From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2799 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 2799 In this issue: RE: [CANSLIM] Current Case Study - XRAY RE: [CANSLIM] Quote Plus 2 and CANSLIM style investing ---------------------------------------------------------------------- Date: Wed, 14 Aug 2002 08:52:48 -1000 From: "Mike Gibbons" Subject: RE: [CANSLIM] Current Case Study - XRAY This is a multi-part message in MIME format. - ------=_NextPart_000_0023_01C2436F.F73E95E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit > a V-shaped cup with no valid handle yet in my mind. I agree. It formed two short handles (less than 5 days so not valid) starting on 8/8 and then 8/13. Today it's moved up 3.7% on above average volume and so is out of the most recent "handle" at least momentarily - the market close will determine if it continues to form the current handle or 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 8:08 AM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Current Case Study - XRAY Hi Jeffrey, I've had your question set a side since you posted, because frankly, XRAY's pattern did not fit the mold of the "Healthy Rising Stock" in which you can easily count bases and I was clueless as to how to answer. Here's what I *did* know by looking at XRAY's chart: -This is a stock on the rise, each time sporting a new, valid, base as it progresses along the uptrending path. In that sense, it fits the model of a "healthy rising stock" as I outlined in my notes the other day on the CECO discussion. http://WallStreet-LLC.com/canslim/HealthyRisingStock.JPG -This is not an ascending base, but instead a series of bases one after the other http://WallStreet-LLC.com/canslim/TypesOfBases.JPG -The problem with your question is that the rise between each successive base is not at least 25%, which would allow you to "count bases" in a traditional sense. That means that it's unlikely that this would be considered a first stage base. Intuitively, it doesn't make sense that it would be, either. Now, I was stuck, because the advance doesn't fit the mold. So how in the world to count bases? WON says that if it doesn't rise at least 25%, you don't add to the count. But.... I'm still not sure how you would treat something like this in that context. In my mind, if a stock is rising/basing/rising/basing/etc., *especially* in a Bear Market, then there's something going for it. So, to answer your question specifically, I called in the big guns and asked Tim Truebenbach of TradingMarkets.com. Here is his reply in answer to the specific question, "If the rise between bases is <25%, how do you count it?" His answer: "If the rise is less than 25% and the stock forms a new qualifying base (7 weeks or longer) then I would not count the previous base in the base count." [KM Note: a flat base only needs to be >=5wks] But, interestingly, he added this additional comment: "I don't put much weight into base counts during a Bear Market, because a stock that would normally push higher in an orderly fashion gets very choppy. At this point, just look at the most recent base of a stock and assess it from there." Well, there you go... a fresh point of view and something new learned as a result! In our conversation, another very interesting point came up. That is, though I am a fiend about reading market history, my own personal active trading experience is entirely in the '90's. That means that I have mental models of chart patterns formed accordingly. Tim suggested that it would be a great exercise to go back and re-review chart models *prior* to the '90's in HTMMIS and in the CANSLIM/IBD Advanced Seminar notebook (for those who have attended). A great idea and something I'll be adding to my to-do list. So...back to XRAY. Because XRAY hasn't formed a series of bases separated by a rise of 25%, you don't reset the base count. See my annotations at: http://WallStreet-LLC.com/canslim/XRAY081402.jpg. That leaves us with looking at the most current base, a V-shaped cup with no valid handle yet in my mind. (Certainly open to interpretation, so fire away!). See it at: http://WallStreet-LLC.com/canslim/XRAY(2)081402.jpg Katherine PS...Thanks for your question Jeffrey.... a real gold mine of learning for me personally. ----- Original Message ----- From: Gasta, Jeffrey To: 'canslim@lists.xmission.com' Sent: Thursday, August 08, 2002 2:58 PM Subject: RE: [CANSLIM] Current Case Study - XRAY Hello, another neophyte here. If the most recent pattern for XRAY is a valid CWH, then what stage base is it? I think I see a flat base running from about Feb. 02 until late May. This most recent pattern undercuts the previous pattern. So maybe this is a 1st stage base? Thanks, jg -----Original Message----- From: Mike Gibbons [mailto:mike@proactech.com] Sent: Thursday, August 08, 2002 3:27 PM To: canslim@lists.xmission.com Subject: [CANSLIM] Current Case Study - XRAY In view of the interest in current cases rather than 20-20 hindsight, and discussions to aid the learning process, I offer XRAY as an example, which broke out today from a CwH pattern with short handle Firstly, let me add the disclaimer that I'm a programmer who was introduced to CANSLIM as a development project, and I'm 1 year into the 3 yr learning curve, so further comment by the "experts" is welcomed to improve my own understanding. Firstly the fundamentals which are very strong, with the exception that Institutional Ownership is already quite high. There are differing views on what the level should be, but somewhere less than 30% would be better. Additional DD would be required to determine why pre-tax profit margins are decreasing and if that is cause for concern. (This information is drawn from yahoo/multex not IBD) C Current Earnings Earnings per share growth of at least 25% in the most recent quarter Most recent quarter year on year growth. (Published financial data). 35.00 % Latest three quarters of sales growth should be a minimum of 25% Average year on year growth for last 3 quarters. (Published financial data). 51.00 % Sales growth should be accelerating. Difference in year on year growth rates over last 3 quarters. (Published financial data). 23.00 A Strong Annual Earnings Growth Annual earnings growth for the last three years of 25% or greater 3 year compound EPS growth rate. (Published financial data). 53.00 % Return on equity should be at least 17% Published financial data. 21.00 % Pretax profit margins should be increasing Profit Margin for most recent quarter minus profit margin 1 year ago. (Published financial data). -1.00 N New Products, Services or Leadership If a company has a dynamic new product or service, or is capitalizing on new conditions in the economy, this can have a dramatic impact on the price of a stock. Buy stocks just as they emerge from a sound "base" pattern and make new price highs. Not Known S Supply and Demand Watch the demand for shares by looking at the percentage change in volume for each of your stocks. Analyze a stock's daily and weekly price and volume changes. The up/down volume ratio measures the ratio of accumulation days to distribution days over the last 50 days. 0.90 L Leading Stocks in Leading Industry Groups Nearly 50% of a stock's price action is a result of its industry group's performance. Focus on the top industry groups, and within those groups select stocks with the best price performance. Multex Industry Rank ( 0 - 99 ) (26 week relative performance). 90 Multex Rank within Industry ( 0 - 99 ). Provided for informational purposes only. (4 week relative performance) 22 The stock's Relative Price Strength Rating should be in the 80s or 90s We calculate RS daily by ranking all NYSE, AMEX and NASDAQ stocks. Our RS algorithm is described here. It correlates well with IBD's. Value. Score pro-rated in range 60-79. 83 I Institutional Sponsorship You want at least a few of the better performing mutual funds owning the stock. They're the ones who will drive the stock up on a sustained basis. Institutional Ownership. Value in range 5 - 30% needed to score 1. 79.00 % No. of Institutions. Provided for informational purposes only. 568 M Market Direction You can buy the best stocks, but if the general market is weak, most likely your stocks will be weak also. Because Market Direction is not specific to any one particular stock, we do not evaluate it on a per stock basis. Look at the chart below. Note that the handle is only 3 days long. This is normally insufficient to have shaken out the potential sellers and WON recommends that a handle should be at least 1-2 weeks long, otherwise a breakout is prone to failure. Also the volume in the handle has not dried up. This is often the case in the early days of handle formation and we would like to see the volume decrease below the ADV and the price wedge downwards as the handle progresses. Look at the volume coming up the right side of the cup - consistently above the 50 ADV accompanied by big price positive price movements, with only two days when the stock closed slightly down. It would have been better if the volume had been below the ADV on those days, in which case the stock would have earned a higher CQ (Chart Quality) score. Note the RS line. This is quite high at 83, but has advanced only slightly over the last few days despite significant price gains in this stock. This indicates that other stocks are doing at least as well. The 50 day up/down volume is at 0.90. Values less than 1 mean that the down volume days exceed the up volume days. However, the trend of the line is upwards, which is a positive sign. I'll go out on a limb and say my guess is that todays breakout will not be sustained (although its holding now - just) and it will continue to form a handle. I conclude that this is one to watch but not to buy right now. Aloha, Mike Gibbons Proactive Technologies, LLC http://www.proactech.com - ------=_NextPart_000_0023_01C2436F.F73E95E0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
>=20 a V-shaped cup = with no valid=20 handle yet in my mind.
 
I=20 agree. It formed two short handles (less than 5 days so not valid) = starting on=20 8/8 and then 8/13. Today it's moved up 3.7% on above average volume = and so=20 is out of the most recent "handle" at least momentarily - the market = close will=20 determine if it continues to form the current handle or = 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 8:08 AM
To:=20 canslim@lists.xmission.com
Subject: Re: [CANSLIM] Current = Case Study=20 - XRAY

Hi Jeffrey,
 
I've had your question set a side since you posted, because = frankly,=20 XRAY's pattern did not fit the mold of the "Healthy Rising Stock" in = which you=20 can easily count bases and I was clueless as to how to answer.
 
Here's what I *did* know by looking at XRAY's chart:
-This is a stock on the rise, each time sporting a new, valid, = base as it=20 progresses along the uptrending path. In that sense, it fits the model = of a=20 "healthy rising stock" as I outlined in my notes the other day on the = CECO=20 discussion.
          &nbs= p;       =20 http://= WallStreet-LLC.com/canslim/HealthyRisingStock.JPG
=

-This is not an = ascending base,=20 but instead a series of bases one after the other

          &nbs= p;       =20 http://WallSt= reet-LLC.com/canslim/TypesOfBases.JPG

-The problem with your = question=20 is that the rise between each successive base is not at least 25%, = which would=20 allow you to "count bases" in a traditional sense. That means that = it's=20 unlikely that this would be considered a first stage base. = Intuitively, it=20 doesn't make sense that it would be, either.

 

Now, I was stuck, = because the=20 advance doesn't fit the mold. So how in the world to count bases? WON = says=20 that if it doesn't rise at least 25%, you don't add to the count. = But.... I'm=20 still not sure how you would treat something like this in that = context. In my=20 mind, if a stock is rising/basing/rising/basing/etc., *especially* in = a Bear=20 Market, then there's something going for it. So, to answer your = question=20 specifically, I called in the big guns and asked Tim Truebenbach of=20 TradingMarkets.com.

 

Here is his reply in = answer to=20 the specific question, "If the rise between bases is <25%, how do = you count=20 it?"

His answer: "If the = rise is less=20 than 25% and the stock forms a new qualifying base (7 weeks or longer) = then I=20 would not count the previous base in the base count." [KM Note: a flat = base=20 only needs to be >=3D5wks]

 

But, interestingly, he = added this=20 additional comment: "I don't put much weight into base counts during a = Bear=20 Market, because a stock that would normally push higher in an orderly = fashion=20 gets very choppy. At this point, just look at the most recent base of = a stock=20 and assess it from there."

 

Well, there you go... a = fresh=20 point of view and something new learned as a result!

 

In our conversation, = another very=20 interesting point came up. That is, though I am a fiend about reading = market=20 history, my own personal active trading experience is entirely in the = '90's.=20 That means that I have mental models of chart patterns formed = accordingly. Tim=20 suggested that it would be a great exercise to go back and re-review = chart=20 models *prior* to the '90's in HTMMIS and in the CANSLIM/IBD Advanced = Seminar=20 notebook (for those who have attended). A great idea and something = I'll be=20 adding to my to-do list.

 
So...back to XRAY. Because XRAY hasn't formed a series of bases = separated=20 by a rise of 25%, you don't reset the base count. See my annotations = at: http://WallStr= eet-LLC.com/canslim/XRAY081402.jpg.
 
That leaves us with looking at the most current base, a V-shaped = cup with=20 no valid handle yet in my mind. (Certainly open to interpretation, so = fire=20 away!). See it at: http://WallS= treet-LLC.com/canslim/XRAY(2)081402.jpg
 
Katherine
 
PS...Thanks for your question Jeffrey.... a real gold mine of = learning=20 for me personally.
 
 
----- Original Message -----
From:=20 Gasta, Jeffrey
To: 'canslim@lists.xmission.com'= =20
Sent: Thursday, August 08, = 2002 2:58=20 PM
Subject: RE: [CANSLIM] = Current Case=20 Study - XRAY

Hello, another neophyte here.  If the most recent = pattern for=20 XRAY is a valid CWH, then what stage base is it?  I think I see = a flat=20 base running from about Feb. 02 until late May.  This most = recent=20 pattern undercuts the previous pattern.  So maybe this is a 1st = stage=20 base?  Thanks, jg
-----Original Message-----
From: Mike Gibbons=20 [mailto:mike@proactech.com]
Sent: Thursday, August 08, = 2002 3:27=20 PM
To: canslim@lists.xmission.com
Subject: = [CANSLIM]=20 Current Case Study - XRAY

In view of the interest in current = cases rather=20 than 20-20 hindsight,  and discussions = to aid the=20 learning process,  I offer XRAY as an = example,=20 which broke out today from a CwH pattern with short=20 handle
 
Firstly, let me add the disclaimer that = I'm a=20 programmer who was introduced to CANSLIM as a development project, = and I'm=20 1 year into the 3 yr learning curve, so further comment by the = "experts"=20 is welcomed to improve my own understanding.
 
Firstly the fundamentals which are very strong, = with the=20 exception that Institutional Ownership is already quite high. = There are=20 differing views on what the level should be, but somewhere less = than 30%=20 would be better. Additional DD would be required to = determine why=20 pre-tax profit margins are decreasing and if that is = cause for=20 concern. (This information is drawn from yahoo/multex not=20 IBD)  
 
C
Current = Earnings
Earnings per share growth = of at least=20 25% in the most recent quarter

Most recent quarter year on = year growth.=20 (Published financial data).

 35.00 % =
Latest three quarters of = sales growth=20 should be a minimum of 25%
Average year on year growth = for last 3=20 quarters. (Published financial data).
 51.00 % =
Sales growth should be = accelerating.=20
Difference in year on year = growth rates=20 over last 3 quarters. (Published financial data). =
23.00 =
A
Strong Annual Earnings=20 Growth
Annual earnings growth for = the last=20 three years of 25% or greater
3 year compound EPS growth = rate.=20 (Published financial data).
 53.00 % =
Return on equity should be = at least=20 17%
Published financial=20 data.
 21.00 = %
Pretax profit margins = should be=20 increasing
Profit Margin for most = recent quarter=20 minus profit margin 1 year ago. (Published financial=20 data).
 -1.00 =
N
New Products, Services or=20 Leadership
If a company has a dynamic = new product=20 or service, or is capitalizing on new conditions in the = economy,=20 this can have a dramatic impact on the price of a stock. Buy = stocks=20 just as they emerge from a sound "base" pattern and make new = price=20 highs.
Not = Known  
S
Supply and Demand =
Watch the demand for shares = by looking=20 at the percentage change in volume for each of your stocks. = Analyze=20 a stock's daily and weekly price and volume changes.=20
The up/down volume ratio = measures the=20 ratio of accumulation days to distribution days over the = last 50=20 days.
 0.90 =
L
Leading Stocks in Leading = Industry=20 Groups
Nearly 50% of a stock's = price action is=20 a result of its industry group's performance. Focus on the = top=20 industry groups, and within those groups select stocks with = the best=20 price performance.
Multex Industry Rank ( 0 - = 99 )
(26=20 week relative performance).
 90 =

Multex Rank within Industry ( = 0 - 99 ).=20 Provided for informational purposes only.
(4 week = relative=20 performance)

 22 =
The stock's Relative Price = Strength=20 Rating should be in the 80s or 90s
We calculate RS daily by = ranking all=20 NYSE, AMEX and NASDAQ stocks. Our RS algorithm is described=20 here. It correlates well with = IBD's. Value.=20 Score pro-rated in range 60-79.
 83 =
I
Institutional=20 Sponsorship
You want at least a few of = the better=20 performing mutual funds owning the stock. They're the ones = who will=20 drive the stock up on a sustained basis.
Institutional Ownership. = Value in range=20 5 - 30% needed to score 1.
 79.00 % =
No. of Institutions. = Provided for=20 informational purposes only.
 568 =
M
Market Direction =
You can buy the best = stocks, but if the=20 general market is weak, most likely your stocks will be weak = also.
Because Market Direction is = not=20 specific to any one particular stock, we do not evaluate it = on a per=20 stock basis.
  
 
Look at the chart below. Note that the = handle is=20 only 3 days long. This is normally insufficient to have shaken out = the=20 potential sellers and WON recommends that a handle should be at = least 1-2=20 weeks long, otherwise a breakout is prone to failure. Also the = volume in=20 the handle has not dried up. This is often the case in the early = days of=20 handle formation and we would like to see the volume decrease = below the=20 ADV and the price wedge downwards as the handle=20 progresses.
 
Look at the volume coming up the = right side of=20 the cup - consistently above the 50 ADV accompanied by big price = positive=20 price movements, with only two days when the stock closed slightly = down.=20 It would have been better if the volume had been below the ADV on = those=20 days, in which case the stock would have earned a higher CQ (Chart = Quality) score.

 Note the=20 RS line. This is quite high at 83, but has advanced only=20 slightly over the last few days despite=20 significant price gains in this stock. This indicates that other=20 stocks are doing at least as=20 well.
 
The 50 = day up/down=20 volume is at 0.90. Values less than 1 mean that the down volume = days=20 exceed the up volume days. However, the trend of the line is = upwards,=20 which is a positive sign.
 
 I'll go out on a limb and = say my=20 guess is that todays breakout will not be sustained (although its holding now -=20 just) and it will continue to form a handle.=20
 
I conclude that this is = one to watch=20 but not to buy right=20 = now.
=
 
3D""
 
 
Aloha,
 
Mike = Gibbons
Proactive = Technologies,=20 LLC
http://www.proactech.com
 
- ------=_NextPart_000_0023_01C2436F.F73E95E0-- - - - -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 15:00:45 -0400 From: Bill Lanius Subject: RE: [CANSLIM] Quote Plus 2 and CANSLIM style investing Victor, You asked about using Quotes Plus to screen for CANSLIM stocks. At the site below, you should be able to download a QP scan written to accomplish this. Go to the scan index on the left side and choose "CANSLIM". There will be instructions for downloading into the QP scan program. If you have problems, contact me off-line, and I'll try to get you set up. I have no first hand experience using the scan--can't give any guidance on its effectiveness but you may want to try it and as you say, "tweak it" for your own preferences. http://www.geocities.com/WallStreet/Exchange/1216/index.html Bill. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #2799 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.