Defining The Buy Point
A buy point is a price level at which a stock is most likely to begin a significant advance. It also points to an area of the chart that offers the least amount of resistance to price progress.
Where that point is depends on the type of base the stock has formed, whether a cup with handle, a cup without handle, a flat base or double bottom.
This is the critical moment. Identifying the correct buy point can make all the difference between a successful investment and a losing trade. And before you buy, always check that the Market Pulse table, updated every day in The Big Picture column, shows the current outlook as “Market in confirmed uptrend.”
Let’s look first at one of the easiest buy points to spot: one from a cup without handle.
In this type of base, the stock declines as much as 30% to 33% from a recent 52-week or all-time high, then starts to recover in a process that takes at least six weeks to complete. Once the ascent begins, there are no significant pullbacks, or anything that might be considered a handle.
The buy point on this pattern is easy: 10 cents above the peak in the left side of the pattern.
The flat base isn’t much different. When the stock recovers and is 10 cents above the base’s prior highest point, that’s when you jump in.