1. Cup is centered on 01/04/2010: Handle went down to $9.54 on 07/06/2010 and broke out to 16.45 as of 10/25/2010 - forming the right side of the next cup.
2. The right side of cup 2 peaked at 16.45 after the previous breakout and forms a handle selling down to a low of 10.95 on 01/24/2011 and beginning its breakout from 11.95 on 06/20/2011 and running up to 33.73 on 10/31/2011 form the right side of cup 3.
3. Cup 3's right side peaks at 33.73 on 10/31/2011, forming the right side of the current cup. This cup then formed a handle from 10/31/2011 down to a low of 18.62 on 08/13/2012 and finally (did I say finally? - I meant FINALLY!!!!!!!!) starts to breakout as we speak.
Look at the 10 year - Where does it look like to you this breakout may lead. $39+ was the peak of the left side of the current cup pattern so a breakout isn't going to be a breakout unless $40 gets taken out...however now we're talking about a 10 year pattern - classic - and virtually identical to the other shorter two patterns characteristically, but a long term pattern - so it'll take time, but the way the last earnings announcement went...perhaps not that much.
About a year after this discussion was posted it seems even more relevant.
We're reaching a watershed of sorts for STMP. It survived the dot.bomb meltdown. Refocussed on the core of what this company is all about - efficiency for businesses of all sizes and the USPS's parcel post business which STMP helps facilitate. STMP has margins which are unheard of in most other businesses - meaning each quarter STMP goes CAAAA-CHING as the cash register closes on another wad of cash. STMP has a great deal of financial leverage as it has no debt and relatively high fixed costs which translates into more of each new dollar falling directly to the bottom line, and generating a ton of cash in the process.
All Longs need to do is wait for Wall Street to get more greedy than they are afraid of the big bad short sellers. Shorts have a lot of pricing power - they control it with the help of corrupt market makers and retail brokers who sell out their Sheeple clients by the flock. But as you can see by the longterm cup and handle pattern that has formed - what's been going around - is about to come around. This run is in it's infancy. EPS growth has been 30%+ compounded annually over several years now. The ttm PE is at about 15. The forward PE for 2014 is a joke at between 11 and 12 depending on what estimate you use for '14 EPS. Throw in a million share buyback and it gets even better (for Longs).
It's pretty obvious where this stock is headed longterm...
I don't put much stock in TA with that long of a time frame, especially not when said time frame includes the panic sell off that was the collapse of 2008/09. That is not to say that your observation on the formation isn't spot on, it's just to point out that I doubt it will have any influence on today's traders.
What I do find very significant is that today's price action took out the twice tested resistance level of $32.50. If we hold the $33+ level next week (allowing for temporary breaches due to traders using exceptionally tight stops), I think we will be off to the races. I'm also encouraged by the fact that yesterday's parabolic move was confirmed by today's trading, once again on well above average volume. If traders weren't inclined to take profits today, then it is my sincere opinion that this short squeeze may have just begun.
With regards to the next stop on a breakout, my analysis points to the $45-46 range. This, of course, assumes that the broader equity markets hold up, and that we don't have any macroeconomic surprises.
I don't put stock in TA either. Short duration or long. It's just analysis of what's already happened, no guarantee of what could happen - because anything can happen - in the market and out of it. But patterns tend to repeat in the market, in nature, in life...the fibonacci sequence, wives who nag their husbands about dirty socks, etc...
Your estimates of what could happen with STMP are somewhat lower than mine. Mine are based on what the fundamentals are showing. The growth in revenue and EPS. How the company has spent so much time positioning itself for growth. Macro economics driving the need for efficiency, and the fact that when you boil it down - that's exactly what STMP sells - efficiency - and they sell it for less than PBI and in an improved and constantly improving form. But I"m the resident cheerleader so you have to take what I say with a grain of salt - or maybe two on a good day.
What we have here is a convergence of opinions based on short term technical analysis, and long term fundamental analysis. In other words, Investors and Traders now find themselves on the same bullish page. Throw in a few powerful shorts who thought they were bullet proof and voila - you've got the makin's for one hell of a short squeeze.
In regards to the short side...they're gonna get what they have coming. Karma - you can run, but you can't hide, especially when the sharks smell blood...
Buy AND HOLD - It's always been a no brainer...fits me like a glove. g