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One of the most important chart patterns for investors hunting for breakouts is the cup with handle . Sometimes, a good cup with handle will have an unusual look.
A common "mutation" can be found in the relationship between the left-side high of a cup base and the highest price within the handle itself. Among great stocks, in most cases, the highest price in the left lip exceeds the handle's high.
But if you study the 100 charts in Chapter 1 in the updated fourth edition of "How to Make Money in Stocks" by IBD founder William O'Neil, you'll discover that the 19-week cup with handle of Simmonds Precision in 1965 had a handle whose highest price overshadowed the left-side lip.
Simmonds went on to break out and triple in price before forming a new buy point less than a year later. Same goes for Monogram Industries, which built a 10-week cup with handle amid a giant run from 1966 to the end of 1967.
Fast-forward to today. LinkedIn (NYSE:LNKD), which made the list in Tuesday's IBD, tried to jump past a 232.38 buy point in a seven-week cup base on Nov. 3. The breakout fizzled after the stock hit a high of 238.77.
Now, it appears that LinkedIn has formed a downward-sloping handle with a new buy point of 238.87. That price exceeds the cup's 232.28 left-side high.
The decline in the handle so far is healthy at less than 10%. The online networking firm for recruiters and professionals ranked No. 19 in the Big Cap 20 in Tuesday's IBD.

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