From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #3295 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 Tuesday, May 6 2003 Volume 02 : Number 3295 In this issue: Re: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) RE: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) Re: [CANSLIM] IVX RE: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) ---------------------------------------------------------------------- Date: Tue, 06 May 2003 20:11:49 -0700 From: Karen White Subject: Re: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) Hi Katherine,,,, now with all that info on a handle I have to ask if you are a Virgo and secondly, have you ever considered a book? Amazed Karen At 09:58 PM 5/6/2003 -0500, you wrote: >"urn:schemas-microsoft-com:vml" xmlns:o = >"urn:schemas-microsoft-com:office:office" xmlns:w = >"urn:schemas-microsoft-com:office:word"> >Hi Roger, > >An "ideal" handle will drift down on decreasing volume. WON considers this >drifting down to be one of the most important factors in a good handle. If >there is a shake out day or two on high volume *within* the handle, that's >a good thing, especially if the days end in the upper part of their range. >(Plenty more handle characteristics--see a more complete list at the end >of this email ). > >That said, it's honestly rare that you get "perfection" in a handle. My >comment on JOSB was that the lack of drift down and/or shakeout *within* >the handle made it a "poor quality" handle. That generally adds to your >risk, but plenty of breakouts occur from less than perfect bases and less >than perfect handles. It's all a matter of odds--just part of the decision >process when determining whether to take a breakout or not. My overall >point on JOSB is that given the lack of drift down in the handle, the risk >of a pullback *after* breakout then increases. That's essentially what >happened. Buying late after a higher risk breakout increases your odds of >getting caught in a pullback. > >Katherine ...handle info follows: > > >----- Original Message ----- > >From: Katherine Malm > >To: canslim@lists.xmission.com > >Sent: Friday, August 16, 2002 4:53 PM > >Subject: [CANSLIM] Re: Handles, A list of Characteristics > >HANDLES > >General Requirements: > >1. Handles most often begin to form lower than the left side of the base, >generally when the stock has climbed within 5-15% of the high. > >2. The midpoint of a good handle should be higher than the midpoint of the >base. > >3. The handle should form in the upper half of the base. > >4. The handle should form above the 200 day MA, but trade may often lull >below the 50 day MA. > >5. The handle should drift sideways or lower. Upward "wedging" handles are >failure prone because the upwardly drifting price doesn't shake out the >weak holders, leaving the stock vulnerable to a correction. Wedging >handles also make pivots harder to spot. WON considers this the most >important aspect of a handle formation. > >6. The handle should drift lower on light volume. This shows existing >holders are content to remain invested. > >7. Within the handle, volatility should contract. The distance between >price highs and lows (intraday and day to day) should narrow. Avoid >zigzagging or wide and loose handles. Choppy handles carry more uncertainty. > >8. In normal markets, proper handles correct 10-20%. In Bear markets, they >can correct as much as 30%. A handle that drifts <10% is fine as long as >it is drifting downward and meets other requirements. > >9. The handle must be at least one week in length but can stretch as much >as 7-10 weeks. It should be smaller in proportion to the size of the cup. > > > >Special Considerations: > >1. "High handles" can begin to form at prices higher than the left side of >the base. This is neither ideal nor common, but can still be successful as >long as the other handle requirements are met. > >2. Be sure to look at both daily and weekly charts, as stocks with lengthy >bases will have long handles. The lengthy handle may appear as a base if >looking at a daily chart. Long bases signal strong support and are very >strong patterns. (The longer the base, the stronger the subsequent move.) >Based on a study done by the IBD in 96-97, small and mid cap stocks had 33 >week bases on average. Large caps had 66 week bases on average. > >3. A stock can form a handle, near its pivot point and then begin forming >another handle. In this case, consider this to be one long handle. > >4. "No-handle" bases are more error prone, but tend to work at the start >of a fresh rally, especially if the rally is strong. Look for volume to >dry up as the stock comes within 5-10% of its old peak. Stocks breaking >out of bases without a handle are most likely industry leaders; lead the >market in relative price performance, sales and earnings growth; and have >high institutional sponsorship. > >5. Double bottom bases can form a handle, though normally they do not do so. > > > >[Note: These notes are compiled from many years worth of Investors' >Corners, HTMMIS, the IBD web site and other misc. sources.] > > > >--Katherine > > >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Roger Tawa >Sent: Tuesday, May 06, 2003 8:13 PM >To: canslim@lists.xmission.com >Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB) > >Hi Katherine, > >I have a question with regard to your "poor" handle comment. According to >24 lessons, page 47, a handle should drift down on lows *OR* have a shake >out. In this case, the shake out did happen on the two days after the pivot. > >Furthermore, at the top of page 48, it says a proper handle will dry up >near its lows, which this one seems to do, *OR* will have several tight >areas, which this one also has. > >Finally, the JOSB handle actually looks very much like the handle of >Microsoft shown in the example on page 46. > >Now, being a novice at this, I would have looked at this handle and said >"looks good" by the time april 1st came around. > >Do you feel that the handle should drift down along its lows for the >entire duration of handle before it breaks out? Would you consider this a >better indication of a good handle than the other things? Thanks. > >================================================= >Roger Tawa >http://tawacentral.net/ >[One thing about paradigms: shift happens.] >[When you stop, you're done.] > >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm >Sent: Tuesday, May 06, 2003 10:57 AM >To: canslim@lists.xmission.com >Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB) > >Hi Chris, > >I see several folks have already commented on the discipline of selling, >so thought I'd focus on a slightly different angle. That is, something I >call "wiggle room" or "the best selling rule is to buy right." > >The biggest problem I see with your JOSB situation is that by buying late, >you took away all your wiggle room. JOSB set up with a pivot established >3/21 at $25.51. It put in a poor handle which didn't drift down, >indicating a possible lack of shakeout, then staged a wimpy breakout on >4/2 (though it did show some follow through action the next day). With >those credentials, buying right is particularly important. Odds favor, at >minimum, a pullback at least to the original breakout area around 25-26. >Sure enough, that's what happened. As your purchase was late, when the >stock was already 13% extended from the breakout price, you have no wiggle >room to survive a pullback without triggering your 8% rule. Notice that >your original mental stop at $27 was above the logical support area. See >an annotated chart at: > >http://www.cwhcharts.com/katherine/JOSB050603.JPG > > >These kinds of pullbacks are fairly common. BSTE did the same thing >recently and if purchased correctly, one could've sat out the minor >correction without triggering sell rules. Take a look at the reward: > >http://www.cwhcharts.com/katherine/BSTE050603.JPG > > >Katherine >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Chris Jones >Sent: Monday, May 05, 2003 3:45 PM >To: CANSLIM >Subject: [CANSLIM] How much support is the 50 DMA? (JOSB) >I have a dilemma - I bought JOSB a few weeks back and put a mental stop in >at $27 (8%). When I checked today after the market closed, I saw it had >dropped $1.88, and is now at $25.51. I'm a little mad that I only placed >a mental stop, which could have avoided this, however I can't change that >now. Normally I would sell right at the market since my loss has now >dropped to 12%, but the stock now sits about $.25 above it's 50 >DMA. Should I hang on and hope institutions will step in? IBD says "many >institutions view the 50-day line as a level at which they can add to >their positions at a reasonable price. That's why many strong stocks find >"support" at this line." However, it seems that the 50 DMA hasn't been >too much of a support/resistance for JOSB in the past. I hate to wait and >hope, since that's exactly what O'Neil said bad investors do, but the 50 >DMA adds an interesting twist. Should I sell at the market, or wait to >see if it bounces back? Opinions are appreciated! > >Thanks so much! > >Chris - - - -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: Tue, 6 May 2003 22:11:58 -0500 From: "Katherine Malm" Subject: RE: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) LOL! No, my dad's the Virgo in the family. The material is collected from what I've learned over the years from the IBD and WON's teachings. I'll leave the books to him. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Karen White Sent: Tuesday, May 06, 2003 9:12 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) Hi Katherine,,,, now with all that info on a handle I have to ask if you are a Virgo and secondly, have you ever considered a book? Amazed Karen At 09:58 PM 5/6/2003 -0500, you wrote: >"urn:schemas-microsoft-com:vml" xmlns:o = >"urn:schemas-microsoft-com:office:office" xmlns:w = >"urn:schemas-microsoft-com:office:word"> >Hi Roger, > >An "ideal" handle will drift down on decreasing volume. WON considers this >drifting down to be one of the most important factors in a good handle. If >there is a shake out day or two on high volume *within* the handle, that's >a good thing, especially if the days end in the upper part of their range. >(Plenty more handle characteristics--see a more complete list at the end >of this email ). > >That said, it's honestly rare that you get "perfection" in a handle. My >comment on JOSB was that the lack of drift down and/or shakeout *within* >the handle made it a "poor quality" handle. That generally adds to your >risk, but plenty of breakouts occur from less than perfect bases and less >than perfect handles. It's all a matter of odds--just part of the decision >process when determining whether to take a breakout or not. My overall >point on JOSB is that given the lack of drift down in the handle, the risk >of a pullback *after* breakout then increases. That's essentially what >happened. Buying late after a higher risk breakout increases your odds of >getting caught in a pullback. > >Katherine ...handle info follows: > > >----- Original Message ----- > >From: Katherine Malm > >To: canslim@lists.xmission.com > >Sent: Friday, August 16, 2002 4:53 PM > >Subject: [CANSLIM] Re: Handles, A list of Characteristics > >HANDLES > >General Requirements: > >1. Handles most often begin to form lower than the left side of the base, >generally when the stock has climbed within 5-15% of the high. > >2. The midpoint of a good handle should be higher than the midpoint of the >base. > >3. The handle should form in the upper half of the base. > >4. The handle should form above the 200 day MA, but trade may often lull >below the 50 day MA. > >5. The handle should drift sideways or lower. Upward "wedging" handles are >failure prone because the upwardly drifting price doesn't shake out the >weak holders, leaving the stock vulnerable to a correction. Wedging >handles also make pivots harder to spot. WON considers this the most >important aspect of a handle formation. > >6. The handle should drift lower on light volume. This shows existing >holders are content to remain invested. > >7. Within the handle, volatility should contract. The distance between >price highs and lows (intraday and day to day) should narrow. Avoid >zigzagging or wide and loose handles. Choppy handles carry more uncertainty. > >8. In normal markets, proper handles correct 10-20%. In Bear markets, they >can correct as much as 30%. A handle that drifts <10% is fine as long as >it is drifting downward and meets other requirements. > >9. The handle must be at least one week in length but can stretch as much >as 7-10 weeks. It should be smaller in proportion to the size of the cup. > > > >Special Considerations: > >1. "High handles" can begin to form at prices higher than the left side of >the base. This is neither ideal nor common, but can still be successful as >long as the other handle requirements are met. > >2. Be sure to look at both daily and weekly charts, as stocks with lengthy >bases will have long handles. The lengthy handle may appear as a base if >looking at a daily chart. Long bases signal strong support and are very >strong patterns. (The longer the base, the stronger the subsequent move.) >Based on a study done by the IBD in 96-97, small and mid cap stocks had 33 >week bases on average. Large caps had 66 week bases on average. > >3. A stock can form a handle, near its pivot point and then begin forming >another handle. In this case, consider this to be one long handle. > >4. "No-handle" bases are more error prone, but tend to work at the start >of a fresh rally, especially if the rally is strong. Look for volume to >dry up as the stock comes within 5-10% of its old peak. Stocks breaking >out of bases without a handle are most likely industry leaders; lead the >market in relative price performance, sales and earnings growth; and have >high institutional sponsorship. > >5. Double bottom bases can form a handle, though normally they do not do so. > > > >[Note: These notes are compiled from many years worth of Investors' >Corners, HTMMIS, the IBD web site and other misc. sources.] > > > >--Katherine > > >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Roger Tawa >Sent: Tuesday, May 06, 2003 8:13 PM >To: canslim@lists.xmission.com >Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB) > >Hi Katherine, > >I have a question with regard to your "poor" handle comment. According to >24 lessons, page 47, a handle should drift down on lows *OR* have a shake >out. In this case, the shake out did happen on the two days after the pivot. > >Furthermore, at the top of page 48, it says a proper handle will dry up >near its lows, which this one seems to do, *OR* will have several tight >areas, which this one also has. > >Finally, the JOSB handle actually looks very much like the handle of >Microsoft shown in the example on page 46. > >Now, being a novice at this, I would have looked at this handle and said >"looks good" by the time april 1st came around. > >Do you feel that the handle should drift down along its lows for the >entire duration of handle before it breaks out? Would you consider this a >better indication of a good handle than the other things? Thanks. > >================================================= >Roger Tawa >http://tawacentral.net/ >[One thing about paradigms: shift happens.] >[When you stop, you're done.] > >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm >Sent: Tuesday, May 06, 2003 10:57 AM >To: canslim@lists.xmission.com >Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB) > >Hi Chris, > >I see several folks have already commented on the discipline of selling, >so thought I'd focus on a slightly different angle. That is, something I >call "wiggle room" or "the best selling rule is to buy right." > >The biggest problem I see with your JOSB situation is that by buying late, >you took away all your wiggle room. JOSB set up with a pivot established >3/21 at $25.51. It put in a poor handle which didn't drift down, >indicating a possible lack of shakeout, then staged a wimpy breakout on >4/2 (though it did show some follow through action the next day). With >those credentials, buying right is particularly important. Odds favor, at >minimum, a pullback at least to the original breakout area around 25-26. >Sure enough, that's what happened. As your purchase was late, when the >stock was already 13% extended from the breakout price, you have no wiggle >room to survive a pullback without triggering your 8% rule. Notice that >your original mental stop at $27 was above the logical support area. See >an annotated chart at: > >http://www.cwhcharts.com /katherine/JOSB050603.JPG > > >These kinds of pullbacks are fairly common. BSTE did the same thing >recently and if purchased correctly, one could've sat out the minor >correction without triggering sell rules. Take a look at the reward: > >http://www.cwhcharts.com /katherine/BSTE050603.JPG > > >Katherine >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Chris Jones >Sent: Monday, May 05, 2003 3:45 PM >To: CANSLIM >Subject: [CANSLIM] How much support is the 50 DMA? (JOSB) >I have a dilemma - I bought JOSB a few weeks back and put a mental stop in >at $27 (8%). When I checked today after the market closed, I saw it had >dropped $1.88, and is now at $25.51. I'm a little mad that I only placed >a mental stop, which could have avoided this, however I can't change that >now. Normally I would sell right at the market since my loss has now >dropped to 12%, but the stock now sits about $.25 above it's 50 >DMA. Should I hang on and hope institutions will step in? IBD says "many >institutions view the 50-day line as a level at which they can add to >their positions at a reasonable price. That's why many strong stocks find >"support" at this line." However, it seems that the 50 DMA hasn't been >too much of a support/resistance for JOSB in the past. I hate to wait and >hope, since that's exactly what O'Neil said bad investors do, but the 50 >DMA adds an interesting twist. Should I sell at the market, or wait to >see if it bounces back? Opinions are appreciated! > >Thanks so much! > >Chris - - - -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: Tue, 6 May 2003 20:21:56 -0700 (PDT) From: Tomas Subject: Re: [CANSLIM] IVX I'll take a shot at this. The fundies look ok. Currently, it looks well extended from the base. Just my novice thoughts. tomas - --- "Bistricer, Avi" wrote: > > Any comment on IVX action today? > > Thanks > > > > > - > -To subscribe/unsubscribe, email > "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. __________________________________ Do you Yahoo!? The New Yahoo! Search - Faster. Easier. Bingo. http://search.yahoo.com - - - -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: Tue, 06 May 2003 23:20:39 -0400 From: Roger Tawa Subject: RE: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (JOSB)) This is a multi-part message in MIME format. - --Boundary_(ID_JqL+aX8AwjJ50YjaYy+N9Q) Content-type: text/plain; charset=iso-8859-1 Content-transfer-encoding: QUOTED-PRINTABLE Thanks Katherine. This email is definitely a keeper, from before I joined the list. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D Roger Tawa http://tawacentral.net/ [One thing about paradigms: shift happens.] [When you stop, you're done.] - -----Original Message----- =46rom: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Tuesday, May 06, 2003 10:59 PM To: canslim@lists.xmission.com Subject: [CANSLIM] RE:Handles (was:How much support is the 50 DMA? (J= OSB)) Hi Roger, An "ideal" handle will drift down on decreasing volume. WON considers= this drifting down to be one of the most important factors in a good handl= e. If there is a shake out day or two on high volume *within* the handle, t= hat's a good thing, especially if the days end in the upper part of their ran= ge. (Plenty more handle characteristics--see a more complete list at the = end of this email ). That said, it's honestly rare that you get "perfection" in a handle. = My comment on JOSB was that the lack of drift down and/or shakeout *with= in* the handle made it a "poor quality" handle. That generally adds to your r= isk, but plenty of breakouts occur from less than perfect bases and less t= han perfect handles. It's all a matter of odds--just part of the decision process when determining whether to take a breakout or not. My overal= l point on JOSB is that given the lack of drift down in the handle, the risk = of a pullback *after* breakout then increases. That's essentially what hap= pened. Buying late after a higher risk breakout increases your odds of getti= ng caught in a pullback. Katherine ...handle info follows: - ----- Original Message ----- =46rom: Katherine Malm To: canslim@lists.xmission.com Sent: Friday, August 16, 2002 4:53 PM Subject: [CANSLIM] Re: Handles, A list of Characteristics HANDLES General Requirements: 1. Handles most often begin to form lower than the left side of the b= ase, generally when the stock has climbed within 5-15% of the high. 2. The midpoint of a good handle should be higher than the midpoint o= f the base. 3. The handle should form in the upper half of the base. 4. The handle should form above the 200 day MA, but trade may often l= ull below the 50 day MA. 5. The handle should drift sideways or lower. Upward "wedging" handle= s are failure prone because the upwardly drifting price doesn't shake out t= he weak holders, leaving the stock vulnerable to a correction. Wedging handle= s also make pivots harder to spot. WON considers this the most important asp= ect of a handle formation. 6. The handle should drift lower on light volume. This shows existing holders are content to remain invested. 7. Within the handle, volatility should contract. The distance betwee= n price highs and lows (intraday and day to day) should narrow. Avoid zigzagg= ing or wide and loose handles. Choppy handles carry more uncertainty. 8. In normal markets, proper handles correct 10-20%. In Bear markets,= they can correct as much as 30%. A handle that drifts <10% is fine as long= as it is drifting downward and meets other requirements. 9. The handle must be at least one week in length but can stretch as = much as 7-10 weeks. It should be smaller in proportion to the size of the cup= . Special Considerations: 1. "High handles" can begin to form at prices higher than the left si= de of the base. This is neither ideal nor common, but can still be successf= ul as long as the other handle requirements are met. 2. Be sure to look at both daily and weekly charts, as stocks with le= ngthy bases will have long handles. The lengthy handle may appear as a base= if looking at a daily chart. Long bases signal strong support and are ve= ry strong patterns. (The longer the base, the stronger the subsequent mo= ve.) Based on a study done by the IBD in 96-97, small and mid cap stocks h= ad 33 week bases on average. Large caps had 66 week bases on average. 3. A stock can form a handle, near its pivot point and then begin for= ming another handle. In this case, consider this to be one long handle. 4. "No-handle" bases are more error prone, but tend to work at the st= art of a fresh rally, especially if the rally is strong. Look for volume to = dry up as the stock comes within 5-10% of its old peak. Stocks breaking out = of bases without a handle are most likely industry leaders; lead the mar= ket in relative price performance, sales and earnings growth; and have high institutional sponsorship. 5. Double bottom bases can form a handle, though normally they do not= do so. [Note: These notes are compiled from many years worth of Investors' C= orners, HTMMIS, the IBD web site and other misc. sources.] - --Katherine - -----Original Message----- =46rom: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Roger Tawa Sent: Tuesday, May 06, 2003 8:13 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB) Hi Katherine, I have a question with regard to your =93poor=94 handle comment. Acc= ording to 24 lessons, page 47, a handle should drift down on lows *OR* have a s= hake out. In this case, the shake out did happen on the two days after th= e pivot. Furthermore, at the top of page 48, it says a proper handle will dry = up near its lows, which this one seems to do, *OR* will have several tight ar= eas, which this one also has. Finally, the JOSB handle actually looks very much like the handle of Microsoft shown in the example on page 46. Now, being a novice at this, I would have looked at this handle and s= aid =93looks good=94 by the time april 1st came around. Do you feel that the handle should drift down along its lows for the = entire duration of handle before it breaks out? Would you consider this a b= etter indication of a good handle than the other things? Thanks. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D Roger Tawa http://tawacentral.net/ [One thing about paradigms: shift happens.] [When you stop, you're done.] - -----Original Message----- =46rom: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm Sent: Tuesday, May 06, 2003 10:57 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB) Hi Chris, I see several folks have already commented on the discipline of selli= ng, so thought I'd focus on a slightly different angle. That is, something I= call "wiggle room" or "the best selling rule is to buy right." The biggest problem I see with your JOSB situation is that by buying = late, you took away all your wiggle room. JOSB set up with a pivot establis= hed 3/21 at $25.51. It put in a poor handle which didn't drift down, indi= cating a possible lack of shakeout, then staged a wimpy breakout on 4/2 (tho= ugh it did show some follow through action the next day). With those credent= ials, buying right is particularly important. Odds favor, at minimum, a pul= lback at least to the original breakout area around 25-26. Sure enough, tha= t's what happened. As your purchase was late, when the stock was already = 13% extended from the breakout price, you have no wiggle room to survive = a pullback without triggering your 8% rule. Notice that your original m= ental stop at $27 was above the logical support area. See an annotated cha= rt at: http://www.cwhcharts.com/katherine/JOSB050603.JPG These kinds of pullbacks are fairly common. BSTE did the same thing r= ecently and if purchased correctly, one could've sat out the minor correction without triggering sell rules. Take a look at the reward: http://www.cwhcharts.com/katherine/BSTE050603.JPG Katherine - -----Original Message----- =46rom: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Chris Jones Sent: Monday, May 05, 2003 3:45 PM To: CANSLIM Subject: [CANSLIM] How much support is the 50 DMA? (JOSB) I have a dilemma - I bought JOSB a few weeks back and put a mental st= op in at $27 (8%). When I checked today after the market closed, I saw it = had dropped $1.88, and is now at $25.51. I'm a little mad that I only pl= aced a mental stop, which could have avoided this, however I can't change th= at now. Normally I would sell right at the market since my loss has now dropp= ed to 12%, but the stock now sits about $.25 above it's 50 DMA. Should I h= ang on and hope institutions will step in? IBD says "many institutions view= the 50-day line as a level at which they can add to their positions at a reasonable price. That's why many strong stocks find "support" at thi= s line." However, it seems that the 50 DMA hasn't been too much of a support/resistance for JOSB in the past. I hate to wait and hope, si= nce that's exactly what O'Neil said bad investors do, but the 50 DMA adds= an interesting twist. Should I sell at the market, or wait to see if it bounces back? Opinions are appreciated! Thanks so much! Chris - --Boundary_(ID_JqL+aX8AwjJ50YjaYy+N9Q) Content-type: text/html; charset=iso-8859-1 Content-transfer-encoding: QUOTED-PRINTABLE

Thanks Katherine.

 

This email is definitely a keeper, from before I joined the li= st.

 

=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D

Roger Tawa

http://tawacentral.net/

[One thing about paradigms: = shift happens.]

[When you stop, you're done.= ]

 =

-----Original Message-----
From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission= .com]On Behalf Of Katherine Malm
Sent: Tuesday, May 06,= 2003 10:59 PM
To: canslim@lists.xmis= sion.com
Subject: [CANSLIM] RE:= Handles (was:How much support is the 50 DMA? (JOSB))

 =

Hi Roger,

 

An "ideal" handle will drift down on decreasing volume. WON co= nsiders this drifting down to be one of the most important factors in a good = handle. If there is a shake out day or two on high volume *within* the hand= le, that's a good thing, especially if the days end in the upper part of their r= ange. (Plenty more handle characteristics--see a more complete list at = ;the end of this email ).

 

That said, it's honestly rare that you get "perfection" in a handle. M= y comment on JOSB was that the lack of drift down and/or shakeout *within* the = handle made it a "poor quality" handle. That generally adds to you= r risk, but plenty of breakouts occur from less than perfect bases and less t= han perfect handles. It's all a matter of odds--just part of the decision= process when determining whether to take a breakout or not. My over= all point on JOSB is that given the lack of drift down in the handle, the risk = of a pullback *after* breakout then increases. That's essentially what hap= pened. Buying late after a higher risk breakout increases your odds of getting caug= ht in a pullback.

 

Katherine       =2E..handle info follows:

 

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

From: Kat= herine Malm

To: canslim@lists.xmission.com

Sent: Friday, August 16, 2002 4:53 PM

Subject: [CANSLIM] Re: Handles, A list of Characteristics=

HANDLES

General Requirements:

1. Handles most often begin to form lower than the left = side of the base, generally when the stock has climbed within 5-15% of the hi= gh.

2. The midpoint of a good handle should be higher than t= he midpoint of the base.

3. The handle should form in the upper half of the base.=

4. The handle should form above the 200 day MA, but trad= e may often lull below the 50 day MA.

5. The handle should drift sideways or lower. Upward "wedging" handles are failure prone because the upwardly dr= ifting price doesn't shake out the weak holders, leaving the stock vulnerabl= e to a correction. Wedging handles also make pivots harder to spot. W= ON considers this the most important aspect of a handle formation.

6. The handle should drift lower on light volume. This s= hows existing holders are content to remain invested.

7. Within the handle, volatility should contract. The di= stance between price highs and lows (intraday and day to day) should narrow.= Avoid zigzagging or wide and loose handles. Choppy handles carry more uncer= tainty.

8. In normal markets, proper handles correct 10-20%. In = Bear markets, they can correct as much as 30%. A handle that drifts <10= % is fine as long as it is drifting downward and meets other requirements.

9. The handle must be at least one week in length but ca= n stretch as much as 7-10 weeks. It should be smaller in proportion to the size= of the cup.

 

Special Considerations:

1. "High handles" can begin to form at prices = higher than the left side of the base. This is neither ideal nor common, but= can still be successful as long as the other handle requirements are met.

2. Be sure to look at both daily and weekly charts, as s= tocks with lengthy bases will have long handles. The lengthy handle may appear a= s a base if looking at a daily chart. Long bases signal strong support and are= very strong patterns. (The longer the base, the stronger the subsequent mo= ve.) Based on a study done by the IBD in 96-97, small and mid cap stocks had 33 = week bases on average. Large caps had 66 week bases on average.

3. A stock can form a handle, near its pivot point and t= hen begin forming another handle. In this case, consider this to be one lo= ng handle.

4. "No-handle" bases are more error prone, but= tend to work at the start of a fresh rally, especially if the rally is strong= . Look for volume to dry up as the stock comes within 5-10% of its old peak. Sto= cks breaking out of bases without a handle are most likely industry leade= rs; lead the market in relative price performance, sales and earnings growth; = and have high institutional sponsorship.

5. Double bottom bases can form a handle, though normall= y they do not do so.

 

[Note: These notes are compiled from many years worth of Investors' Corners, HTMMIS, the IBD web site and other misc. sources.= ]

 

--Katherine

 

-----Original Message-----
From: owner-canslim@li= sts.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Roger Tawa
Sent: Tuesday, May 06,= 2003 8:13 PM
To: canslim@lists.xmis= sion.com
Subject: RE: [CANSLIM]= How much support is the 50 DMA? (JOSB)

Hi Katherine,

 

I have a question with regard to your ̶= 0;poor” handle comment.  According to = 24 lessons, page 47, a handle should drift down on lows *OR* have a shake out.  In t= his case, the shake out did happen on the two days after the pivot.<= /span>

 

Furthermore, at the top of page 48, it says= a proper handle will dry up near its lows, which this one seems to do, *OR* will have several tight are= as, which this one also has.

 

Finally, the JOSB handle actually looks ver= y much like the handle of Microsoft shown in the example on page 46.

 

Now, being a novice at this, I would have l= ooked at this handle and said “looks good” by the time april 1st came around.

 

Do you feel that the handle should drift do= wn along its lows for the entire duration of handle before it breaks out?  Would you consider this a b= etter indication of a good handle than the other things?  Thanks.

 

=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D<= font color=3Dblack>

= Roger Tawa

= http://tawacentral.net/

= [One thing about paradigms: shift happens.]

= [When you stop, you're done.]

 

-----Original Message-----
From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission= .com]On Behalf Of Katherine Malm
Sent: Tuesday, May 06,= 2003 10:57 AM
To: canslim@lists.xmis= sion.com
Subject: RE: [CANSLIM]= How much support is the 50 DMA? (JOSB)

 

Hi Chris,

 

I see several folks have already commented on the discipline of selling, so thought= I'd focus on a slightly different angle. That is, something I call "wiggle room" or "the best selling rule is to buy right."

 

The biggest problem I see with your JOSB situation is that by buying late, you to= ok away all your wiggle room. JOSB set up with a pivot established 3/21 at $2= 5.51. It put in a poor handle which didn't drift down, indicating a possible l= ack of shakeout, then staged a wimpy breakout on 4/2 (though it did show som= e follow through action the next day). With those credentials, buying right is particularly important. Odds favor, at minimum, a pullback at least t= o the original breakout area around 25-26. Sure enough, that's what happene= d. As your purchase was late, when the stock was already 13% extended from the b= reakout price, you have no wiggle room to survive a pullback without triggeri= ng your 8% rule. Notice that your original mental stop at $27 was above the logi= cal support area.  See an annotated chart at:

 

http://www= .cwhcharts.com/katherine/JOSB050603.JPG

 

These kinds of pullbacks are fairly common. BSTE did the same thing recently and = if purchased correctly, one could've sat out the minor correction withou= t triggering sell rules. Take a look at the reward:

 

http://www= .cwhcharts.com/katherine/BSTE050603.JPG

 

Katherine

-----Original Message-----
From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission= .com]On Behalf Of Chris Jones
Sent: Monday, May 05, = 2003 3:45 PM
To: CANSLIM
Subject: [CANSLIM] How= much support is the 50 DMA? (JOSB)

I have a dilemma - I bought JOS= B a few weeks back and put a mental stop in at $27 (8%).  When I ch= ecked today after the market closed, I saw it had dropped $1.88, and is now= at $25.51.  I'm a little mad that I only placed a mental stop, whic= h could have avoided this, however I can't change that now.  Normally I = would sell right at the market since my loss has now dropped to 12%, but the sto= ck now sits about $.25 above it's 50 DMA.  Should I hang on and hope in= stitutions will step in?  IBD says "many institutions view the 50-day = line as a level at which they can add to their positions at a reasonable price.= That's why many strong stocks find "support" at this line."&n= bsp; However, it seems that the 50 DMA hasn't been too much of a support/r= esistance for JOSB in the past.  I hate to wait and hope, since that's exa= ctly what O'Neil said bad investors do, but the 50 DMA adds an intere= sting twist.  Should I sell at the market, or wait to see if it bounce= s back?  Opinions are appreciated!

 

Thanks so much!

 

Chris

- --Boundary_(ID_JqL+aX8AwjJ50YjaYy+N9Q)-- - - - -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 #3295 ****************************** 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.