlist date is “as of” the close on the date indicated. The watchlist is then used for trading on the following market day.
 

Watchlist Candidate Criteria

Item	Definition	Criteria
Current Close	Current closing price as of the date the watchlist is prepared.	>=$6 and >= 95% of 200 day moving average
Average Daily Volume	The average daily trading volume per day over the prior 50 trading days.	>=30,000
RSRank	Relative Strength Rank. The stock’s weighted price appreciation over the prior year, as ranked against all other stocks in our database.	>=60
Left Cup	Highest intraday high that marks the beginning of the correction.	none
Prior Low	Lowest intraday low prior to the Left Cup.	Rise from Prior Low to Left Cup >=30%
Base Low	Lowest intraday low within the Cup.	None
Cup Depth	Difference between the Left Cup and Base Low, expressed as a percentage of the Left Cup.	<=60%
% Retracement	Percent of the Cup Depth the stock has risen above the Base Low. For example, a stock which has fallen from Left Cup = 100 to Base Low = 45 has corrected (100-45) = 55 points. A 38% retracement requires that the stock recover 38% of the 55 points lost, or (0.38)*55 = 20.90 points. In this example, to meet the criteria, the Current Close must be >= Base Low + retracement, or >= 45 + 20.90, or >= 65.90.	Current Close >= 38% Retracement from Base Low
Cup to Date	Trading days between Left Cup and Current Close.	>= 25 days and <=325 days

CwH Watch Criteria

Item	Definition	Criteria
Current Close	The price at which the stock closed on the day it is included in CwHwatch. This is updated each day that the stock remains on the list.	>= $6
Average Volume	The average daily volume over the last 50 days	>=30,000
RSRank	The stock’s weighted price appreciation over the prior year, as ranked against all other stocks in our database.	>=70
Cup	Trading days between Left Cup and Current Close.	>=30 days
Handle	Action on the right side of the Cup in which the price has discontinued rising, falling back slightly in a tight consolidation. (see Pivot)	>= 2 days and <= 90 days *
Cup:Handle Ratio	The length of the cup relative to the length of the handle.	>= 3
Handle Low	Lowest intraday low within the Handle.	>= 99% of 200 day moving average
Pivot	Highest intraday high that marks the beginning of the Handle.	Must exist
Handle Depth	Difference between the Pivot and the Handle Low, expressed as a percentage of the Pivot.	<= 30%
Pivot % off Left Cup	Difference between the Left Cup and the Pivot, expressed as a percentage of the Left Cup.	<= +5% and >= -40%
Midpoint of Base	Price which marks half the distance between the Left Cup and the Base Low.	None
Midpoint of Handle	Price which marks half the distance between the Pivot and the Handle Low.	>= Midpoint of Base