From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2798 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, August 14 2002 Volume 02 : Number 2798 In this issue: RE: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) Re: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) ---------------------------------------------------------------------- Date: Wed, 14 Aug 2002 08:31:02 -1000 From: "Mike Gibbons" Subject: RE: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) This is a multi-part message in MIME format. - ------=_NextPart_000_001B_01C2436C.EC91C3E0 Content-Type: text/plain; charset="Windows-1252" Content-Transfer-Encoding: 7bit Thanks Katherine, I seem to be getting more than my fair share of coaching lately, I hope others are benefiting also. So if I've understood, you look to the technicals first to alert you to stocks that warrant more careful scrutiny, then look at the fundamentals to screen for those that are CANSLIMish and finally do the real down and dirty due diligence ( I think I just invented a new acronym - DDDD). Now when you say "the bear has taught me to favor technicals first", does that mean "in a bear market, I favor technicals first" or would this approach apply in all markets? If not, why not? Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Wednesday, August 14, 2002 5:55 AM To: canslim@lists.xmission.com Subject: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) Hi Mike, Thought I might first clear up Charley's reference to my comment about technicals. As I see it, technicals have *always* been important, but the Bear has taught me to favor technicals first in my analysis/mining techniques. This is a subtle shift in my thinking, maybe due to the Bear and maybe due to a new understanding of the CANSLIM discipline which continues to evolve day by day. Your comments brought some things to mind: (1) You can always make money using technicals as your only indicator, but the entry/exit has to be in the short term, as that is the only period in which fundamentals would have no influence on the stock movement. Intermediate term and beyond, the fundamentals are what drive the business and create value. In other words, the earnings and cash stream, reinvested in the business for growth or distributed to shareholders via dividends, create value in the underlying investment. If trading in the short term, you would never wait for the entire period of intermediate term consolidation to form, but instead would take advantage of the current directional ride. For example, in a cup & handle, you would essentially hitch a ride on the right side of a cup. You would also trade, e.g., reversals from extremely oversold conditions, regardless of the relative strength of the stock to the market. In some cases, you'd be bottom fishing. That's fine in a short term trade because you don't care what the next direction is going to be once you exit. In intermediate term and beyond, the next direction is what matters the most, because you are riding an underlying wave of movement that covers a longer period of time. Essentially, the short term trader gets *really* close to the chart and looks for ups/downs to ride. The intermediate term trader steps back 3 feet and looks for the underlying movement, up or down, with the close up price wiggles smoothed out. The long term trader steps back 7 feet and looks for underlying movement, with most all of the wiggles smoothed out. (2) If you have 200 stocks with identical technicals and you are trading intermediate term and beyond, how would you choose between them? Fundamentals and due diligence allow you to assess the potential return on investment given (1) above. That, in turn, allows you to eliminate some and rank the remainder. (3) WON's wording is "Buy on the fundamentals, sell on the technicals" meaning buy based on the fundamental characteristics of the company using technicals for entry, but on the flipside, consider only technicals when selling because fundamental indicators don't tell you that sales and profits are deteriorating until after the fact. Look at any highflier from the last Bull. Take CSCO as example. At the time the price peaked around 80-85 in 2000, the fundamentals looked peachy. ROE, sales/earnings growth, etc. The technicals topped and began to slide, but it wasn't until 3 or 4 quarters later that it be came apparent that fundamentals were stinky. (4) When you select and enter a stock well under intermediate term rules, the longer the underlying upward movement in the market, the more likely it is that you will have a "big winner." During the Bear, the upward waves have been short-lived. The best you could hope for was an excellent move while the market was in an intermediate term rally within the longer term bear. That means the exits are designed to protect capital. Despite a good company, the majority of stocks eventually get caught in the downdraft. However, if you are in the habit of catching things as they begin their ascent and the market as a whole moves from Bear rally mode to sustainable Bull mode, you're on for the ride already. That will allow you to stay with a winning position much longer, despite the near term price wiggles. Katherine ----- Original Message ----- From: Mike Gibbons To: canslim@lists.xmission.com Sent: Sunday, August 11, 2002 4:47 AM Subject: RE: [CANSLIM] NVDA I didn't realize what a pandora's box I was opening , but I'm glad I did raise the lid on NVDA. What I learned was: a.. an excellent "C" and "A" can be misleading b.. The technicals such as RS, up/down volume, etc were indicators that there's something rotten in the state of Denmark, despite the fundamentals Which would appear to confirm that everything you need to know is already in the tape. Question: is this only true in a bear market? (I'm referring to Katherine's statement quoted by Charley), and if it's universally true then can't the lazy one's among us (and I include myself in that category) simply cheat by swing trading patterns, not CANSLIM fundamentals? Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Chazmoore@aol.com Sent: Saturday, August 10, 2002 5:49 PM To: canslim@lists.xmission.com Subject: [CANSLIM] NVDA A week or so ago, (time passes so fast), Katherine made a statement to the effect that the technicals are more important than the fundamentals in a bear market. I have now observed this to be true on numerous recent occasions, but my first impulse is to look for fundamental excuses for a falling stock price. Quoting from a book I am reading, "The fundamental work answers the question what, and the technical side of the equation answers the question when." , points out how important it is to have all the facts. Thanks for calling my attention to the SEC investigation. It is so discouraging to learn of these repeated accounting problems. One of these days I will stop believing in Santa Claus. Charley - ------=_NextPart_000_001B_01C2436C.EC91C3E0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable
Thanks Katherine,
 
I=20 seem to be getting more than my fair share of coaching lately, I hope = others are=20 benefiting also.
 
So if=20 I've understood, you look to the technicals first to alert you to stocks = that=20 warrant more careful scrutiny, then look at the fundamentals to screen = for those=20 that are CANSLIMish and finally do the real down and dirty due = diligence (=20 I think I just invented a new acronym - DDDD).
 
Now=20 when you say "the bear has taught me to favor technicals first", does = that mean=20 "in a bear market, I favor technicals first" or would this approach = apply in all=20 markets? If not, why not?
 
Aloha,
 
Mike = Gibbons
Proactive = Technologies,=20 LLC
http://www.proactech.com
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine = Malm
Sent: Wednesday, August 14, 2002 5:55 AM
To:=20 canslim@lists.xmission.com
Subject: [CANSLIM] Re:Technicals = vs=20 Fundamentals (was: NVDA)

Hi Mike,
 
Thought I might first clear up Charley's reference to my comment = about=20 technicals. As I see it, technicals have *always* been important, but = the Bear=20 has taught me to favor technicals first in my analysis/mining = techniques. This=20 is a subtle shift in my thinking, maybe due to the Bear and maybe due = to a new=20 understanding of the CANSLIM discipline which continues to evolve = day by=20 day. 
 
Your comments brought some things to mind:
 
(1) You can always make money using technicals as your only = indicator,=20 but the entry/exit has to be in the short term, as that is the only = period in=20 which fundamentals would have no influence on the stock movement. = Intermediate=20 term and beyond, the fundamentals are what drive the business and = create=20 value. In other words, the earnings and cash stream, reinvested in the = business for growth or distributed to shareholders via dividends, = create value=20 in the underlying investment. If trading in the short term, you would = never=20 wait for the entire period of intermediate term consolidation to form, = but=20 instead would take advantage of the current directional ride. For = example, in=20 a cup & handle, you would essentially hitch a ride on the right = side of a=20 cup. You would also trade, e.g., reversals from extremely oversold = conditions,=20 regardless of the relative strength of the stock to the market. In = some cases,=20 you'd be bottom fishing. That's fine in a short term trade because you = don't=20 care what the next direction is going to be once you exit. In = intermediate=20 term and beyond, the next direction is what matters the most, because = you are=20 riding an underlying wave of movement that covers a longer period of = time.=20 Essentially, the short term trader gets *really* close to the chart = and looks=20 for ups/downs to ride. The intermediate term trader steps back 3 feet = and=20 looks for the underlying movement, up or down, with the close up price = wiggles=20 smoothed out. The long term trader steps back 7 feet and looks for = underlying=20 movement, with most all of the wiggles smoothed out.
 
(2) If you have 200 stocks with identical technicals and you are = trading=20 intermediate term and beyond, how would you choose between them? = Fundamentals=20 and due diligence allow you to assess the potential return on = investment given=20 (1) above. That, in turn, allows you to eliminate some and rank the=20 remainder.
 
(3) WON's wording is "Buy on the fundamentals, sell on the = technicals"=20 meaning buy based on the fundamental characteristics of the company = using=20 technicals for entry, but on the flipside, consider only technicals = when=20 selling because fundamental indicators don't tell you that sales and = profits=20 are deteriorating until after the fact. Look at any highflier from the = last=20 Bull. Take CSCO as example. At the time the price peaked around 80-85 = in 2000,=20 the fundamentals looked peachy. ROE, sales/earnings growth, etc. = The=20 technicals topped and began to slide, but it wasn't until 3 or 4 = quarters=20 later that it be came apparent that fundamentals were stinky.
 
(4) When you select and enter a stock well under intermediate = term rules,=20 the longer the underlying upward movement in the market, the more = likely it is=20 that you will have a "big winner." During the Bear, the upward waves = have been=20 short-lived. The best you could hope for was an excellent move while = the=20 market was in an intermediate term rally within the longer term bear. = That=20 means the exits are designed to protect capital. Despite a good = company, the=20 majority of stocks eventually get caught in the downdraft. However, if = you are=20 in the habit of catching things as they begin their ascent and the = market as a=20 whole moves from Bear rally mode to sustainable Bull mode, you're on = for the=20 ride already. That will allow you to stay with a winning position much = longer,=20 despite the near term price wiggles.
 
Katherine
----- Original Message -----
From:=20 Mike Gibbons
To: canslim@lists.xmission.com= =20
Sent: Sunday, August 11, 2002 = 4:47=20 AM
Subject: RE: [CANSLIM] = NVDA

I=20 didn't realize what a pandora's box I was opening , but I'm glad I = did raise=20 the lid on NVDA.
 
What I learned was:
  • an excellent "C" and "A" can = be misleading=20
  • The technicals such as = RS, up/down=20 volume, etc were indicators that there's something rotten in the = state of=20 Denmark, despite the fundamentals
Which would appear to confirm that = everything you=20 need to know is already in the tape.
 
Question: is this only true in a bear = market? (I'm=20 referring to Katherine's statement quoted by Charley), and if it's=20 universally true then can't the lazy one's among us (and I include = myself in=20 that category) simply cheat by swing trading patterns, not CANSLIM=20 fundamentals?
 
Aloha,
 
Mike = Gibbons
Proactive = Technologies,=20 LLC
http://www.proactech.com
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of=20 Chazmoore@aol.com
Sent: Saturday, August 10, 2002 = 5:49=20 PM
To: canslim@lists.xmission.com
Subject: = [CANSLIM]=20 NVDA

A week or=20 so ago, (time passes so fast), Katherine made a statement to the = effect=20 that the technicals are more important than the fundamentals in a = bear=20 market. I have now observed this to be true on numerous recent = occasions,=20 but my first impulse is to look for fundamental excuses for a = falling=20 stock price.
Quoting from a book I am reading, "The = fundamental work=20 answers the question what, and the technical side of the = equation=20 answers the question when." , points out how important it = is to=20 have all the facts.
Thanks for calling my attention to the SEC = investigation. It is so discouraging to learn of these repeated = accounting=20 problems. One of these days I will stop believing in Santa Claus.=20

Charley=20
- ------=_NextPart_000_001B_01C2436C.EC91C3E0-- - - - -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, 14 Aug 2002 13:48:34 -0500 From: "Katherine Malm" Subject: Re: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) This is a multi-part message in MIME format. - ------=_NextPart_000_00FD_01C24399.48A538C0 Content-Type: text/plain; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Hi Mike, I understand your question and see that it was my wording that may have = prompted it. Yes, my assessment is that you can never go wrong *in any = market* by screening for technicals first. Why? Because: (1) Stocks that have broken down technically are telling you something, = despite the rosy fundamental picture. ("Buy on the fundamentals, sell on = the technicals"). (2) Despite good fundamentals, a CANSLIM stock is not a valid buy unless = it is also setting up technically. That helps you avoid a stock with = good fundamentals that nobody wants to own. Afterall, if nobody's = bidding the price up, you're not going to make any money in the = intermediate term. (3) Sometimes a good stock gets lost in the noise of fundamental = screening. That is, if you screen too tightly for *all* the recommended = CANSLIM fundamental characteristics and/or the data itself is missing = and/or erroneous, you miss good potential candidates. Also, when a stock = is in turnaround mode, you'll find that some fundamental indicators take = a while to shape up. If you screen for the right technical action, it's = hard to miss good candidates. Why? Because if you have a decent data = source, it's pretty hard to have bad data on basic price/volume = activity. So, my preference is to look for *very* simple and basic fundamental = requirements that would qualify a stock as a potential CANSLIM = candidate. Simply, forward growth rate (>=3D15%) and liquidity (I = personally use $10/90000 AvgVol, but opinions vary on that). I don't = bother looking further if these requirements aren't met, technicals or = no. Why? If it's not a growth stock, it's not CANSLIM. If it's not = liquid enough to attract the institutional crowd, then I'm not = interested. At that point, I then look to technical condition to draw my = eye to strength, then narrow down the stocks and/or rank them based on a = "preponderance of evidence" review of the fundamentals and the DDDD to = which you refer because it's there you uncover potential = business/accounting red flags and make an assessment as to the "N"(ew) = that fuels future growth. (And by the way, I *love* the DDDD term...down = and dirty due diligence....excellent!) Katherine ----- Original Message -----=20 From: Mike Gibbons=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, August 14, 2002 1:31 PM Subject: RE: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) Thanks Katherine, I seem to be getting more than my fair share of coaching lately, I = hope others are benefiting also.=20 So if I've understood, you look to the technicals first to alert you = to stocks that warrant more careful scrutiny, then look at the = fundamentals to screen for those that are CANSLIMish and finally do the = real down and dirty due diligence ( I think I just invented a new = acronym - DDDD). Now when you say "the bear has taught me to favor technicals first", = does that mean "in a bear market, I favor technicals first" or would = this approach apply in all markets? If not, why not? Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Wednesday, August 14, 2002 5:55 AM To: canslim@lists.xmission.com Subject: [CANSLIM] Re:Technicals vs Fundamentals (was: NVDA) Hi Mike, Thought I might first clear up Charley's reference to my comment = about technicals. As I see it, technicals have *always* been important, = but the Bear has taught me to favor technicals first in my = analysis/mining techniques. This is a subtle shift in my thinking, maybe = due to the Bear and maybe due to a new understanding of the CANSLIM = discipline which continues to evolve day by day.=20 Your comments brought some things to mind: (1) You can always make money using technicals as your only = indicator, but the entry/exit has to be in the short term, as that is = the only period in which fundamentals would have no influence on the = stock movement. Intermediate term and beyond, the fundamentals are what = drive the business and create value. In other words, the earnings and = cash stream, reinvested in the business for growth or distributed to = shareholders via dividends, create value in the underlying investment. = If trading in the short term, you would never wait for the entire period = of intermediate term consolidation to form, but instead would take = advantage of the current directional ride. For example, in a cup & = handle, you would essentially hitch a ride on the right side of a cup. = You would also trade, e.g., reversals from extremely oversold = conditions, regardless of the relative strength of the stock to the = market. In some cases, you'd be bottom fishing. That's fine in a short = term trade because you don't care what the next direction is going to be = once you exit. In intermediate term and beyond, the next direction is = what matters the most, because you are riding an underlying wave of = movement that covers a longer period of time. Essentially, the short = term trader gets *really* close to the chart and looks for ups/downs to = ride. The intermediate term trader steps back 3 feet and looks for the = underlying movement, up or down, with the close up price wiggles = smoothed out. The long term trader steps back 7 feet and looks for = underlying movement, with most all of the wiggles smoothed out. (2) If you have 200 stocks with identical technicals and you are = trading intermediate term and beyond, how would you choose between them? = Fundamentals and due diligence allow you to assess the potential return = on investment given (1) above. That, in turn, allows you to eliminate = some and rank the remainder. (3) WON's wording is "Buy on the fundamentals, sell on the = technicals" meaning buy based on the fundamental characteristics of the = company using technicals for entry, but on the flipside, consider only = technicals when selling because fundamental indicators don't tell you = that sales and profits are deteriorating until after the fact. Look at = any highflier from the last Bull. Take CSCO as example. At the time the = price peaked around 80-85 in 2000, the fundamentals looked peachy. ROE, = sales/earnings growth, etc. The technicals topped and began to slide, = but it wasn't until 3 or 4 quarters later that it be came apparent that = fundamentals were stinky.=20 (4) When you select and enter a stock well under intermediate term = rules, the longer the underlying upward movement in the market, the more = likely it is that you will have a "big winner." During the Bear, the = upward waves have been short-lived. The best you could hope for was an = excellent move while the market was in an intermediate term rally within = the longer term bear. That means the exits are designed to protect = capital. Despite a good company, the majority of stocks eventually get = caught in the downdraft. However, if you are in the habit of catching = things as they begin their ascent and the market as a whole moves from = Bear rally mode to sustainable Bull mode, you're on for the ride = already. That will allow you to stay with a winning position much = longer, despite the near term price wiggles. Katherine ----- Original Message -----=20 From: Mike Gibbons=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 11, 2002 4:47 AM Subject: RE: [CANSLIM] NVDA I didn't realize what a pandora's box I was opening , but I'm glad = I did raise the lid on NVDA. What I learned was: a.. an excellent "C" and "A" can be misleading=20 b.. The technicals such as RS, up/down volume, etc were = indicators that there's something rotten in the state of Denmark, = despite the fundamentals Which would appear to confirm that everything you need to know is = already in the tape. Question: is this only true in a bear market? (I'm referring to = Katherine's statement quoted by Charley), and if it's universally true = then can't the lazy one's among us (and I include myself in that = category) simply cheat by swing trading patterns, not CANSLIM = fundamentals? Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Chazmoore@aol.com Sent: Saturday, August 10, 2002 5:49 PM To: canslim@lists.xmission.com Subject: [CANSLIM] NVDA A week or so ago, (time passes so fast), Katherine made a = statement to the effect that the technicals are more important than the = fundamentals in a bear market. I have now observed this to be true on = numerous recent occasions, but my first impulse is to look for = fundamental excuses for a falling stock price.=20 Quoting from a book I am reading, "The fundamental work answers = the question what, and the technical side of the equation answers the = question when." , points out how important it is to have all the facts.=20 Thanks for calling my attention to the SEC investigation. It is = so discouraging to learn of these repeated accounting problems. One of = these days I will stop believing in Santa Claus.=20 Charley=20 - ------=_NextPart_000_00FD_01C24399.48A538C0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable
Hi Mike,
 
I understand your question and see that it was my wording that may = have=20 prompted it. Yes, my assessment is that you can never go wrong *in any = market*=20 by screening for technicals first. Why? Because:
 
(1) Stocks that have broken down technically are telling you = something,=20 despite the rosy fundamental picture. ("Buy on the fundamentals, sell on = the=20 technicals").
 
(2) Despite good fundamentals, a CANSLIM stock is not a valid buy = unless it=20 is also setting up technically. That helps you avoid a stock with good=20 fundamentals that nobody wants to own. Afterall, if nobody's bidding the = price=20 up, you're not going to make any money in the intermediate term.
 
(3) Sometimes a good stock gets lost in the noise of fundamental = screening.=20 That is, if you screen too tightly for *all* the recommended CANSLIM = fundamental=20 characteristics and/or the data itself is missing and/or erroneous, you = miss=20 good potential candidates. Also, when a stock is in turnaround mode, = you'll find=20 that some fundamental indicators take a while to shape up. If you screen = for the=20 right technical action, it's hard to miss good candidates. Why? Because = if you=20 have a decent data source, it's pretty hard to have bad data on basic=20 price/volume activity.
 
So, my preference is to look for *very* simple and basic = fundamental=20 requirements that would qualify a stock as a potential CANSLIM = candidate.=20 Simply, forward growth rate (>=3D15%) and liquidity (I personally use = $10/90000=20 AvgVol, but opinions vary on that). I don't bother looking further if = these=20 requirements aren't met, technicals or no. Why? If it's not a growth = stock, it's=20 not CANSLIM. If it's not liquid enough to attract the institutional = crowd, then=20 I'm not interested. At that point, I then look to technical condition to = draw my=20 eye to strength, then narrow down the stocks and/or rank them based on a = "preponderance of evidence" review of the fundamentals and the DDDD to = which you=20 refer because it's there you uncover potential business/accounting red = flags and=20 make an assessment as to the "N"(ew) that fuels future growth. (And by = the way,=20 I *love* the DDDD term...down and dirty due = diligence....excellent!)
 
Katherine
----- Original Message -----
From:=20 Mike = Gibbons=20
To: canslim@lists.xmission.com=
Sent: Wednesday, August 14, = 2002 1:31=20 PM
Subject: RE: [CANSLIM] = Re:Technicals vs=20 Fundamentals (was: NVDA)

Thanks Katherine,
 
I=20 seem to be getting more than my fair share of coaching lately, I hope = others=20 are benefiting also.
 
So=20 if I've understood, you look to the technicals first to alert you to = stocks=20 that warrant more careful scrutiny, then look at the fundamentals to = screen=20 for those that are CANSLIMish and finally do the real down and = dirty due=20 diligence ( I think I just invented a new acronym - = DDDD).
 
Now=20 when you say "the bear has taught me to favor technicals first", does = that=20 mean "in a bear market, I favor technicals first" or would this = approach apply=20 in all markets? If not, why not?
 
Aloha,
 
Mike = Gibbons
Proactive = Technologies,=20 LLC
http://www.proactech.com
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of = Katherine=20 Malm
Sent: Wednesday, August 14, 2002 5:55 = AM
To:=20 canslim@lists.xmission.com
Subject: [CANSLIM] = Re:Technicals vs=20 Fundamentals (was: NVDA)

Hi Mike,
 
Thought I might first clear up Charley's reference to my = comment about=20 technicals. As I see it, technicals have *always* been important, = but the=20 Bear has taught me to favor technicals first in my analysis/mining=20 techniques. This is a subtle shift in my thinking, maybe due to the = Bear and=20 maybe due to a new understanding of the CANSLIM discipline = which=20 continues to evolve day by day. 
 
Your comments brought some things to mind:
 
(1) You can always make money using technicals as your only = indicator,=20 but the entry/exit has to be in the short term, as that is the only = period=20 in which fundamentals would have no influence on the stock movement. = Intermediate term and beyond, the fundamentals are what drive the = business=20 and create value. In other words, the earnings and cash stream, = reinvested=20 in the business for growth or distributed to shareholders via = dividends,=20 create value in the underlying investment. If trading in the short = term, you=20 would never wait for the entire period of intermediate term = consolidation to=20 form, but instead would take advantage of the current directional = ride. For=20 example, in a cup & handle, you would essentially hitch a ride = on the=20 right side of a cup. You would also trade, e.g., reversals from = extremely=20 oversold conditions, regardless of the relative strength of the = stock to the=20 market. In some cases, you'd be bottom fishing. That's fine in a = short term=20 trade because you don't care what the next direction is going to be = once you=20 exit. In intermediate term and beyond, the next direction is what = matters=20 the most, because you are riding an underlying wave of movement that = covers=20 a longer period of time. Essentially, the short term trader gets = *really*=20 close to the chart and looks for ups/downs to ride. The intermediate = term=20 trader steps back 3 feet and looks for the underlying movement, up = or down,=20 with the close up price wiggles smoothed out. The long term trader = steps=20 back 7 feet and looks for underlying movement, with most all of the = wiggles=20 smoothed out.
 
(2) If you have 200 stocks with identical technicals and you = are=20 trading intermediate term and beyond, how would you choose between = them?=20 Fundamentals and due diligence allow you to assess the potential = return on=20 investment given (1) above. That, in turn, allows you to eliminate = some and=20 rank the remainder.
 
(3) WON's wording is "Buy on the fundamentals, sell on the = technicals"=20 meaning buy based on the fundamental characteristics of the company = using=20 technicals for entry, but on the flipside, consider only technicals = when=20 selling because fundamental indicators don't tell you that sales and = profits=20 are deteriorating until after the fact. Look at any highflier from = the last=20 Bull. Take CSCO as example. At the time the price peaked around = 80-85 in=20 2000, the fundamentals looked peachy. ROE, sales/earnings = growth, etc.=20 The technicals topped and began to slide, but it wasn't until 3 or 4 = quarters later that it be came apparent that fundamentals were = stinky.=20
 
(4) When you select and enter a stock well under intermediate = term=20 rules, the longer the underlying upward movement in the market, the = more=20 likely it is that you will have a "big winner." During the Bear, the = upward=20 waves have been short-lived. The best you could hope for was an = excellent=20 move while the market was in an intermediate term rally within the = longer=20 term bear. That means the exits are designed to protect capital. = Despite a=20 good company, the majority of stocks eventually get caught in the = downdraft.=20 However, if you are in the habit of catching things as they begin = their=20 ascent and the market as a whole moves from Bear rally mode to = sustainable=20 Bull mode, you're on for the ride already. That will allow you to = stay with=20 a winning position much longer, despite the near term price = wiggles.
 
Katherine
----- Original Message ----- =
From:=20 Mike Gibbons
To: canslim@lists.xmission.com= =20
Sent: Sunday, August 11, = 2002 4:47=20 AM
Subject: RE: [CANSLIM] = NVDA

I didn't realize what a pandora's box I was opening , but = I'm glad=20 I did raise the lid on NVDA.
 
What I learned was:
  • an excellent "C" and "A" can=20 be misleading=20
  • The = technicals such=20 as RS, up/down volume, etc were indicators that there's = something rotten=20 in the state of Denmark, despite the = fundamentals
Which would appear to confirm that = everything you=20 need to know is already in the tape.
 
Question: is this only true in a bear = market?=20 (I'm referring to Katherine's statement quoted by Charley), and if = it's=20 universally true then can't the lazy one's among us (and I include = myself=20 in that category) simply cheat by swing trading patterns, not = CANSLIM=20 fundamentals?
 
Aloha,
 
Mike = Gibbons
Proactive = Technologies,=20 LLC
http://www.proactech.com
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of=20 Chazmoore@aol.com
Sent: Saturday, August 10, 2002 = 5:49=20 PM
To: canslim@lists.xmission.com
Subject: = [CANSLIM]=20 NVDA

A week=20 or so ago, (time passes so fast), Katherine made a statement to = the=20 effect that the technicals are more important than the = fundamentals in a=20 bear market. I have now observed this to be true on numerous = recent=20 occasions, but my first impulse is to look for fundamental = excuses for a=20 falling stock price.
Quoting from a book I am reading, "The=20 fundamental work answers the question what, and the = technical=20 side of the equation answers the question when." , points = out how=20 important it is to have all the facts.
Thanks for calling my = attention to the SEC investigation. It is so discouraging to = learn of=20 these repeated accounting problems. One of these days I will = stop=20 believing in Santa Claus.

Charley=20 =
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