From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2919 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 Sunday, September 8 2002 Volume 02 : Number 2919 In this issue: Re: [CANSLIM] Buy Stop Limit orders? Re: [CANSLIM] VMF Re: [CANSLIM] Wedging example: CECO Re: [CANSLIM] Wedging example: CECO ---------------------------------------------------------------------- Date: Sun, 8 Sep 2002 07:39:39 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Buy Stop Limit orders? This is a multi-part message in MIME format. - ------=_NextPart_000_00CB_01C2570A.E3157940 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable John, I rarely use stops on either buy or sell side. Mostly a function = of the kind of stocks I personally buy (small & micro cap, often thinly = traded, often lower priced) and my broker won't accept these type = orders. I will use limits on both my buys and sells, but only because I = buy and sell early (or try to, anyway). On the other hand, if I was = trading big cap stocks on NYSE, I likely would use stops and stop limits = a lot. I don't use alerts at all, except for news. If I have the time to = respond to my cell phone alert, I have the time to look at the markets. - ----- Original Message -----=20 From: John Calkins=20 To: canslim@lists.xmission.com=20 Sent: Saturday, September 07, 2002 11:52 PM Subject: Re: [CANSLIM] Buy Stop Limit orders? Thanks Tom and Bond.......James Bond for all these great examples. This = is a real education on execution of trades. I can see the advantage of the buy stop limit order with keeping you = above the pivot and below an extended price except you might end up = buying on low volume. Do you and others prefer this method when you = cannot get to your trading device during the day or do you use it = regularly? And I can see the advantage of the sell stop order, but I've been caught = so many times in these gap down situations that I'm wondering if I = should place my sell stop above the pivot point so I can get the heck = out, or does this change with the market? I find myself checking all = the time to see what the action is when I can, its just I can't seem to = get in front of a computer or on the phone at the most important time. = I would like to set hard stops if they work for me. =20 Now the sell stop limit orders have me confused. I do see that at least = half of the time a stock will take a bounce so I can understand some of = the logic of a sell stop limit order of not carrying you to the = basement, but isn't it better to find a sell stop that might get you and = up-tic like above one of the areas of resistance? I keep telling myself if I could only just be there at the right time, I = could improve my trades....but this is a fallacy isn't it. It doesn't = matter if you get there or not, there are always surprises that fowl up = your trade, its just finding a method like James's by looking at action = during the days before that will support your move..........after you = burn yourself enough times, you put the gloves on ea? Next question. I keep telling myself, if I had the perfect stock alert = set then I could act on the volume. I see where MSN had price and = volume. I used this for a while instead of the hard stops. My cell = would give me the alert that my price or volume or both had been hit and = then I would be able to make a little more timely decision. Is this = again another inexperienced trader thinking that he's got the greatest = plan, just to have it fail? Half the time my Verizon phone won't get = the alert for some reason. This all just keeps coming back to such a small area of trading in the = pivot and break out that everyone try's to hit. It eventually seems to = go in the direction that the short sellers want. IBD say wait for the = market but then say the best moves are off the bottom. If the market = has moved 20% off the last bottom I just missed it again somehow. I'm getting quite gun shy. I'm capitulating. (JC) ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Friday, September 06, 2002 7:24 PM Subject: Re: [CANSLIM] Buy Stop Limit orders? Nancy, a stop order converts to a market order (wherever the market is = then). A stop LIMIT order converts to a LIMIT order (again, wherever the = market is). So if the stop price is hit by a big gap, then the stop = order becomes a market, and naturally executes, altho at a price that = may be a real surprise. A stop LIMIT order, because it now is a LIMIT = order, may not execute if the market moved outside of the LIMIT range. Example: you find an absolutely perfect, classic, textbook cup and = handle. Can't find a single thing wrong with either the chart or its = fundamentals, even after exhaustive hours of due diligence (ok, I admit = it, I like to fantasize). You determine that the perfect pivot point is exactly $25.20, so you = enter a Buy Stop order at $25.30. Your friend, however, enters a Buy = Stop LIMIT order at Buy Stop $25.30, LIMIT $26.46 (5% over the pivot). = Shortly before the open, the company announces that it has accepted a = cash buyout at $29, and the stock gaps to that price (or higher, or just = under) as the shorts immediately cover. Your buy is executed at around = $29, and the best you can hope for is to sell at a breakeven, if you are = lucky cover transaction costs. Your friend's order never executes = because of the LIMIT and is able to simply cancel the order when the = news is discovered. Exactly the same thing can happen on a Sell Stop / Sell Stop LIMIT = order. A stop order means you take what the market gives you, and can be = triggered when the volume might have kept you out of the trade entirely. = A stop LIMIT order means you may never get an execution, but may have a = second chance to evaluate the situation, and change the order, or cancel = it entirely. As one further comment, many firms still will not accept Stop LIMIT = orders on NASDAQ stocks, especially if they are not very liquid. ----- Original Message -----=20 From: NANCY POLCARO=20 To: canslim=20 Sent: Friday, September 06, 2002 4:10 PM Subject: Re: [CANSLIM] Buy Stop Limit orders? which is right? One says a stop order will always execute somewhere = even if it is not at the stop price( this is what I thought) and one = says the market can pass through the stop and it will never be executed. = They both can not be correct. Advice from the more experienced then I = please. Thanks again for the help nancy ----- Original Message ----- From: Dan Forant Sent: Friday, September 06, 2002 10:57 AM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Buy Stop Limit orders? A stop order, buy or sell will always execute (somewhere). A Stop = Limit order may not if the market blows up through the stop *limit*. DanF ----- Original Message ----- From: "david frank" To: Sent: Friday, September 06, 2002 12:53 PM Subject: Re: [CANSLIM] Buy Stop Limit orders? > Warren, the bad thing about a stop order is that it is a secondary = order. A > broker doesn't have to execute it, thereby, you don't really have = any > recourse, if it is not executed, although the price of the stock = was within > your price parameters. If the price of the stock is outside of = your stop, it > will not execute. dave > ----- Original Message ----- > From: "Warren Keuffel" > To: "CANSLIM list" > Sent: Friday, September 06, 2002 10:55 AM > Subject: [CANSLIM] Buy Stop Limit orders? > > > > I am curious (yellow) -- sorry, bad joke that will be undersood = only by > > those of a certain age, if no one "gets" it I will explain, if = asked -- > > > > anyway, back to the subject -- whether people here have used buy = stop > > limit orders to trigger a purchase if the price of a stock rises = above > > the limit price. You would need to use this with some sort of = manual or > > automatic scan for increased volume to make a good buy on a = breakout, > > but given the volume, seems like a buy stop limit order would = help one > > buy at the pivot point. Or not? > > > > Thanks, > > Warren > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - -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_00CB_01C2570A.E3157940 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
John, I rarely use stops on either buy = or sell=20 side. Mostly a function of the kind of stocks I personally buy (small = &=20 micro cap, often thinly traded, often lower priced) and my broker won't = accept=20 these type orders. I will use limits on both my buys and sells, but only = because=20 I buy and sell early (or try to, anyway).  On the other hand, if I = was=20 trading big cap stocks on NYSE, I likely would use stops and stop limits = a=20 lot.
 
I don't use alerts at all, except for = news. If I=20 have the time to respond to my cell phone alert, I have the time to look = at the=20 markets.
 
----- Original Message -----=20
From: John = Calkins=20
Sent: Saturday, September 07, 2002 11:52 PM
Subject: Re: [CANSLIM] Buy Stop Limit orders?

Thanks Tom and Bond.......James Bond = for all these=20 great examples.  This is a real education on execution of=20 trades.
 
I can see the advantage of the buy stop = limit order=20 with keeping you above the pivot and below an extended price except you = might=20 end up buying on low volume.  Do you and others prefer this method = when you=20 cannot get to your trading device during the day or do you use it=20 regularly?
 
And I can see the advantage of the = sell stop=20 order, but I've been caught so many times in these gap down situations = that I'm=20 wondering if I should place my sell stop above the pivot point so I can = get the=20 heck out, or does this change with the market?   I find myself = checking all the time to see what the action is when I can, its just I = can't=20 seem to get in front of a computer or on the phone at the most important = time.  I would like to set hard stops if they work for me. =20
 
Now the sell stop limit orders have me=20 confused.  I do see that at least half of the time a stock will = take a=20 bounce so I can understand some of the logic of a sell stop limit order = of not=20 carrying you to the basement, but isn't it better to find a sell stop = that might=20 get you and up-tic like above one of the areas of = resistance?
 
I keep telling myself if I could only = just be there=20 at the right time, I could improve my trades....but this is a fallacy = isn't=20 it.  It doesn't matter if you get there or not, there are always = surprises=20 that fowl up your trade, its just finding a method like James's by = looking=20 at action during the days before that will support your = move..........after you=20 burn yourself enough times, you put the gloves on ea?
 
Next question.  I keep telling = myself, if I=20 had the perfect stock alert set then I could act on the volume.  I = see=20 where MSN had price and volume.  I used this for a while instead of = the=20 hard stops.  My cell would give me the alert that my price or = volume or=20 both had been hit and then I would be able to make a little more timely=20 decision.  Is this again another inexperienced trader thinking that = he's=20 got the greatest plan, just to have it fail?  Half the time my = Verizon=20 phone won't get the alert for some reason.
 
This all just keeps coming back to such = a small=20 area of trading in the pivot and break out  that everyone try's to = hit. It=20 eventually seems to go in the direction that the short sellers = want.  IBD=20 say wait for the market but then say the best moves are off the = bottom.  If=20 the market has moved 20% off the last bottom I just missed it again=20 somehow.
 
I'm getting quite gun shy.  I'm=20 capitulating.
 
(JC)
 
 
----- Original Message -----
From:=20 Tom=20 Worley
Sent: Friday, September 06, = 2002 7:24=20 PM
Subject: Re: [CANSLIM] Buy Stop = Limit=20 orders?

Nancy, a stop order converts to a = market order=20 (wherever the market is then). A stop LIMIT order converts to a LIMIT = order=20 (again, wherever the market is). So if the stop price is hit by a big = gap,=20 then the stop order becomes a market, and naturally executes, altho at = a price=20 that may be a real surprise. A stop LIMIT order, because it now is a = LIMIT=20 order, may not execute if the market moved outside of the LIMIT=20 range.
 
Example: you find an absolutely = perfect, classic,=20 textbook cup and handle. Can't find a single thing wrong with either = the chart=20 or its fundamentals, even after exhaustive hours of due diligence (ok, = I admit=20 it, I like to fantasize).
 
You determine that the perfect pivot = point is=20 exactly $25.20, so you enter a Buy Stop order at $25.30. Your friend, = however,=20 enters a Buy Stop LIMIT order at Buy Stop $25.30, LIMIT $26.46 (5% = over the=20 pivot). Shortly before the open, the company announces that it has = accepted a=20 cash buyout at $29, and the stock gaps to that price (or higher, or = just=20 under) as the shorts immediately cover. Your buy is executed at around = $29,=20 and the best you can hope for is to sell at a breakeven, if you are = lucky=20 cover transaction costs. Your friend's order never executes because of = the=20 LIMIT and is able to simply cancel the order when the news is=20 discovered.
 
Exactly the same thing can happen on = a Sell Stop=20 / Sell Stop LIMIT order. A stop order means you take what the market = gives=20 you, and can be triggered when the volume might have kept you out of = the trade=20 entirely. A stop LIMIT order means you may never get an execution, but = may=20 have a second chance to evaluate the situation, and change the order, = or=20 cancel it entirely.
 
As one further comment, many firms = still will not=20 accept Stop LIMIT orders on NASDAQ stocks, especially if they are not = very=20 liquid.
 
----- Original Message -----=20
From: NANCY = POLCARO=20
To: canslim
Sent: Friday, September 06, 2002 4:10 PM
Subject: Re: [CANSLIM] Buy Stop Limit orders?

which is right?  One says a stop order will always = execute=20 somewhere even if it is not at the stop price( this is what I thought) = and one=20 says the market can pass through the stop and it will never be=20 executed.  They both can not be correct.  Advice from the = more=20 experienced then I please.  Thanks again for the help nancy
 
----- Original Message -----
From: Dan=20 Forant
Sent: Friday, September 06, = 2002 10:57=20 AM
To: = canslim@lists.xmission.com
Subject: Re: [CANSLIM] Buy = Stop Limit=20 orders?
 
A stop order, buy or sell will always execute = (somewhere).=20 A Stop Limit
order may not if the market blows up through the = stop=20 *limit*.

DanF
----- Original Message -----
From: "david = frank"=20 <camelot.homes@charter.net>
To:=20 <canslim@lists.xmission.com>
Sent: Friday, September 06, = 2002 12:53=20 PM
Subject: Re: [CANSLIM] Buy Stop Limit orders?


> = Warren,=20 the bad thing about a stop order is that it is a secondary=20 order.
A
> broker doesn't have to execute it, thereby, you = don't=20 really have any
> recourse, if it is not executed, although = the price=20 of the stock was
within
> your price parameters. If the = price of=20 the stock is outside of your stop,
it
> will not execute.=20 dave
> ----- Original Message -----
> From: "Warren = Keuffel"=20 <wkeuffel@xmission.com>
> To: "CANSLIM list"=20 <canslim@lists.xmission.com>
> Sent: Friday, September = 06, 2002=20 10:55 AM
> Subject: [CANSLIM] Buy Stop Limit=20 orders?
>
>
> > I am curious (yellow) -- sorry, = bad=20 joke that will be undersood only by
> > those of a certain = age, if=20 no one "gets" it I will explain, if asked --
> >
> = >=20 anyway, back to the subject -- whether people here have used buy=20 stop
> > limit orders to trigger a purchase if the price of = a stock=20 rises above
> > the limit price. You would need to use this = with=20 some sort of manual or
> > automatic scan for increased = volume to=20 make a good buy on a breakout,
> > but given the volume, = seems like=20 a buy stop limit order would help one
> > buy at the pivot = point.=20 Or not?
> >
> > Thanks,
> > = Warren
>=20 >
> >
> > -
> > -To = subscribe/unsubscribe,=20 email "majordomo@xmission.com"
> > -In the email body, = write=20 "subscribe canslim" or
> > -"unsubscribe canslim".  Do = not use=20 quotes in your email.
>
>
> -
> -To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
> -In = the email=20 body, write "subscribe canslim" or
> -"unsubscribe = canslim".  Do=20 not use quotes in your email.
>


-
-To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
-In the = email body,=20 write "subscribe canslim" or
-"unsubscribe canslim".  Do not = use=20 quotes in your email.
- ------=_NextPart_000_00CB_01C2570A.E3157940-- - - - -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: Sun, 8 Sep 2002 07:52:48 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] VMF Norman, I think looking at a fund's NAV on anything less than a weekly chart will only confuse you. In this case, it is a well managed bond fund, working much like a money market, some higher risk, but better yield (currently 5.7%). It has been remarkably stable on NAV for many years. It is also a closed end fund, trading AMEX, which means theoretically it trades like a stock. Because of the low daily volume, however, it is likely to have a sizable spread between the bid and ask, and be very sensitive to any volume at all. Because it is not only a municipal (tax free) bond fund, but also only holds Massachusetts bonds, it will have its greatest appeal to high income taxpayers of MA. As long as rates remain stable, or fall further, funds like this may continue doing well. I do note that it has been trading over NAV quite a lot, so people are willing to pay a premium for it. - ----- Original Message ----- From: "Norman" To: Sent: Saturday, September 07, 2002 7:37 PM Subject: Re: [CANSLIM] VMF OK, OK, must have been my keyboard getting revenge on me. Try VMV:-) Norm - ----- Original Message ----- From: "Norman" To: Sent: Saturday, September 07, 2002 6:19 PM Subject: [CANSLIM] VMF > What is going on with this action? Seems to do the "tails up" thing an > awful (pun intended) lot. > > Norm > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -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: Sun, 8 Sep 2002 08:20:35 -0500 From: "Katherine Malm" Subject: Re: [CANSLIM] Wedging example: CECO This is a multi-part message in MIME format. - ------=_NextPart_000_06FD_01C25710.9AF33AC0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable May as well add this to the reply, from today's "Ask Bill" Column: =20 Question: What determines whether a handle is sloping up or down, = the highs or lows of the handle? =20 - Submitted from Chicago, Ill. =20 =20 Answer: Ideally, the handle should drift downward along both its = high and lows points. If the lows drift downward while the highs are = basically flat, that's not necessarily a bad thing, although it's = something to treat cautiously. If the lows drift downward but the highs = drift up, this could indicate looseness in the handle, which is not = constructive action. These are just general observations about how a = handle should look like. The most important thing to avoid is a handle = that consistently drifts upward along its price lows. These patterns = have a much higher probability of failing when the stock breaks out.=20 =20 - ----- Original Message -----=20 From: "Katherine Malm" To: Sent: Thursday, September 05, 2002 9:37 AM Subject: Re: [CANSLIM] Wedging example: CECO | Hi Kelly, |=20 | For the most part, the action on the right side of CECO's "V" cup was | wedging, just as you noted. You had to pick the toughest chart in the | *universe* though.... Prior to that sudden V-cup, the basing action = was | actually constructive. Since then, it's pretty much a nightmare of = activity | and very difficult to read. The first area you marked as a pivot is = iffy for | 2 reasons. First, the base, having been so deep, has to be at least 6 = weeks | in length to be valid. That means the earliest a valid pivot could = form | would be about 8/2. You can see the action there is a little suspect, | forming a sloppy handle at best. In the handle itself, you actually = want to | see volume dry up, but the problem is that this stock took a big = plunge at | the start of the handle. One could certainly argue that the handle = "moved | sideways" but I'd be disinclined to do so because of the wedging = action to | get there. That, combined with a very low volume breakout attempt on = 8/15 | just seals the deal...this stock didn't want to go *anywhere.* I'll = bet the | strong action in the group has had more to do with it's ability to = hang in | there than anything else. I wouldn't, as a result look at the high = 8/16 as a | "pivot" but instead a pull back into the base. The only thing that can = save | CECO at this point is a nice tight sideways consolidation on quiet = volume. | If it can do that, then I'd say it's ready to move on. If it stays = wide and | loose as it's been, then hasta la vista baby. |=20 | Katherine | ----- Original Message ----- | From: "Kelly Short" | To: | Sent: Wednesday, September 04, 2002 8:34 PM | Subject: [CANSLIM] Wedging example: CECO |=20 |=20 | | Katherine, | | | | To continue your point on wedging- would this stock be an example of | wedging | | action? | | | | http://www.kellyrshort.com/canslim/CECOwedgeexample.gif | | | | Kelly | | | | - | | -To subscribe/unsubscribe, email "majordomo@xmission.com" | | -In the email body, write "subscribe canslim" or | | -"unsubscribe canslim". Do not use quotes in your email. |=20 - ------=_NextPart_000_06FD_01C25710.9AF33AC0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
May as well add this to the reply, from today's "Ask Bill" = Column:
 
 Question: What determines = whether a handle=20 is sloping up or down, the highs or lows of the handle?    
- Submitted from=20 Chicago, Ill.