I have had several questions on how to make the handle to control a cable puppet. I have a tutorial on how to make a cable puppet, and how to make a cable puppet with moveable wings.
And since a picture is worth a thousand words...
In the handle drill a hole (big enough for the jacket to fit into) all the way through it. It may take some tries to drill it, flip it over then drill again, to get all the way through. Push the jacket into the handle a good ways into it, if not all the way. If it isn't tight and moves around then glue it in place. The jacket needs to be stationary.
If you are going to glue it, I like the two part epoxy. It comes in a double syringe type thing. Mix the epoxy according to the package and when it is thoroughly mixed, pull the jacket out a little and put a dab of it at the bottom of the handle. Then push the jacket back in.
Don't do this near where the cable comes out or you will end up stopping your cable from moving. Only epoxy the bottom of the handle!
Put a spring over the cable. Depending on the thickness of your cable you might be able to take a spring from an old ballpoint pen. You don't want anything too strong (like a trampoline spring.) This is just to return the head to the normal position instead of being stuck looking at the ceiling. You can find springs at a hardware store. Experiment with different springs until you find one you like. Just don't glue the knob on until you are sure.
In the knob, drill a hole just big enough for the cable to fit into. Don't drill all the way through. You just want enough to glue the cable into it. Then glue the cable into the knob. I recommend turning the knob upside down putting some glue into the hole then inserting the cable. Be very careful not to get any glue down into the jacket.
I know you are going to want to test it and make sure it works. Don't do it until you are sure the epoxy has cured all the way. There will be endless amounts of time to test it once the glue dries. If you try and test it before it is dry it will gum up inside the jacket and you will have wasted your time.
Don't give in to the temptation!
Once it is dry you should be able to easily turn your puppet's head, or push down on the knob to make the puppet look up.