From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1863 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Wednesday, November 28 2001 Volume 02 : Number 1863 In this issue: Re: [CANSLIM] UNH Re: [CANSLIM] Re: (CANSLIM) Things I Learned ---------------------------------------------------------------------- Date: Thu, 29 Nov 2001 01:24:02 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] UNH This is a multi-part message in MIME format. - ------=_NextPart_000_00A2_01C17874.8760EBE0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I see a short, weak handle on a weak double bottom. Handle is short, = that's a matter of time. Weak because volume has yet to dry up. Best = strength I see for the handle right now is that it appears to have = institutional support around 71. Double bottom is weak because latest decline did not even come close to = undercutting the prior low. As for the 5%, as long as the handle continues to form, you have to keep = assessing the high point in the handle. That becomes the pivot, and a = new high in the handle could be hit tomorrow, or Friday, or next = Tuesday. So you must keep measuring and identifying the pivot, and its = subsequent 5% point. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Marc Deiter=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 10:42 PM Subject: [CANSLIM] UNH UNH (EPS =3D 96, RS =3D 80), industry group rank is #6, and the daily chart shows a double-bottom with a pivot of 70.10 which was passed on 11/20 on strong volume. Since the 20th it has edged up but is still within the 5% buy range. Any opinions? Also, are there rules for how long the 5% buy guideline is in effect? __________________________________________________ Do You Yahoo!? Yahoo! GeoCities - quick and easy web site hosting, just $8.95/month. http://geocities.yahoo.com/ps/info1 - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - ------=_NextPart_000_00A2_01C17874.8760EBE0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

I see a short, weak handle on a weak double bottom. = Handle is=20 short, that's a matter of time. Weak because volume has yet to dry up. = Best=20 strength I see for the handle right now is that it appears to have = institutional=20 support around 71.

Double bottom is weak because latest decline did not = even come=20 close to undercutting the prior low.

As for the 5%, as long as the handle continues to = form, you=20 have to keep assessing the high point in the handle. That becomes the = pivot, and=20 a new high in the handle could be hit tomorrow, or Friday, or next = Tuesday. So=20 you must keep measuring and identifying the pivot, and its subsequent 5% = point.

Tom Worley
stkguru@netside.net
AIM:=20 TexWorley

----- Original Message -----

From:=20 Marc = Deiter

To: canslim@lists.xmission.com =

Sent: Wednesday, November 28, = 2001 10:42=20 PM

Subject: [CANSLIM] UNH

UNH (EPS =3D 96, RS =3D 80), industry group rank is #6, = and the=20 daily
chart shows a double-bottom with a pivot of 70.10 which was = passed=20 on
11/20 on strong volume. Since the 20th it has edged up but = is=20 still
within the 5% buy range. Any opinions? Also, are = there=20 rules for
how long the 5% buy guideline is in=20 = effect?

__________________________________________________=
Do=20 You Yahoo!?
Yahoo! GeoCities - quick and easy web site hosting, = just=20 $8.95/month.
http://geocities.yahoo.com/p= s/info1

-
-To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
-In= the=20 email body, write "subscribe canslim" or
-"unsubscribe = canslim". Do=20 not use quotes in your email.
- ------=_NextPart_000_00A2_01C17874.8760EBE0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Wed, 28 Nov 2001 23:53:09 -0600 From: "Katherine Malm" Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned This is a multi-part message in MIME format. - ------=_NextPart_000_0322_01C17867.D5232760 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Tom, In principle, I guess logically I agree with you. Certainly a weak, = even declining, group can hold the best of stocks back from full = potential performance. I do glance at GRS when I find a good stock = chart, but it does not factor into my decision making whether strong or = weak. Now that I can look at group charts at the DGO beta (at least I = think that's there), I will be interested in seeing how the groups = represented in my VRfund have done by comparison. In particular, I am = interested in seeing if my style of picking stocks also happened to put = me into mostly rising groups. I will also be looking to see if any of = those groups also rose 40% or better since the Sept lows. In fact, I was thinking about your investments as I was washing the = 50th mixing bowl at the cooking school this evening (I volunteer there) = and was wondering about this very thing. It may just be that you are = instinctively choosing stocks in rising industry groups and it would be = interesting to do some analysis to see if that is so. I'm curious about = something, however. I'm assuming this "VRfund" you speak of is a = "Virtual" fund. Not real money? I know you've posted returns on these = funds and I just wonder why the VRfund has returns that are so much = higher than the IRA. (sorry if I've got these mixed up.) Are you using = very different styles? What causes such differences? Among other things, = could it be related to ignoring industry movement? Just random thoughts. = That darn chef was cranking out dishes faster than I could blink and the = other volunteer spent all her time watching what the chef was doing = instead of helping me! But the fact remains that I have made nice money off stocks where the = GRS was in single or very low double digit numbers. GRS has never scared = me off a stock, nor made me any more interested in buying it. But then I = also think my style would not likely work for very many others, even if = they were risk takers. Are you primarily in microcaps? So many different factors there than = the typical small or mid cap that favors the CANSLIM style. Also, are = you sticking to growth stocks or do you partake in cyclicals and = defensives? With those in particular, the *only* way to make any money = is to catch them at the bottom and ride them through the next cycle. Of = course, you'd never want to wait until these are top rated industries to = be getting in. Again, very different animal. My comment, however, was primarily geared around the comment from the = seminar that if you had two stocks with high RS, then the GRS element = was satisfied. For those who find GRS rating an integral part of their = stock selection methodology, I would be disturbed by that notion. At a = minimum, I would think that concept would also have to be combined with = a requirement that GRS already be rising, even if still at a low number. I've been to two of WON's full day seminars. I suspect that if we were = to transcript the discussion, I'd bet there was more to it than the = brief notes that Chris so graciously brought to the group. WON's = experienced and I doubt that he would have suggested that the two stocks = left standing in a declining industry would be a good investment. It = makes no sense and goes against everything he teaches. Example...CSCO = was just about the last stock standing in its group in early 2000. = Leader in the group, but the group seriously damaged. Good investment in = late April 2000? Not a chance in &*%@. Yet, there were people who = pounded the table saying that it was "a good buy" at 69.33. If people = had done nothing else but industry analysis they would have known how = bogus that was. Glad to see the DGO beta add industry info...I've been after them for = years to do it, but they did not because it would add too many features = available only in the WONDA product for which people paid big bucks. I = think the fact that it's now included demonstrates how important WON = thinks industry action is in determining the health and attractiveness = of a particular stock, even for us little guys. Katherine ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 9:07 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Hi Tom, Here's the problem and the reason why my approach would still hold, = i.e., you replied: >>.So I find it hard to understand how having only two performers in = a large group that is otherwise trending down would be sufficient to = offset the negative group trend. I would never be interested in a industry that was *declining*. I am = only interested in a group that is *RISING.* Very different animal = there. I never mine for candidates based on GRS because it hides rising = groups and rising stocks. If the GRS is low, but there are stocks in the = group that are doing well, that speaks to me. In particular, in a bear = market, I want to be mining for stocks that show their ability to buck = the trend. Very important for uncovering the gems. Similarly, if you = mine for candidates based on "high" GRS, you are more likely to be = focused on groups that are getting ready to top out. My motto: top = stocks top out and then they decline. I don't want to be there. I want = to be in the stocks coming up in ranks as they *become* top stocks. When = their run is over, I get out. In the Great Bull, this may have taken = months or years. In the Great Bear, this process can take a few weeks. >>I am not a "group follower", and give very little weight to GRS I think this is a dangerous practice. Witness TARO as our list's = recent example, so good in fact that the IBD chose to use it themselves = as an example. Being unaware of group action hides the "truth" about = institutional money's "feel" about the group. A bit like letting the = big dog do the sniffing for you. To make big money over a long period of = time, we *must* be in the right stocks in the right industries. Katherine ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 8:05 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Hi Katherine, I am not a "group follower", and give very little weight to GRS, = contrary to WON's guidance (just one of my many CANSLIM sins). But I = know that many members of this group use the group ranking, strength or = trends as their starting point in finding picks. So I find it hard to = understand how having only two performers in a large group that is = otherwise trending down would be sufficient to offset the negative group = trend. I agree with what you say below, certainly some groups are a real = hodge podge of companies. And the stellar performance and fundies of one = can be confirmed by the performance of a competitor. But likewise, = another competitor could also offset that. And a broader industry group = could also provide a broader indication of the generalized industry = trend, to which one or two companies have simply failed to follow, YET. If Group RS is a fundamental part of your process in picking = stocks, I just don't see how you can disregard the group RS if you have = two good stocks in that group. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 8:34 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned >>If you have two stocks with high RS, this is enough to satisfy = the Group RS. This was news to me, and doesn't make a lot of sense, = either. Tom, Chris I have a slightly different perspective on this one. Often = times, when a group is composed of many members, you'll find that their = business models don't really "match." In this case, I always find the = direct competitors of the stock in question and look at its performance = against just these stocks. If these are moving up in tandem, it says = something. Also, my belief is different than WON's. I am always looking = for *rising* industries, not necessarily *top* industries. If a = particular stock is rising in a group that is not yet a "top" industry, = it is very often the strongest stock in the group. But, you want to be = sure there is some additional confirmation of the move. WON *does* say = that you do not want a lone wolf, you always want to see at least one = additional stock in the "group" moving up as well. And just to be = complete, the stocks should, of course have all the requisite = fundamental characteristics: accelerating sales & earnings, ROE>=3D17%, = cash flow closely mirroring EPS, an "N", sound financials, and sound = strategic planning and execution. Katherine ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, November 28, 2001 6:25 AM Subject: Re: [CANSLIM] Re: (CANSLIM) Things I Learned Chris, I would also like to add my thanks for you spending = your time in effort in giving us this report. I found it informative and = well worth reading, as well as some new material. I have thrown in some = comments below. Tom Worley stkguru@netside.net AIM: TexWorley ----- Original Message -----=20 From: Chris Mc=20 To: canslim@lists.xmission.com=20 Sent: Tuesday, November 27, 2001 7:02 PM Subject: [CANSLIM] Re: (CANSLIM) Things I Learned Well - here goes - I hope Paul is right! I recently attended the IBD Seminar in L.A. and wanted to = share a few of my learnings with you. Please know that I am still in = the learning curve and just starting my second reading of HTMMIS so this = is my understanding of some of the comments and perhaps you can answer a = few questions for me. Asset allocation - 30-40% in this market, 3 to 4 stocks. = WON compared this market to a 75 mph freeway and it's now at 5 mph - = slow and tough. It's down so much, there's no base and we are gradually = coming off the bottom, but a slow process and sooner or later the = momentum will return. Doing what it should be doing. Hit bottom and = turned. Correcting for euphoria similar to the 1962 period which took = time to recover because it was damaged so seriously. Could be 3 - 6 - 9 = - - 18 months before we see patterns - coming out of the grave. Patience, = and time. I thought because of M we shouldn't be in the market at = all but I guess if you are confident in what you're doing, it's o.k. to = break a few rules?? It's not so much that you are breaking rules to be = partially invested at this point. While a switch from bear to bull was = only confirmed by the DOW 30 (only one to gain 20% from the low), "M" = has been much stronger since Sept 21. So limited investing is still = within CANSLIM guidelines. That also goes to the other comment of no = pyramiding up, buy it right, but don't add to the position (something I = have been violating in my VR Fund with some success, so personally don't = agree with this point). Small or large cap - Doesn't make any difference. Funds = have gotten bigger and bigger, and they have enormous buying power for = big cap stocks as well as small ones. The key thing is that, is the = pattern exactly right, are the earnings there, the market right, all the = other things. AOL was trading 7 Million shares a day, it was a big cap = stock and went up 400-500%. I think the difference still remains that is = is far easier for a small cap to show 20-50% or more earnings growth = than for a big cap. But the big cap gives you more stability and safety = in this kind of "M". Chart discussions of PECS, CYTC, EASI, L3 - straight off = the bottom, no pullback. These are the ones that are risky in this = market environment -they run too far, too fast. 2 out of 3 stocks like = this aren't making it. If you know enough about the company and you're = convinced everythings alright, maybe it'll work. Bigger cap stocks are a little bit safer and sounder = because if you're wrong, it's going to cost you more than 1 or 2 points. = Pivot - in this market, buy at the pivot. No pyramiding = in this market. OK to buy within 5% of pivot in a bull market. Have you heard this before or is this a "Revision"? I = would say it's a reflection of "M" and the number of failed breakouts. = Take a partial position and manage it. If you bought right, make a = limited amount of money. But if you pyramid, and it then fails, your = follow on buys will wipe out your success from the first buy. Charts - A lot of the charts don't seem to be working, a = lot of the breakouts seem to be failing. It's not that the charts are = not working, you're buying bad bases that are faulty and have something = wrong with them, they're incorrect bases. Handles can be looser and cups may be deeper coming out of = a bear market. Cups and handles should be porportional - small cup, = small handle. Big cup, longer handle. If it's not a C&H, not a double bottom, not a flat base, = it's a nothing. After you go through all the models, it has to fit or = it's a nothing. (My den is now wallpapered in Chart Patterns) There are very few sound bases - not there yet. Easy to = get sucked in - great story, great earnings, but we're in a tough market = and you can't play aggressively. AZO is an exception and one of the few = stocks that worked although extended now. Tom - do you think the pattern broke on EPIQ and do you = see anything that caused it to break or was it just a function of the = market? When you do the WWW, are you looking at Daily or Weekly charts? = Aside from the article in IBD, and the downgrade by AG Edwards, you can = add in that the company has been moving very fast with two stock splits = this year, plus registering 1.3 million restricted shares, plus having = options trading, plus another cash acquisition, plus up several hundred = percent for the year. The two stocks splits are worrying some investors = according to a board I visited on yahoo. Because of the added liquidity, = and likely now the options, short position is up 13% to 8.3 days. That = equates to better than 1.6 million shares, or 21% of the float. Of = course, that may have dropped a lot in the past week. The collapse on = 11/21 didn't quite break the pattern, and we saw a small recovery. But = yesterday's fall, which broke to the bottom of the short base at $30, = did end the breakout pattern and further weaken the chart. I am not = trying to buy just now, and would not be surprised by further price = deterioration, where I will buy because of my belief long term in the = business model. For WWW, I use Daily Charts and only look at the latest = six months. Fallen Angels - There were lots of chart discussions - = CSCO, SUNW, ORCL and it seemed alot of them were similar. No base, = thick overhead supply, no prior uptrend, have probably hit bottom but = are they going to be leaders again? Sooner or later they get into a = big stalling thing, they just don't do much for 3 - 4 - 5 months while = something else is moving better.=20 It seems every chart I look at has the same pattern. So = we wait for a base to form but while we're waiting, it's gone up = 50-100%?? Not that many have gone up that far, even from their recent = lows. And remember many are down as much as 90% from their high of the = past 12-18 months, so even a double from recent lows still leaves them a = very long way to go for a true new high. 9/11 - Caused a panic and a bad break in a lot of things = and it explains it but don't make an alibi for the stock and say it = broke 20 points but the reason was this, therefore it's o.k.? Is the = pattern right or not? Don't make excuses or alibis for stocks. If you don't have the C & A, you better have the N & L. = (Isn't this another mortal sin?) M counts for at least 50% of the whole = ballgame.=20 If you have two stocks with high RS, this is enough to = satisfy the Group RS. This was news to me, and doesn't make a lot of = sense, either. Lots of revisions in next edition of HTMMIS - should be = out in January. (I suppose to some extent we learn of revisions as they = develop, i.e. buy within .10 of pivot and not .13 but I think it's good = there are some revisions as conditons change - ?) I thought the seminar was well organized, staff friendly = and welcoming. WON spoke for almost the entire session, except an hour = in the AM and an hour in the PM, had a group constantly surrounding him = and even took questions during lunch. It was such a terrific = opportunity to see and listen to WON and I would highly recommend the = seminar to anyone interested in the market, although they do call it = "Advanced" and you need to have some understanding of CANSLIM. They = did not push IBD or DGO, but merely explained the services offered and = were very accommodating in answering questions. =20 The seminar was extremely worthwhile for me but it seems = the more I learn, the more I have to learn. Did anyone else attend? = Comments appreciated. Chris Mc - ------=_NextPart_000_0322_01C17867.D5232760 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Hi Tom,

In principle, I guess logically I agree with you. = Certainly=20 a weak, even declining, group can hold the best of stocks back from = full=20 potential performance. I do glance at GRS when I find a good stock = chart, but=20 it does not factor into my decision making whether strong or = weak. Now=20 that I can look at group charts at the DGO beta (at least I think = that's=20 there), I will be interested in seeing how the groups represented in = my VRfund=20 have done by comparison. In particular, I am interested in seeing if = my style=20 of picking stocks also happened to put me into mostly rising groups. I = will=20 also be looking to see if any of those groups also rose 40% or better = since=20 the Sept lows.

In fact, I was thinking about your = investments as I=20 was washing the 50th mixing bowl at the cooking school this evening (I = volunteer there) and was wondering about this very thing. It may just = be that=20 you are instinctively choosing stocks in rising industry groups and it = would=20 be interesting to do some analysis to see if that is so. I'm curious = about=20 something, however. I'm assuming this "VRfund" you speak of is a = "Virtual"=20 fund. Not real money? I know you've posted returns on these funds and = I just=20 wonder why the VRfund has returns that are so much higher than the = IRA. (sorry=20 if I've got these mixed up.) Are you using very different styles? What = causes=20 such differences? Among other things, could it be related to ignoring = industry=20 movement? Just random thoughts. That darn chef was cranking out dishes = faster=20 than I could blink and the other volunteer spent all her time watching = what=20 the chef was doing instead of helping me!

But the fact remains that I have made nice money = off stocks=20 where the GRS was in single or very low double digit numbers. GRS has = never=20 scared me off a stock, nor made me any more interested in buying it. = But then=20 I also think my style would not likely work for very many others, even = if they=20 were risk takers.

Are you primarily in microcaps? So many = different=20 factors there than the typical small or mid cap that favors the = CANSLIM style.=20 Also, are you sticking to growth stocks or do you partake in cyclicals = and=20 defensives? With those in particular, the *only* way to make any money = is to=20 catch them at the bottom and ride them through the next cycle. Of = course,=20 you'd never want to wait until these are top rated industries to be = getting=20 in. Again, very different animal.

My comment, however, was primarily geared around = the comment=20 from the seminar that if you had two stocks with high RS, then the GRS = element=20 was satisfied. For those who find GRS rating an integral part of their = stock=20 selection methodology, I would be disturbed by that notion. At a = minimum, I=20 would think that concept would also have to be combined with a = requirement=20 that GRS already be rising, even if still at a low = number.

I've been to two of WON's full day = seminars. I=20 suspect that if we were to transcript the discussion, I'd bet there = was more=20 to it than the brief notes that Chris so graciously brought to the = group.=20 WON's experienced and I doubt that he would have suggested that = the two=20 stocks left standing in a declining industry would be a good = investment. It=20 makes no sense and goes against everything he teaches. Example...CSCO = was just=20 about the last stock standing in its group in early 2000. Leader in = the group,=20 but the group seriously damaged. Good investment in late April 2000? = Not a=20 chance in &*%@. Yet, there were people who pounded the table = saying that=20 it was "a good buy" at 69.33. If people had done nothing = else but=20 industry analysis they would have known how bogus that = was.

Glad to see the DGO beta add industry = info...I've=20 been after them for years to do it, but they did not because it would = add too=20 many features available only in the WONDA product for which people = paid big=20 bucks. I think the fact that it's now included demonstrates how = important WON=20 thinks industry action is in determining the health and attractiveness = of a=20 particular stock, even for us little guys.

Katherine

----- Original Message -----
From:=20 Katherine=20 Malm
To: canslim@lists.xmission.com= =20

Sent: Wednesday, November 28, = 2001 9:07=20 AM

Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

Hi Tom,

Here's the problem and the reason = why my=20 approach would still hold, i.e., you replied:

>>.So I find=20 it hard to understand how having only two performers in a large = group that=20 is otherwise trending down would be sufficient to = offset=20 the negative group trend.

I would never be interested in a = industry that=20 was *declining*. I am only interested in a group that is *RISING.* = Very=20 different animal there. I never mine for candidates based on GRS = because it=20 hides rising groups and rising stocks. If the GRS is low, but there = are=20 stocks in the group that are doing well, that speaks to me. In = particular,=20 in a bear market, I want to be mining for stocks that show their = ability to=20 buck the trend. Very important for uncovering the gems. Similarly, = if you=20 mine for candidates based on "high" GRS, you are more likely to be = focused=20 on groups that are getting ready to top out. My motto: top stocks = top out=20 and then they decline. I don't want to be there. I want to be in the = stocks=20 coming up in ranks as they *become* top stocks. When their run is = over, I=20 get out. In the Great Bull, this may have taken months or years. In = the=20 Great Bear, this process can take a few weeks.

>>I am not a=20 "group follower", and give very little weight to = GRS

I think this is a dangerous = practice. Witness=20 TARO as our list's recent example, so good in fact that the IBD = chose to use=20 it themselves as an example. Being unaware of group action hides the = "truth"=20 about institutional money's  "feel" about the group. A bit = like=20 letting the big dog do the sniffing for you. To make big money over = a long=20 period of time, we *must* be in the right stocks in the = right=20 industries.

Katherine

----- Original Message ----- =
From:=20 Tom=20 Worley
To: canslim@lists.xmission.com= =20

Sent: Wednesday, November = 28, 2001=20 8:05 AM

Subject: Re: [CANSLIM] Re: = (CANSLIM)=20 Things I Learned

Hi Katherine,

I am not a "group follower", and give very = little weight=20 to GRS, contrary to WON's guidance (just one of my many CANSLIM = sins). But=20 I know that many members of this group use the group ranking, = strength or=20 trends as their starting point in finding picks. So I find it hard = to=20 understand how having only two performers in a large group that is = otherwise trending down would be sufficient to offset the negative = group=20 trend.

I agree with what you say below, certainly = some groups=20 are a real hodge podge of companies. And the stellar performance = and=20 fundies of one can be confirmed by the performance of a = competitor. But=20 likewise, another competitor could also offset that. And a broader = industry group could also provide a broader indication of the = generalized=20 industry trend, to which one or two companies have simply failed = to=20 follow, YET.

If Group RS is a fundamental part of your = process in=20 picking stocks, I just don't see how you can disregard the group = RS if you=20 have two good stocks in that group.

Tom Worley
stkguru@netside.net
AIM:=20 TexWorley

----- Original Message ----- =
From:=20 Katherine=20 Malm
To: canslim@lists.xmission.com= =20

Sent: Wednesday, November = 28, 2001=20 8:34 AM

Subject: Re: [CANSLIM] = Re:=20 (CANSLIM) Things I Learned

>>If you have=20 two stocks with high RS, this is enough to satisfy the Group RS. = This was news to me, and doesn't make a lot of = sense,=20 either.

Tom, = Chris

I have a=20 slightly different perspective on this one. Often times, = when a=20 group is composed of many members, you'll find that their = business=20 models don't really "match." In this case, I always find the = direct=20 competitors of the stock in question and look at its performance = against=20 just these stocks. If these are moving up in tandem, it says = something.=20 Also, my belief is different than WON's. I am always looking for = *rising* industries, not necessarily *top* industries. If a = particular=20 stock is rising in a group that is not yet a "top" industry, it = is very=20 often the strongest stock in the group. But, you want to = be sure=20 there is some additional confirmation of the move. WON *does* = say that=20 you do not want a lone wolf, you always want to see at least one = additional stock in the "group" moving up as well. And just to = be=20 complete, the stocks should, of course have all the requisite=20 fundamental characteristics: accelerating sales & earnings,=20 ROE>=3D17%, cash flow closely mirroring EPS, an "N", sound = financials,=20 and sound strategic planning and execution.

Katherine

----- Original Message ----- =
From:=20 Tom=20 Worley
To: canslim@lists.xmission.com= =20

Sent: Wednesday, = November 28,=20 2001 6:25 AM

Subject: Re: [CANSLIM] = Re:=20 (CANSLIM) Things I Learned

Chris, I would also like to add my thanks = for you=20 spending your time in effort in giving us this report. I found = it=20 informative and well worth reading, as well as some new = material. I=20 have thrown in some comments below.

Tom Worley
stkguru@netside.net
AIM:=20 TexWorley

----- Original Message ----- =
From:=20 Chris=20 Mc
To: canslim@lists.xmission.com= =20

Sent: Tuesday, = November 27,=20 2001 7:02 PM

Subject: [CANSLIM] = Re:=20 (CANSLIM) Things I Learned

Well - here goes - I hope = Paul is=20 right!

I recently attended the = IBD Seminar=20 in L.A. and wanted to share a few of my learnings with = you. =20 Please know that I am still in the learning curve and = just=20 starting my second reading of HTMMIS so this=20 is my understanding of some of the comments and = perhaps=20 you can answer a few questions for me.

Asset allocation=20 - 30-40% in this market, 3 = to 4=20 stocks. WON compared this market to a 75 mph freeway = and=20 it's now at 5 mph - slow and tough. It's down so = much,=20 there's no base and we are gradually coming off the = bottom, but a=20 slow process and sooner or later the momentum will = return. =20 Doing what it should be doing. Hit bottom and = turned. =20 Correcting for euphoria similar to the 1962 period which = took time=20 to recover because it was damaged so seriously. = Could be 3 -=20 6 - 9 - 18 months before we see patterns - coming out of = the=20 grave. Patience, and time.

I thought because of M = we=20 shouldn't be in the market at all but I guess if you are = confident=20 in what you're doing, it's o.k. to break a few rules?? = It's not so much that you are breaking = rules to be=20 partially invested at this point. While a switch from bear = to bull=20 was only confirmed by the DOW 30 (only one to gain 20% = from the=20 low), "M" has been much stronger since Sept 21. So limited = investing is still within CANSLIM guidelines. That also = goes to=20 the other comment of no pyramiding up, buy it right, but = don't add=20 to the position (something I have been violating in my VR = Fund=20 with some success, so personally don't agree with this=20 point).

Small or large = cap=20 - Doesn't make any difference. Funds = have=20 gotten bigger and bigger, and they have enormous buying = power for=20 big cap stocks as well as small ones. The key thing = is that,=20 is the pattern exactly right, are the earnings there, the = market=20 right, all the other things. AOL was trading 7 = Million=20 shares a day, it was a big cap stock and went up=20 400-500%. I think the = difference=20 still remains that is is far easier for a small cap to = show 20-50%=20 or more earnings growth than for a big cap. But the big = cap gives=20 you more stability and safety in this kind of=20 "M".

Chart=20 discussions of PECS, CYTC, EASI, L3 - straight off the = bottom, no=20 pullback. These are the ones that are risky in this = market=20 environment -they run too far, too fast. 2 out = of 3=20 stocks like this aren't making it. If you know = enough about=20 the company and you're convinced everythings alright, = maybe it'll=20 work.

Bigger cap stocks are a little=20 bit safer and sounder because if you're wrong, it's = going=20 to cost you more than 1 or 2 points.

Pivot - in this=20 market, buy at the pivot. No pyramiding in this=20 market. OK to buy within 5% of pivot in a bull=20 market.

Have you heard this = before or is=20 this a "Revision"? I would say = it's a=20 reflection of "M" and the number of failed breakouts. Take = a=20 partial position and manage it. If you bought right, make = a=20 limited amount of money. But if you pyramid, and it then = fails,=20 your follow on buys will wipe out your success from the = first=20 buy.

Charts - = A lot of=20 the charts don't seem to be working, a lot of the = breakouts=20 seem to be failing. It's not that the charts are not = working, you're buying bad bases that are faulty and have=20 something wrong with them, they're incorrect = bases.

Handles can be looser and = cups may be=20 deeper coming out of a bear market. Cups and handles = should=20 be porportional - small cup, small handle. Big cup, = longer=20 handle.

If it's not a C&H, = not a double=20 bottom, not a flat base, it's a nothing. After you = go=20 through all the models, it has to fit or it's a=20 nothing. (My den is now wallpapered in Chart=20 Patterns)

There are very few sound = bases - not=20 there yet.  Easy to get sucked in - great story, = great=20 earnings, but we're in a tough market and you can't play=20 aggressively. AZO is an exception and one of the few = stocks=20 that worked although extended now.

Tom - do you think = the pattern=20 broke on EPIQ and do you see anything that caused it to = break or=20 was it just a function of the market? When you do = the WWW,=20 are you looking at Daily or Weekly charts? Aside from the article in IBD, and the = downgrade by=20 AG Edwards, you can add in that the company has been = moving very=20 fast with two stock splits this year, plus registering 1.3 = million=20 restricted shares, plus having options trading, plus = another cash=20 acquisition, plus up several hundred percent for the year. = The two=20 stocks splits are worrying some investors according to a = board I=20 visited on yahoo. Because of the added liquidity, and = likely now=20 the options, short position is up 13% to 8.3 days. That = equates to=20 better than 1.6 million shares, or 21% of the float. = Of=20 course, that may have dropped a lot in the past week. The = collapse=20 on 11/21 didn't quite break the pattern, and we saw a = small=20 recovery. But yesterday's fall, which broke to the bottom = of the=20 short base at $30, did end the breakout pattern and = further weaken=20 the chart. I am not trying to buy just now, and would not = be=20 surprised by further price deterioration, where I will buy = because=20 of my belief long term in the business = model.

For WWW, I use Daily = Charts and=20 only look at the latest six months.

Fallen = Angels -=20 There were lots of chart discussions - CSCO, SUNW, ORCL = and it=20 seemed alot of them were similar. No base, thick = overhead=20 supply, no prior uptrend, have probably hit bottom but are = they=20 going to be leaders again?   Sooner or later = they get=20 into a big stalling thing, they just don't do much for 3 - = 4 - 5=20 months while something else is moving = better.

It seems every chart = I look at=20 has the same pattern. So we wait for a base to form = but=20 while we're waiting, it's gone up 50-100%?? Not that many have gone up that far, even = from their=20 recent lows. And remember many are down as much as 90% = from their=20 high of the past 12-18 months, so even a double from = recent lows=20 still leaves them a very long way to go for a true new=20 high.

9/11 - = Caused a=20 panic and a bad break in a lot of things and it = explains it=20 but don't make an alibi for the stock and say it = broke=20 20 points but the reason was this, therefore it's = o.k.? Is=20 the pattern right or not?  Don't make = excuses or=20 alibis for stocks.

If you don't have the C = & A, you=20 better have the N & L. (Isn't this another = mortal=20 sin?) M counts for at least 50% of the whole=20 ballgame.

If you have two stocks = with high RS,=20 this is enough to satisfy the Group RS. This=20 was news to me, and doesn't make a lot of sense,=20 either.

Lots of revisions in next = edition of=20 HTMMIS - should be out in January. (I suppose to = some=20 extent we learn of revisions as they develop, i.e. buy = within .10=20 of pivot and not .13 but I think it's good there are = some=20 revisions as conditons change - ?)

I thought the seminar was = well=20 organized, staff friendly and welcoming. WON spoke = for=20 almost the entire session, except an hour in the AM = and an=20 hour in the PM, had a group constantly surrounding him and = even=20 took questions during lunch. It was such a terrific=20 opportunity to see and listen to WON and I would = highly=20 recommend the seminar to anyone interested in the market, = although=20 they do call it "Advanced" and you need to have some = understanding=20 of CANSLIM. They did not push IBD or = DGO,=20 but merely explained the services offered and were very=20 accommodating in answering questions.

The seminar was extremely = worthwhile for me but it seems the more I learn, = the=20 more I have to learn. Did anyone else = attend? =20 Comments appreciated.

Chris Mc

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