From: canslim-owner@xmission.com To: canslim-digest@xmission.com Subject: canslim Digest V1 #106 Reply-To: canslim@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Monday, 3 March 1997 Volume 01 : Number 106 In this issue: [CANSLIM] Internet Trader [CANSLIM] New Member Re: [CANSLIM] back-testing CANSLIM Re: [CANSLIM] Re: 2/21/97 market comments response [CANSLIM] Garzarelli & posting delays Re: [CANSLIM] back-testing CANSLIM Re: [CANSLIM] Market Comments, week ending 2/28/97 Re: [CANSLIM] MENS anaylsis [CANSLIM] JPMX Re: [CANSLIM] back-testing CANSLIM [CANSLIM] Internet Trader Re: [CANSLIM] Internet Trader [CANSLIM] Market Comments, 3/3/97 Fw: [CANSLIM] ALAB [CANSLIM] SGMA Re: [CANSLIM] Internet Trader Re: Fw: [CANSLIM] ALAB Re: [CANSLIM] TAGS - When to sell [CANSLIM] Missing Posts 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: Mike Artobello Date: Mon, 3 Mar 1997 07:51:15 -0800 (PST) Subject: [CANSLIM] Internet Trader Craig Griffin wrote: >Could you post the WWW address for the Internet Trader. Thank you in >advance. The address is http://www.papyrus.com Internet Trader is free, the service is free, and support is free. It's a good program, but has a few bugs which they are working on. Not sure how long it will remain free. They also have a realtime version for a fee. There's also a discussion group for IT on Silicon Investor. I've been using it for a couple months and really like it. Regards, Mike ____________________________ Mike Artobello (Concord, CA) email: marto@ccnet.com WWW: http://www.ccnet.com/~marto ------------------------------ From: jeff@scrooge.idec.sdl.usu.edu (Jeff Salisbury) Date: Mon, 3 Mar 1997 09:13:00 -0600 Subject: [CANSLIM] New Member - --- Forwarded mail from owner-canslim@xmission.com Hello, I've just discovered this e-mail thread on CANSLIM and hope it proves to be more serious than other "bulletin-board" related methods for discussing CANSLIM stocks and methodology. I am an individual investor who uses the investment research tools available on AOL and the web. I also use TC-2000 for technical analysis as well as Subscribe to IBD. I am a firm believer in the methods of O'Neil, and find that re-reading the 'red' book every so often brings me back on-track from other riskier endeavors. I live in Connecticut and also enjoy racing my JY15 sailboat as well as cruises in my 1964 Chris Craft. Hope I can both learn and add to investment ideas here. KrumGarv@aol.com - ---End of forwarded mail from owner-canslim@xmission.com ------------------------------ From: Zoran Mitrovski Date: Mon, 3 Mar 1997 11:14:54 -0500 (EST) Subject: Re: [CANSLIM] back-testing CANSLIM Tom wrote: > I'm not sure I understand the question. I do recall that O'Neill > initially developed his approach starting with known successful > stocks, then analyzing back thru time for those characteristics that > might have predicted the future success. Are you asking whether > CANSLIM has been tested against other methods? Or are you asking > whether it is capable of using present day known characteristics to > successfully predict future performers? > > tom w Tom, my main question was not any of your last two. Here's what I mean. Say I notice a pattern of action by which stocks start moving up after their 50dma crosses their 200dma in the upward direction. Then I decide to write a book named "Making Money in Stocks" where I describe what I have found out and as a "proof" I give 30-50 examples from the past 20 years where the system has worked perfectly and yielded astonishing profits. My claim basicaly would be: "I looked at successfull stock moves at the past and what I noticed was that there are many of them that went up after the 50dma crossed their 200dma in the upward direction." That's very nice, and I guess people will buy the book and start practicing the "new" religion, but a main question is overlooked in this scenario: "It is fine that all your examples show success after the dma crossing event occured, BUT can you claim with a high enough certainty that EVERY TIME the dma crossing event occured there is going to be a successful upward move in the price?" My answer to that would be a plain NO. Do you notice the difference? It is one thing to look at the winners and try to define the intersection of parameters and conditions that they share, but it is totally another thing - -- after you had defined the set (system, method) -- to test it back in time on a sample of stocks that are OUT of the sample space of stocks that helped you derive your system. If O'Neil gives us examples of winning stocks that satisfy his criteria, that doesn't show or prove that ANY stock that had satisfied that same criteria at some point in time would show the same rate of success as his chosen set of examples. The only way to check this is to do a CANSLIM search on ALL the stocks sufficiently back in time and see the statistical performance of the method through success/failure ratios, and other measurement parameters. A simple starter question: What is the probability that a stock featuring - - 99 99 99 A, - - a perfect breakout from a perfect base, - - in a perfect bull market, and - - and everything imaginable lined up in O'Neil's favor will yield a profitable trade? Then how would this maximum probability change as the various parameters change their values? The only way to answer these questions would be to let the method (system) search ALL the stocks for the past 50 (or so) years looking for the ones that satisfy the input (CANSLIM) parameters and count the successful trades against the total number of attempts. And this is only to answer the above simple questions. More complex questions are still waiting in terms of optimal position sizes, points of exit/reentry, etc. And O'Neil has not done that. What he has done is looking at (a limited set of) winners and defining a set common denominators found in each and every one of them. By no means he claims that EVERY TIME (or within a certain MEASURED range of probabilities) the conditions are satisfied, you would be looking at a winner. By no means I want to imply that CANSLIM is no good. It has made me a great deal of money lately however my above opinions remain as strong as ever. I hope I made myself clearer now. If not, then I'm sorry cause I spent a good half hour typing this. Cheers, Zoran ------------------------------ From: jeff@scrooge.idec.sdl.usu.edu (Jeff Salisbury) Date: Mon, 3 Mar 1997 09:14:56 -0600 Subject: Re: [CANSLIM] Re: 2/21/97 market comments response - --- Forwarded mail from owner-canslim@xmission.com Subject: Re: [CANSLIM] Re: 2/21/97 market comments response Priority: normal X-mailer: Pegasus Mail for Windows (v2.33) Message-ID: <19970301185250.AAC11642@LOCALNAME> > From: "David F. Cameron" > You are obviously 100% right - in that since you posted > this, the NASDAQ is off 4% to the DOWs 2%. Is it just > because at the first sign of decent profits, funds will > sell techs as Unsustainable - but hang on to Dow stocks? > I don't know the whole explanation, but I think part of it is that a lot of the money that is gushing into the market is flowing into index funds. Index funds don't make any decisions about what to do with the money, they are always fully invested. Therefore, every time they get money, it goes into the S&P 500. - ---End of forwarded mail from owner-canslim@xmission.com ------------------------------ From: "David F. Cameron" Date: Mon, 03 Mar 1997 11:16:46 CST Subject: [CANSLIM] Garzarelli & posting delays I received the following re: Garzarelli. Thought all you Elaine fans would find it informative. In addition, I am having posting delays - but everything I've posted has made it through. The annoying thing is that sometimes it has taken days to get through. Late last week, for example, I posted a message asking for opinions on the divergence btwn. NASDAQ & S&P/DOW. The posting took over 24 hours - and looked dumb in retrospect because by the time it made it through - several posters had posted messages that were closely related. BTW, it is now 11:20 AM CST (5:20 PM GMT) 3-3-97 Dave Cameron dcameron@harper.cc.il.us - ------------------------------ > >Date: Sat, 1 Mar 1997 14:37:05 -0500 (EST) >From: Stephen Brodeur >Subject: Experience with Gazarelli newsletter > >Hi- > >** WARNING** Somewhat long and boring ***WARNING ** > >Last December I decided to 'bite' when the latest propaganda arrived from >Elaine Gazarelli- I signed up for the _Gazarelli Outlook_ Inner Circle >Club. I reviewed the material and the service, but I did not alter my >investments (whew!). I have completed my test drive and discontinued the >service and requested a refund. This is a [longish] review of my experience. > >Elaine Gazarelli had been the most talked-about market timer, up until last >May or so, anyway. She has a model that had quantitatively [crossing a >threshold value calculated from her model] predicted the last several major >market corrections. The most recent prediction, which began last May at the >*bottom* of the market dip and ended in January, was a false alarm. Elaine >recommended getting *out* of equities at that time, and staying out until >January. Any followers who took her advice lost out on the significant >market growth of the last 6 months or so. > >The first information package gave a little more information about the >areas used as the basis of the prediction model and their relative weights. >This was not sufficiently detailed so that you could just code it up to run >on your own, but it did give some inkling as to what things were considered >important. It also described Elaine's recent history and the evolution of >the model. > >In addition to the very sweeping recommendation of 'sell all equities' or >'buy back now', the newsletter did offer some tempered versions of the >advice. For example, there were some categories or sectors that were ok to >hold, if you must hold on to something (but for heaven's sake, don't buy >more!). If a subscriber kept at least some of their holdings, they wouldn't >have missed the boat completely. Also, the subsequent 'buy' signal came >with some suggested sectors and specific stock picks to snap up right away, >said to be 'poised for particularly good growth, as they have already been >beaten down' (my paraphrasing). So there's some generic >stock-picking-newsletter stuff mixed in with the market timing advice. > >The newsletter also came with a special service that called me with a >recording whenever a special alert was issued. This is to allow the >subscriber to take immediate action, before word leaked out to the >non-subscribers. I must admit, this service worked as advertised. I >received a recorded voice message at each of two designated phone numbers >when the buy signal was issued. This was followed by a special edition of >the news flash 2-3 days later via USPS, with specific buy recommendations >[and an offer to extend my subscription for an additional year at a reduced >price....;) ] >In addition, there is a special hotline for subscribers to call if they get >antsy and want more details in between monthly newsletters and special >alerts. The call-in line is a regular toll call [not 800, but not 900 >either] and is updated approx. weekly. I found this to be a lame 3-5 minute >summary of the the financial news items of the week (cpi release, new >housing starts, meetings of the Fed...), followed by the latest >Gazarelli-model value and a reminder of whether we should all be in the >market or out of the market. The news I heard on the radio while commuting >during the week was more informative. > >Overall, the service provided everything they said they would, except the >performance of the recommendations was HORRIBLE! > >** Chalk up another win for the market (vs. the market timers)!! ** > >I didn't even learn anything as a result of reading through the material. I >*WOULD NOT* recommend that anyone subscribe. Instead, spend your money >*and time* on becoming educated about how to choose your investments, and >then make informed decisions for yourself. > >Enough. Sorry to be so long. > >- -Steve Brodeur (x2496) > ------------------------------ From: pwahl@postoffice.worldnet.att.net Date: Mon, 3 Mar 1997 13:04:33 -0800 Subject: Re: [CANSLIM] back-testing CANSLIM > From: Zoran Mitrovski > I spent Saturday reading two issues of "TA for Stocks and > Commodities" and a question popped out in my head. Namely, > a prevalent opinion there was that there are hundreds of > strategies and systems out there and many gurus find it amusing > how masses of traders fall for methods that have only been > "proven" by a properly picked out set of past successful > examples. On the oposite end, what really counted as a This is especially pertinent to the world of futures trading, where there are probably hundreds of systems for sale at around $3,000. There were enough of these systems that someone started a group, called Club 3000, for traders who had been burned by the purchase of systems that never made any money for them in real world trading. Turns out many of them were based on flawed test methodology, where they were optimized over a small data set, and once in new market conditions, fell apart. > I guess, one would run into difficulties quantifying the > weights and the "desirability" coefficients for say, "N" > and "M", but I find it very challenging and interesting to > try and make a totally numerical system out of CANSLIM by > using the abundance of numerical market data (prices, indices, > coefficients, etc.) out there. You ask many good questions, Zoran. I don't know of any attempt to test the canslim methodology. I think that given the proper database, which is no small problem in itself, it would be possible to quantify the rules to a degree that would permit a test that would generate results that would at least be somewhat indicative of the results you could expect from CANSLIM. The big problem would be identifying proper bases, since pattern recognition is a difficult thing to program into a computer. Also, the N is a something that you aren't going to put into the computer, so one less filter to your backtesting. The bottom line is - I think you could come up with a fairly good approximation of CANSLIM rules and backtest them, IF you can come up with a sufficiently comprehensive database. This probably leads you to Telecan, which, I believe, offers a lot of what you are looking for. ------------------------------ From: pwahl@postoffice.worldnet.att.net Date: Mon, 3 Mar 1997 13:04:33 -0800 Subject: Re: [CANSLIM] Market Comments, week ending 2/28/97 > Good luck hunting. Remember it's a minefield out there, the latest > was Cyrix, down to $10 from this years high over $50 on news that > Microsoft may include many of its "Winframe" features in NT software. > Oops, I think you mean Citrix. Cyrix has actually been pretty strong lately, after Compaq announced a $1,000 computer using a Cyrix 133 chip. ------------------------------ From: PPNewell@aol.com Date: Mon, 3 Mar 1997 16:17:48 -0500 (EST) Subject: Re: [CANSLIM] MENS anaylsis There is no volume with the cup and handle forming so I would agree that this is not an immediate CANSLIM purchase. However, this may be one to watch 40% ROE and a call to the investor relations can tell you if they are expanding or not, if so its a proven concept that Peter Lynch advocates buying and holding. Also, impressed by strength/stability in a down and volatile market. I've seen the pattern before with stocks like VIAS where there would be total boredom low volume, sudden volume search with minimal up movement, total boredom etc until it caught, which is what CANSLIMers wait for. VIAS tripled by the way. Good chart to research. Peter Newell ------------------------------ From: PPNewell@aol.com Date: Mon, 3 Mar 1997 16:35:54 -0500 (EST) Subject: [CANSLIM] JPMX Looks like JPMX is forming a cup, high 23ish, a quick trade down to 14 1/2 and back up, and declining volume. Any thoughts, Peter Newell ------------------------------ From: Zoran Mitrovski Date: Mon, 3 Mar 1997 17:43:18 -0500 (EST) Subject: Re: [CANSLIM] back-testing CANSLIM [Waited 5 hours. Didn't find it in the archives. Reposting.] Tom wrote: > To add to an excellent response, chart reading is ultimately > subjective. Everything else, esp that which is done by computer > analysis, only takes you to the point of having to look at fewer > charts. Well, if "fewer" with time becomes "only one that satisfies every condition I told my computer to look for", there goes your subjectivity, Tom. ;^) Cheers, Zoran ------------------------------ From: KrumGarv@aol.com Date: Mon, 3 Mar 1997 18:28:28 -0500 (EST) Subject: [CANSLIM] Internet Trader Just went to web site of Internet Trader. Was bummed to find it requires Windows 95 or Windows NT. I am still using Windows 3.1 . Oh well, maybe not for long.... Krum ------------------------------ From: "tom worley" Date: Mon, 3 Mar 1997 20:51:51 -0500 Subject: Re: [CANSLIM] Internet Trader So far, I've downloaded two different versions of their software and still can't get logged on. Haven't had the time lately to fight it any more. Maybe next weekend?? tom w - ---------- > From: Mike Artobello > To: canslim@xmission.com > Subject: [CANSLIM] Internet Trader > Date: Monday, March 03, 1997 10:51 AM > > Craig Griffin wrote: > > >Could you post the WWW address for the Internet Trader. Thank you in > >advance. > > The address is http://www.papyrus.com > > Internet Trader is free, the service is free, and support is free. It's a > good program, but has a few bugs which they are working on. ------------------------------ From: "tom worley" Date: Mon, 3 Mar 1997 21:37:51 -0500 Subject: [CANSLIM] Market Comments, 3/3/97 Well, the NAPM report is now behind us, beat estimates by a 0.1% (53.1%, expected was 53.0%, up from January's 52.0%). Next we have the unemployment/jobs report on Friday, which already is indicated as above expectation. In fact, the dollar nearly broke thru resistance against the German mark due to expectations of a rate hike here from strong jobs nrs against the stagnant German economy which may lead to a rate cut, thus further increasing the yield spread between investing in USA vs Germany. Gold held its new levels over $360, techs showed a strong bounce, but I don't expect it to last. Other groups that have recently tried leadership showed their lack of endurance. Bond mkt continued to adjust to expectations of higher rates ahead. I'm still sniffing around the COMS/USRX deal, trying to find out what's wrong with it but with no answers so far. One event last week I forgot to mention was that another 850 NASDAQ stocks came under the new rules designed to tighten the spreads. Don't think this contributed to today's attempted rally, but doesn't hurt either. At the end of this month an addl 1000 will be added. Don't rely just on the index nrs today, it actually was a down day on up/down, vol up/down, and esp on new hi/lows (84 to 119) including COMS again. INTC and IBM among others managed to rally, which made the indexes look good, but I do not believe the tech stock correction has ended, and I think other groups are just starting to correct. Germany reports its unemployment nrs on Thursday (expected to jump from 12.2% in January to 12.5%, and you thought you had it bad). USA reports on Friday, and I expect more jobs to have been created (once again, a never ending litany, mostly in the service sector) than the analysts anticipated while overall unemployment I expect to drop by 0.1%. This will continue to put inflationary fears into the mkt place and further support a "preemptive strike" by the Feds. If I'm right, it will likely continue the retreat, hopefully in an orderly fashion. I hope I am wrong (did I say that???) but I don't think so. I wish I had a way to measure the percent of money in the mkt that is "day trading", I suspect it is rising. While today "appeared" to be an up day, note the low vol on both NYSE and NASDAQ. Hardly encouraging IMHO. tom w As always, just OMHO any opinions expressed, recommendations made, or advice given are strictly my own and do not represent my employer ------------------------------ From: "tom worley" Date: Mon, 3 Mar 1997 22:01:40 -0500 Subject: Fw: [CANSLIM] ALAB Once again, majordumbo didn't like my brief responses. tom w - ---------- From: tom worley To: canslim@xmission.com Subject: Re: [CANSLIM] ALAB Date: Monday, March 03, 1997 7:30 AM My "resident expert" says it's already value twice book, thus little if any room for a buyout much over where it is currently priced, so that potential is ruled out for me. The dividend increase is much bigger than usual, and suggests profits may be growing faster than apparent. tom w - ---------- > From: CardioPhil@aol.com > To: canslim@xmission.com > Subject: Re: [CANSLIM] ALAB > Date: Sunday, March 02, 1997 3:12 PM > > Thanks for the perspective. I just got back from vacation. Apparently, the > company just announced an increased dividend of 11.5 cents per share. Will > need to see if the move continues. Let me know, if you find out anyhthing > else. ------------------------------ From: "Mike Artobello" Date: Mon, 3 Mar 1997 19:12:39 -0800 Subject: [CANSLIM] SGMA What happened to SGMA? It closed down over 8 points today. My paper trade would have hit it's stop loss at 21 1/2 for a 12% loss. Boy was I wrong about this one. I guess distorted cups don't hold water after all :-) On the bright side, this is the type of lesson I don't mind learning, i.e. one that doesn't cost any real money. Regards, Mike - ----------------------------------------------------------- Mike Artobello marto@ccnet.com http://www.ccnet.com/~marto/ - ----------------------------------------------------------- ------------------------------ From: "Mike Artobello" Date: Mon, 3 Mar 1997 19:23:05 -0800 Subject: Re: [CANSLIM] Internet Trader > From: "tom worley" > > So far, I've downloaded two different versions of their software and > still can't get logged on. Haven't had the time lately to fight it > any more. Maybe next weekend?? > > tom w > ---------- Tom, If you're trying to connect through a firewall, it's not supported. I can only use IT at home, since my Internet connection at work goes through a firewall. You might also want to checkout the discussion group on Silicon Investor . http://talk.techstocks.com/~wsapi/investor/Subject-11150 or check the FAQ at Papyrus Technology http://www.papyrus.com/ or email them at mailto://itrader@papyrus.com Regards, Mike - ----------------------------------------------------------- Mike Artobello marto@ccnet.com http://www.ccnet.com/~marto/ - ----------------------------------------------------------- ------------------------------ From: CardioPhil@aol.com Date: Mon, 3 Mar 1997 22:45:44 -0500 (EST) Subject: Re: Fw: [CANSLIM] ALAB Tom - Once again, I appreciate your comments, and follow-up. I am still trying to catch up on things since returning from vacation. I hope to increase mt activity on this excellent e-mail group as I get things caught up and back in order. Phil ------------------------------ From: "Mike Artobello" Date: Mon, 3 Mar 1997 19:49:34 -0800 Subject: Re: [CANSLIM] TAGS - When to sell > From: Craig Griffin > > I can find nothing to criticize except for your assumption of a purchase at > $15 on 2/17/97. Craig, Thanks for pointing out this error. I was looking at the Internet Trader chart and it showed price activity for 2/17/97, which was the same as 2/14/97, although the volume was 0. I used this data by mistake, forgetting that 2/17 was a holiday. This is probably an IT bug. So now let's assume I got filled at 16 1/4, which was the open for 2/18. This put the entry at 10% over the pivot point. A stop loss of 13 7/8 would be about 15%. As I mentioned in an earlier post, the stop loss is based on recent support prior to the breakout. However, once the breakout occurs, the old resistance level becomes support, and perhaps this should be used as a basis for the stop loss. That being the case, the stop loss would be set around 14 1/4, or 12%. This is still above the 8% rule. You mentioned "drawing a line in the sand" at 8% no matter what. Perhaps you are right, but I've been taught to use support and resistance levels from my commodities days. Maybe this is one area I need to reevaluate. More later as I go through the rest of your post. Regards, Mike - ----------------------------------------------------------- Mike Artobello marto@ccnet.com http://www.ccnet.com/~marto/ - ----------------------------------------------------------- ------------------------------ From: "Mike Artobello" Date: Mon, 3 Mar 1997 21:17:33 -0800 Subject: [CANSLIM] Missing Posts I've been missing posts over the last few days. I've had to go to the archives to read them. It seems that majordomo, or, as Tom calls it, majordumbo, is getting worse. Anyone know what's going on? Regards, Mike - ----------------------------------------------------------- Mike Artobello marto@ccnet.com http://www.ccnet.com/~marto/ - ----------------------------------------------------------- ------------------------------ End of canslim Digest V1 #106 ***************************** 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". Back issues are available for anonymous FTP from ftp.xmission.com, in pub/lists/canslim/archive. These are organized by date.