When flipping through stock charts, an investor should look with a wide-angle lens.
Sure, a cup-with-handle base needs only seven weeks to be valid. But your focus shouldn’t be primarily on that almost-two-month range. Many cup bases consolidate for much longer — some up to a year or more. You don’t want to miss those longer bases.
The long cup can hold an advantage over shorter bases. Common sense suggests that the longer a stock consolidates, the fewer weak holders are present.
Uncommitted holders can be driven out two different ways. The anxious desire to break even can lead to selling. But weak holders also can be worn out by time.
In a short consolidation, the weak holders are probably holding shares through most of the base.
But if a stock consolidates over months or longer than a year, many weak holders will be driven out by their own impatience before the stock reaches break-even levels.
Other circumstances also can lighten the overhead supply.