Rock-Tenn's Double Bottom Forms Handle

• Paul Whitfield
• On 5:43 pm EDT, Thursday October 22, 2009

Paper products company Rock-Tenn (NYSE:RKT - News) has formed a double-bottom base.

A double bottom is a W-shaped base. It involves a primary low, a middle peak and a second low that preferably undercuts the first low.

The usual buy point 19 the middle peak plus 10 cents.

Sometimes a double bottom can form a handle. Rock-Tenn's base has a handle, but there are two things to note about it.

First, the handle has more volume than desired. Ideally, volume in a handle should dry up. But there are two days in Rock-Tenn's handle that show volume about 40% heavier than normal.

The handle, nonetheless, has a potential buy point 15f 51.38. That's higher than the 50.88 buy point 20 the middle peak.

But when Rock-Tenn cleared the lower buy point, the stock reversed lower, closing below the buy point.

Sometimes a stock will cross the first potential buy point 14 weak volume. That means an investor shouldn't buy it when the stock flashes such a sign of weakness.

If it then goes on to surge past the second potential buy point 14 fast trade, the breakout becomes more credible.

Rock-Tenn's base shows good accumulation so far.