From: canslim-owner@xmission.com To: canslim-digest@xmission.com Subject: canslim Digest V1 #62 Reply-To: canslim@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Monday, 27 January 1997 Volume 01 : Number 062 In this issue: [CANSLIM] (M)arket Re: [CANSLIM] Group Speed Re: [CANSLIM] Group Speed Re: [CANSLIM] Remec (REMC) Re: [CANSLIM] Breakouts (was: Re: [CANSLIM] (M)arket Re: [CANSLIM] Remec (REMC) Re: [CANSLIM] Breakouts (was: A question of strategy) Re: [CANSLIM] Remec (REMC) Re: [CANSLIM] Looking for breakouts Fw: [CANSLIM] Looking for breakouts [CANSLIM] Fw: Redneck computer lingo [CANSLIM] Fw: The Napeague Letter - January 26, 1997 Re: [CANSLIM] FAST Re: [CANSLIM] New Member Intro Re: [CANSLIM] A question of strategy [CANSLIM] Buy or sell: how do I know? Re: [CANSLIM] Buy or sell: how do I know? Re: [CANSLIM] Buy or sell: how do I know? See the end of the digest for information on subscribing to the canslim or canslim-digest mailing lists and on how to retrieve back issues. ---------------------------------------------------------------------- From: patrick.wahl@unpcbbs.cts.com (Patrick Wahl) Date: Sat, 25 Jan 1997 06:08:00 GMT Subject: [CANSLIM] (M)arket Here are a couple of things that may affect the market in the next two weeks. First thing is that the yield on the 30 year bond has risen from 6.3% to 6.9% in the last two months or so. Eventually a falling bond market (rising yields, falling bond prices) gets to be bad for stocks. On Tuesday the govt. will release the Employment Cost Index for the fourth quarter. If this is bad, inflation-wise, you'll know because the stock market will probably drop 100 or so points. Also coming up is the Jan. Unemployment report, due on the first Fri of Feb (two weeks from yesterday). Finally, the Fed meets in on Feb 4 and 5, and that is when they decide whether or not to raise interest rates. Possibly all these things will have a benign outcome, but just a few things to be aware of. If I were to guess, and I'm bad at this, the numbers released on Tuesday will not be bad enough to cause the bond market to tank, but won't give it any reason to go up either. ------------------------------ From: Joan Sherman Date: Sat, 25 Jan 1997 20:14:04 -0500 Subject: Re: [CANSLIM] Group Speed Craig, firstly, if I knew what this research information would provide for us I could answer with more thought. If the group decides this is a good thing, I would be willing to learn a spreadsheet process - note that I have no experience as yet, but would be game to learn - so, yes, help could be out there. Joanie Joan Sherman, /\~~~/\ /\~/\ /\~/\ and Pound Ridge > < Babe, ^ ^ ^ ^ Courtney and NY > * * < our Clapton, a Calico Samoyed and a Maine Coon Our wonderful rescues! And our newest sweet Sammy, Lucky! ------------------------------ From: shenli@global.california.com Date: Sat, 25 Jan 1997 17:45:19 -0800 (PST) Subject: Re: [CANSLIM] Group Speed Joan, Group speed is probably an attempt to see what industry is gaining momentum or is being rotating into favor. It is a measure of relative strength of an industry against the rest of the market. IBD has a paragraph of the 197 industry groups ranked on price performance in the last 6 month. Knowing the momentum it would point to what industry to buy before prices rise. All, please correct me if I am wrong or elaborate on it. I would be interested to see if there is anything to it. Shen ------------------------------ From: "tom worley" Date: Sat, 25 Jan 1997 21:55:48 -0500 Subject: Re: [CANSLIM] Remec (REMC) Zoran, good review and conclusions. One correction, the price of a secondary offering is set essentially when it is finalized, usually around the prior closing bid price. Unlike an IPO, there is no advance price setting or range. This is why some secondary offerings have been postponed or cancelled, the stock dropped too far from the announcement to the finalization. I personally will not buy a stock in which a secondary is announced and pending, unless the drop prior to the completion of the offering is excessive. I would prefer to wait until the offering is completed, then buy immediately thereafter if I really like the stock. In this case, the co was probably delighted that they could do the offering at $23 since that was several dollars higher than the price when the secondary was announced (not the usual scenario). Whatever led investors to buy this stock and drive it up was not the anticipation of the secondary at $23. tom w - ---------- > From: Zoran Mitrovski > To: canslim@xmission.com > Cc: Zoran Mitrovski > Subject: [CANSLIM] Remec (REMC) > Date: Saturday, January 25, 1997 1:57 PM > > Joan wrote > > 2. The breakout from 20 must have occured because Wall St knew ahead > that the price for the offering would be 23. ------------------------------ From: "tom worley" Date: Sat, 25 Jan 1997 22:01:04 -0500 Subject: Re: [CANSLIM] Breakouts (was: My definition of a breakout is a rise above a well defined base where the new price takes the stock above any recent overhead supply. Usually, but not always, this translates into a new 12 month high (anything older than that is insignificant to me). Volume should be at least 150% of avg daily vol. tom w - ---------- > From: Patrick Wahl > To: canslim@xmission.com > Subject: [CANSLIM] Breakouts (was: > Date: Friday, January 24, 1997 9:57 AM > > A breakout is generally a new high relative to forever, possibly, or at > least to the last 7 or 8 months under less ideal circumstances. The new > high is also accompanied by heavy volume. Last Friday Ascend broke out > of a fairly loose base on 10 million shares, for example. ------------------------------ From: "tom worley" Date: Sat, 25 Jan 1997 22:14:11 -0500 Subject: Re: [CANSLIM] (M)arket Patrick, take the Fed's Feb meeting out of your equation and focus on the other reports in preparation for the March Fed meeting. No change in Feb. tom w - ---------- > From: Patrick Wahl > To: canslim@xmission.com > Subject: [CANSLIM] (M)arket > Date: Saturday, January 25, 1997 1:08 AM > > On Tuesday the govt. will release the Employment Cost Index for the > fourth quarter. > Jan. Unemployment report, due on the first Fri of Feb (two weeks from > yesterday). Finally, the Fed meets in on Feb 4 and 5, and that is when ------------------------------ From: Zoran Mitrovski Date: Sat, 25 Jan 1997 23:55:45 -0500 (EST) Subject: Re: [CANSLIM] Remec (REMC) Tom wrote: > Zoran, good review and conclusions. One correction, the price of a > secondary offering is set essentially when it is finalized, usually > around the prior closing bid price. Unlike an IPO, there is no > advance price setting or range. [...] Tom, thanks for the most valuable correction. I just learned another important thing. What could I possibly say except: "Ooops!" and just repeat that all my advice is probably worth less than what anyone payed for. ;^) Cheers, Zoran ------------------------------ From: Johan Van Houtven Date: Sun, 26 Jan 1997 13:07:43 +0100 Subject: Re: [CANSLIM] Breakouts (was: A question of strategy) Tom, Maybe you misunderstood. At least that is the impression I got when reading your reply. I was referring to a FREE program. I.e. the email program named Eudora Light, is free. If you like it and want a email program that is even more powerfull you can BUY Eudora Pro. I use the free Eudora Light and I am happy with it. The Netscape I was referring to is NetScape v3.0. It's email program is very basic and easy for novices. (I was NOT talking about freenet services or 'free email'. I was talking about the programs that one uses to write, post and manage your emails with.) At 02:00 PM 1/25/97 -0500, you wrote: >I dumped Netscape (2.0?, the latest version anyway) because of >problems with it. I've been much happier with InternetExplorer, altho >just recently learned how to reduce the word wrap length so it stayed >manageable on posting/reposting. >And judging by the bounce-back I am getting on mail to Dennis Lehman, >can't recommend or encourage anyone to use "free email" or freenet >svcs. > >tom w > >---------- >> From: Johan Van Houtven >> To: canslim@xmission.com >> Subject: RE: [CANSLIM] Breakouts (was: A question of strategy) >> Date: Saturday, January 25, 1997 10:53 AM >> >> At 08:11 PM 1/24/97 -0500, you wrote: >> >Sigh, god save me from microsoft mail programs... >> want to try the FREE email program Eudora Light 1.5.4. You can find >it at: >> >> http://www.qualcomm.com/quest/ (if I remember correctly). >> >> Or use the simple email program that comes with NetScape. >> > > ------------------------------ From: "tom worley" Date: Sun, 26 Jan 1997 08:51:58 -0500 Subject: Re: [CANSLIM] Remec (REMC) Zoran, your advice is always good and well researched. Your CANSLIM picks and comments are excellent and certainly not that of a novice, probably because you take the time to do your homework and check things out against the CANSLIM principles. With all my years in investing and working in the industry as a broker and running the "back office", I still learn something every day. tom w - ---------- > From: Zoran Mitrovski > To: canslim@xmission.com > Cc: Zoran Mitrovski > Subject: Re: [CANSLIM] Remec (REMC) > Date: Saturday, January 25, 1997 11:55 PM > > Tom, thanks for the most valuable correction. I just learned another > important thing. What could I possibly say except: "Ooops!" and just > repeat that all my advice is probably worth less than what anyone > payed for. ;^) > > Cheers, > Zoran ------------------------------ From: Johan Van Houtven Date: Sun, 26 Jan 1997 18:43:24 +0100 Subject: Re: [CANSLIM] Looking for breakouts I don't have a written in stone, matematically strict, approach (yet). But this should give you an idea of what I look for. 1) Make a list of CANSLIM stocks 2) Look at charts of these stocks 3) Make list of the ones that are in a consolidation/basing trend. Example: A handle on a cup. 4) Note the average daily volume of the stocks. Note the price at which you will buy the stock. Often this is a new all-time high or a high for the last x months. The value of x is differnet for every stock. Just look at the chart and determine is some of the old overhang supply is still significant. The older it is the less significant it becomes, IMO. Look for a significant % increase in daily vol. Minimum 150%. 5) Put these stocks in watch list and monitor intraday. After a while you get a feel for when a stock is going to take off intraday. Aditionally I look for large block buys. For some stocks a large block buy is 5 to 10K, for others it is more. Depending on avg daily volume. Important note: The 'M' in CANSLIM. If the 'M' is currently not clear, be VERY careful. Example: Last Thurday and Friday I was NOT looking for breakouts. I was going to cash. I'm now completely in cash. Thank God. I was glad that I saved a lot of profit when I looked at the Friday closing prices. I'll be on the sidelines until a uptrend has been established again. Non-CANSLIM note: I have used step 2, 3, 4 and 5 in buying mid or big cap stocks the last few weeks as money mangers were pouring money into these stocks. In step five I then look for > 50K block buys and preferably lots of them. :^) Warning: Since I'm still learning myself, please value this 'advice' close to what you payed for it. Deepak wrote: >Zoran and Johan, > >It would be helpful if you use examples for us novices to explain >the breakout the way you folks use it. Craig has been doing a fine job >in explaining such concepts. But I have the impression that your >definition is somewhat different. > >Thanks, >Deepak > > ------------------------------ From: "Dean Edwards" Date: Mon, 27 Jan 1997 11:50:58 +1300 Subject: Fw: [CANSLIM] Looking for breakouts I went into 100% cash and sold all my US stocks on Friday as well. I've never gone this crazy before and sold everything. But I got shaken out by the market conditions. I've got a healthy profit so I can afford to wait on the sidelines for a long time. My New Zealand stocks have gone down in sympathy with the US market already. NZ is a day ahead of the American market. A US Friday is a NZ Saturday. I happen to be on holiday and brought my computer with me. I can't trade over the internet with NZ stocks. So I'm in a hole with my NZ stocks, if the market slides. However if the US bull market resumes its normal course and takes off next week with a hiss and roar, I'll be back! I already have a shopping list for the stocks I want to buy, this is after my holiday of course! - ---------- > From: Johan Van Houtven > To: canslim@xmission.com > Subject: Re: [CANSLIM] Looking for breakouts > Date: Monday, January 27, 1997 6:43 AM > > Important note: The 'M' in CANSLIM. If the 'M' is currently not clear, be > VERY careful. Example: Last Thurday and Friday I was NOT looking for > breakouts. I was going to cash. I'm now completely in cash. Thank God. I was > glad that I saved a lot of profit when I looked at the Friday closing > prices. I'll be on the sidelines until a uptrend has been established again. > > ------------------------------ From: "tom worley" Date: Sun, 26 Jan 1997 22:57:38 -0500 Subject: [CANSLIM] Fw: Redneck computer lingo Hope no one is offended, but I found this hilarious. - ---------- > From: tom worley > To: > Subject: Redneck computer lingo > Date: Sunday, January 26, 1997 10:54 PM > > Hard Drive - trying to climb a steep, muddy hill with 3 flat tires > and pulling a trailer load of fertilizer > > keyboard - place to hang your truck keys > > window - place in the truck to hang your guns > > floppy - when you run out of polygrip > > modem - how you got rid of your dandelions > > ROM - delicious when you mix it with coca cola > > byte - first word in a kiss-off phrase > > reboot - what you do when the first pair gets covered with barnyard > stuff > > network - activity meant to provide bait for your trout line > > mouse - fuzzy, soft thing you stuff in your beer bottle in order to > get a free case > > LAN - to borrow, as in "Hey delbert! LAN me your truck!" > > cursor - what some guys do when they are mad at their wife and/or > girlfriend > > bit - a wager as in, "I bit you can't spit that watermelon seed > across the porch longways" > > digital control - what your fingers do on the TV remote > > packet - what you do to a suitcase or Wal-Mart bag before a trip > > enjoy > > tom w ------------------------------ From: "tom worley" Date: Mon, 27 Jan 1997 06:59:10 -0500 Subject: [CANSLIM] Fw: The Napeague Letter - January 26, 1997 For those that don't get this, thought this part on Russel 2000 might be of interest. tom w - ---------- > Subject: The Napeague Letter - January 26, 1997 > Date: Monday, January 27, 1997 12:29 AM > > . THE NAPEAGUE LETTER > Sunday, January 26, 1997 > > Editor: Bob Davis rmdavis1@ix.netcom.com > > THE JANUARY EFFECT: > Well, I have to admit that so far in 1997 there has not been an > obvious “January Effect”, when small-cap stocks rebound sharply > after the end of year-end tax selling. > > However, I’ve taken a quick scan through the Russell 2000 daily > charts for the last several years. This showed me that, while each > year has had a “January Effect” of some type, the “Effect” has > taken several different forms. Last year in 1996, the Russell 2000 > declined until mid-January, and then began a 21% run-up which > lasted until mid-May. For 1995, 1994 and 1992, the Russell 2000 > hit a low in mid-December of the previous year, but the “January > Effect” run-up ranged from 9% to 25% and in 1995 it lasted until > May. In 1993, the Russell 2000 began its move upward in > October, plateaued in December, and then ran another 8% until > mid-February. > > So far this year, the Russell 2000 is up about 4.5% in the last > month, and this is not exactly weak performance as compared to > the last several years. ------------------------------ From: Haw-Jye Shyu Date: Mon, 27 Jan 1997 10:10:04 -0500 (EST) Subject: Re: [CANSLIM] FAST Tom: I used to own CU, but was stop out couple months ago when it drop below $22.00. As I emntioned before, I lost about 8% on CU and psychologically it is difficult for me to get in again. Can you provide any suggestion to people like me who got stop out of a good stock and have mental poblem to get in again. Thanks! HJS - ----- Begin Included Message ----- From canslim-owner@xmission.com Fri Jan 24 22:51 EST 1997 From: "tom worley" To: Subject: Re: [CANSLIM] FAST Date: Fri, 24 Jan 1997 22:35:08 -0500 X-MSMail-Priority: Normal X-Priority: 3 MIME-Version: 1.0 Content-Transfer-Encoding: 7bit For what it's worth, I have held, and continue to hold, a position in CUC Int'l (CU on NYSE) cuz of it's consistent earnings record, rev growth, internet connections, etc despite a relatively high PE. I use it as my "portfolio stabilizer" as I don't mind individual stocks running way up and down, but I do like the overall portfolio valuations to be more consistent and less volatile. While I have used CANSLIM principles on occasion to either take profits or add to the position, I generally use value approaches since I am in it for the long term. But there is no insurance policy that is effective against a steady, consistent performer when they hit you between the eyes with a surprise like that. If you weren't already stopped out, then the best bet is to examine carefully the SEC filing and decide if this was simply a one time occurrence or a new pattern, then act accordingly. tom w - ----- End Included Message ----- ------------------------------ From: "Robert Gammon" Date: Mon, 27 Jan 97 09:27:43 +0500 Subject: Re: [CANSLIM] New Member Intro On Fri, 24 Jan 1997 21:31:03 -0500, tom worley wrote: >Thanks for the intro Robert. I too check in at misc.invest.stocks and >every now and then am forced to speak up. Occasionally there is even >some good info there. Does your education or employment/industry >experience lend any thoughts to the high growth stocks (HGS) and >technology? From where I sit, like many others with a tech degree (BSEE myself), working in a high tech area (semiconductors - aka chips), my view of the HGS, and tech stocks is significantly distorted. My employment is in Digital Signal Procesors. I see the data/voice communications markets, computer disk drives, and whole host of smaller markets and market opportunities. As such, it was possible to see a glimmer of the coming success of US Robotics in the early 90s, IOmega before the runup in 1995-6, Seagate, Conner, Micropolis, as well as the loosers like Worlds of Wonder. I see the hype, and the core glimmer of a possibility in Amati. However, these plays are NOT CANSLIM type plays, for the msot part. The positions, when taken, are generally NOT quick hits. You tend to get in too early, and must wait. OTOH, a patient person who was aware of IOmega in the late 80's and early 90's, who saw one of the Zip drive presentations at one of the large User Group meetings in 1994, and saw the reaction of the crowd, AND took action to buy, would be up 3300%!!! or more (based on share prices as of 12/31/94 and 1/24/97). Of course, selling out near the top in 1996 would have been even better. I have seen several of these come and go when I was in a position to act on the information that I had (none of it could in any way be considered insider information) and didn't do so. My resolve (and finances) are stronger now, so I am listening and looking for the new ideas that might catch FIRE!! I hope to get on-board one or more of them and hang on for one of these wild rides. *----------------------------------------------------------------------* Robert Gammon My opinions are my own. In no way do rgammon@micro.ti.com I represent the views of my employer Using OS/2 Warp Connect, and a user of every version of OS/2 since v1.0 *----------------------------------------------------------------------* ------------------------------ From: Haw-Jye Shyu Date: Mon, 27 Jan 1997 10:35:12 -0500 (EST) Subject: Re: [CANSLIM] A question of strategy Zoran, 1) What you describe, namely 'buying breakouts and getting out a few days later' is one of the things that make perfect sense in theory but difficult to do in the real world. At least I can not do it. - I suppose I am a nay sayer! if you read O'neil's book, he hold some of his picks over 2~3 years of period to see them growing and growing. And that's why you would be able to have over 100% return rate with minimum cost. 2) On the other hand some of the traders in the book named Market Wizards were able to do that kind of trading consitently and was successful. All those guru traders have immense knowledge of market and sens of value (basically, they eat and sleep in the market) which allow them be able to spot good "value", make trade decisions and execute them instantly. Further, they have big pot of money to operate, the volumn itself allows them to make 5~10% profit. And these 5~10% profit is huge money that we are talking about. According to a recent news report, a Vietnamese Engineer, with the help of internet, was able to do that kind of trading and make big profit in short period of time (during the past 5 years), if I remember correctly. He trade only high tech stocks. HJS ------------------------------ From: "Jay Cliburn" Date: Mon, 27 Jan 1997 08:38:12 -0700 Subject: [CANSLIM] Buy or sell: how do I know? Is there any way to tell when a large block trade (or *any* trade, for that matter) which executes between the bid/ask spread is a buy or a sell? Regards, - -- Jay Cliburn | Space Dynamics Laboratory Computational Sciences Division | 1747 North Research Park Way Jay.Cliburn@sdl.usu.edu | Logan, Utah, USA 84341 (801) 755-4317 (voice) | (801) 755-4366 (fax) ------------------------------ From: Zoran Mitrovski Date: Mon, 27 Jan 1997 13:06:38 -0500 (EST) Subject: Re: [CANSLIM] Buy or sell: how do I know? Jay wrote: > Is there any way to tell when a large block trade (or > *any* trade, for that matter) which executes between > the bid/ask spread is a buy or a sell? How could it be a buy without at the same time being a sell for the opposite side, and vice versa? I sure believe it MUST be both. Zoran ------------------------------ From: "Jay Cliburn" Date: Mon, 27 Jan 1997 13:40:28 -0700 Subject: Re: [CANSLIM] Buy or sell: how do I know? > Jay wrote: > > > Is there any way to tell when a large block trade (or > > *any* trade, for that matter) which executes between > > the bid/ask spread is a buy or a sell? > > How could it be a buy without at the same time being > a sell for the opposite side, and vice versa? > I sure believe it MUST be both. > > Zoran I'm not sure what to make of this answer, so I'll provide clarifying information. The perspective from which I framed my question was that of you or me -- not from the perspective of a market maker. I apologize for not making this point in my original query. As investors, you and I buy from and sell to a market maker. If I'm watching a CANSLIM stock whose volume averages 10,000 shares per day for ten weeks, then I see a rash of 30,000+ share trades that fall between the bid and ask prices, I'd be really interested to learn if those trades were big investors BUYING the shares or SELLING the shares. If trades are made at the bid price, I can be reasonably assured that the trades are sales TO the market maker. Maybe I'm wrong, but I like to call these "sells." Similarly, if trades are made at the ask price, it is likely that the trades are purchases FROM the market maker. I -- perhaps naively -- call these "buys." If the trades fall BETWEEN the bid/ask price, I know nothing about the transactions except that shares traded hands. I'd like to know which way the trades are going. Does that help clarify my original question? - -- Jay Cliburn | Space Dynamics Laboratory Computational Sciences Division | 1747 North Research Park Way Jay.Cliburn@sdl.usu.edu | Logan, Utah, USA 84341 (801) 755-4317 (voice) | (801) 755-4366 (fax) ------------------------------ End of canslim Digest V1 #62 **************************** To subscribe to canslim Digest, send the command: subscribe canslim-digest in the body of a message to "majordomo@xmission.com". If you want to subscribe something other than the account the mail is coming from, such as a local redistribution list, then append that address to the "subscribe" command; for example, to subscribe "local-canslim": subscribe canslim-digest local-canslim@your.domain.net A non-digest (direct mail) version of this list is also available; to subscribe to that instead, replace all instances of "canslim-digest" in the commands above with "canslim". 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