From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #3372 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, June 17 2003 Volume 02 : Number 3372 In this issue: Re: [CANSLIM] Mutual fund holdings RE: [CANSLIM] How do you CANSLIM? RE: [CANSLIM] How do you CANSLIM? RE: [CANSLIM] How do you CANSLIM? [CANSLIM] TSCO RE: [CANSLIM] TSCO RE: [CANSLIM] TSCO Re: [CANSLIM] TSCO Re: [CANSLIM] stop losses and profits RE: [CANSLIM] stop losses and profits ---------------------------------------------------------------------- Date: Sun, 15 Jun 2003 21:14:51 -0700 (PDT) From: Tomas Subject: Re: [CANSLIM] Mutual fund holdings Does anyone have opinions on how good Morning Star's mutual funding ranking system is? tomas - --- Bob Hodes wrote: > I just found out that you can go morningstar.com and > research individual stocks and not just mutual > funds. They also have a feature that tells you > which mutual funds own a stock and the morningstar > rating for that fund. So this makes for a > convenient method of looking at institutional > ownership and quality of ownership (or at least > mutual fund ownership). If this is well known to > everyone, I apologize. > > Here's an example of their data on APPX. This > feature is free. > > http://quicktake.morningstar.com/Stock/Powerbrokers.asp?Country=USA&Symbol=APPX&Status=0&sktab=owners#anchor3 > > Bob Hodes __________________________________ Do you Yahoo!? SBC Yahoo! DSL - Now only $29.95 per month! http://sbc.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: Mon, 16 Jun 2003 00:23:42 -0700 From: "Harold Josephson" Subject: RE: [CANSLIM] How do you CANSLIM? Instead of the Excel download, Why not use DGO's Custom Screen Wizard to filter for you? Harold - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Treb Courie Sent: Sunday, June 15, 2003 5:19 AM To: canslim@lists.xmission.com Subject: [CANSLIM] How do you CANSLIM? CANSLIMmers, =20 There are many discussions on this list about the CANSLIM = characteristics of particular stocks, but not nearly as many about what I consider teh = harder part of CANSLIMming--how to pick out those stocks out of the thousands = of stocks out there. Some people here have said that they use "Where the = Big Money is Flowing" or other IBD-sorted lists--and others have mentioned = some problems with using those lists (if the big money is flowing there, it's already too late). =20 For discussion, here is how I do it. I am still refining this method = and know that it has some limitations. =20 - -Every weekend I go to DGO and download the Daily Graphs Company Index = (I'm pretty new to DGO and not familiar with all the powerful features on = it.)=20 - -I put it into an Excel Spreadsheet and Filter the Data, usually >75 = EPS, >75 RS, SMR B or better, A/C B or better, >70 Comp, >50 Group RS.=20 - -I then go through all of those stocks (this week about 140 stocks) and = view the weekly graph, looking for a basic chart pattern. For those with a pattern, I check the daily (esp. if it has a short handle) to look more closely at the recent activity. =20 - -Any stocks that I feel comfortable with I will record the pivot point = and watch that stock all week for a breakout. This week I am only watching = four stocks.=20 - -The following week, I will repeat the entire process. This process has some downsides. One is that it takes a long time to = view that many charts, but I haven't figured out a good way to keep notes on = the stocks weekly while downloading the new ratings into my spreadsheet. Another is that too many of the stocks that I view have already broken out--I need to change my criteria to spot them before breaking out = without increasing my chart-analysis workload. =20 I'd love to hear how others select their stocks and any comments others = may have about my system. For example, for those of you who use the IBD ratings, what do you use as your minimums? =20 Treb - - - -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: Mon, 16 Jun 2003 07:31:34 -0500 From: "Katherine Malm" Subject: RE: [CANSLIM] How do you CANSLIM? Hi Harold, The report to which Treb is referring contains 2800 or so stocks and corresponds to those that are included in the DailyGraphs printed product. These are generally a mixture of "good" stocks (most with approx RS>=60) and "bad" stocks (those generally used for shorting and with approx RS<=30). The data is updated each day and the export to an Excel file is part of the baseline DGO subscription ($720/yr). In order to use the DGO screening feature, they make you ante up another $249/yr. (Add the industry analysis for another $199/yr, or all three for $1000/yr). Even with the filtered Excel list, you still have to spend time looking through all the charts to find those that are nearing an entry point. The DGO charts are speedy, but it generally takes about 15-30 seconds per chart depending on both one's level of experience at reading charts and on the speed of their internet connection. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Harold Josephson Sent: Monday, June 16, 2003 1:24 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] How do you CANSLIM? Instead of the Excel download, Why not use DGO's Custom Screen Wizard to filter for you? Harold - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Treb Courie Sent: Sunday, June 15, 2003 5:19 AM To: canslim@lists.xmission.com Subject: [CANSLIM] How do you CANSLIM? CANSLIMmers, There are many discussions on this list about the CANSLIM characteristics of particular stocks, but not nearly as many about what I consider teh harder part of CANSLIMming--how to pick out those stocks out of the thousands of stocks out there. Some people here have said that they use "Where the Big Money is Flowing" or other IBD-sorted lists--and others have mentioned some problems with using those lists (if the big money is flowing there, it's already too late). For discussion, here is how I do it. I am still refining this method and know that it has some limitations. - -Every weekend I go to DGO and download the Daily Graphs Company Index (I'm pretty new to DGO and not familiar with all the powerful features on it.) - -I put it into an Excel Spreadsheet and Filter the Data, usually >75 EPS, >75 RS, SMR B or better, A/C B or better, >70 Comp, >50 Group RS. - -I then go through all of those stocks (this week about 140 stocks) and view the weekly graph, looking for a basic chart pattern. For those with a pattern, I check the daily (esp. if it has a short handle) to look more closely at the recent activity. - -Any stocks that I feel comfortable with I will record the pivot point and watch that stock all week for a breakout. This week I am only watching four stocks. - -The following week, I will repeat the entire process. This process has some downsides. One is that it takes a long time to view that many charts, but I haven't figured out a good way to keep notes on the stocks weekly while downloading the new ratings into my spreadsheet. Another is that too many of the stocks that I view have already broken out--I need to change my criteria to spot them before breaking out without increasing my chart-analysis workload. I'd love to hear how others select their stocks and any comments others may have about my system. For example, for those of you who use the IBD ratings, what do you use as your minimums? Treb - - - -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: Mon, 16 Jun 2003 08:07:54 -0500 From: "Katherine Malm" Subject: RE: [CANSLIM] How do you CANSLIM? Hi Treb, In my early days using DGO, this is exactly the same process I would use to find candidates. The real trick is to be sure that you're not setting your filters too restrictively so that you are missing good quality candidates. The downside to setting your filters with a wider net is that you get far more charts to review. In the end, it took supplemental technical tools to find setups in the right time period, then I would use DGO to make a fundamental assessment of the stock. Here are some general subtleties with the DGO/IBD proprietary rankings that are important to keep in mind: - -EPS, RS, SMR, GRS and the Composite are ranking mechanisms. This means that there is a forced ordering of stocks one vs. another. At the extremes, if all stocks are lousy, some are still going to get high rankings and vice versa. - -SMR is a combination of 5 proprietary rankings. It's a ranking of a ranking, so is even more suspect. More weight is placed on EPS and RS, but no info is given as to exactly how this measure is derived. Caveat emptor. - -EPS considers earnings over the last 3 years and in more recent quarters. This lags badly when a stock has not been consistently performing over that entire period. So, if it is a turnaround or there has been a substantial change in the business plan that creates a backdrop for far better earnings in more recent periods, the EPS will look lousy, even though the company is a good quality candidate. Conversely, since fundamental reporting lags, it's very easy to select a high EPS stock that is more recently beginning a slide in their earnings pattern. - -RS is an extremely "chunky" measurement. It looks at the changes in price over the last quarter, 2 quarters ago to now, 3 quarters ago to now, 1 year to now. That use of a precise moment in time will sometimes play havoc with the measurement and as a result RS can bounce around from high to low in a heartbeat. - -It is also not uncommon for a stock to have a very low RS at the time it is setting up. That RS will rise quickly when the stock stages a breakout and moves successfully onward and upward, but if you wait until the RS is very high, it's easy to miss the up and comers. There are *many* subtleties to RS, this being only one. But also consider that the nature of the market will also impact which stocks receive lower RS's. For example, If many stocks are breaking out and moving up, a stock that is finishing off a very nicely formed and lengthy base will often have a very low RS. That has nothing to do with its attractiveness or technical health, its just that it's currently basing (perhaps even absorbing a prior move) while other stocks are moving. I took a tour through this week's IBD100 and found that there were only a handful of stocks even close to a setup point. Why's that? They've got a high RS because they *have* been moving up, not because they're getting *ready* to move up. Take a strong market and pick the 100 top stocks and guess what? It's a done deal. Nice to know what's working if you're willing to wait for a pullback, but mining off a list like this means one never sees them *as* they were starting their move and never will. - -Here's one last amusing example to show you the vagaries of a ranking system like RS. Take a look at the chart for KMRT. It recently reorganized and emerged from bankruptcy. When it began trading under the reorg, the old stock, worth about 0.10 per share, was restructured so that it now trades at about $15. The RS today? 99! That's entirely as a result of the methodology used for the RS calculations, but I wouldn't exactly call that "a strong stock." - -A/D is a lagging indicator that looks at the previous 13 weeks of accumulation/distribution by "the big players." It's somewhat useful in reading the *trend* of the market as a whole (e.g., watching the trend of total ABC's over time) or for an individual stock, but be careful setting this one too tightly, as more recent accumulation by the institutional players will not be reflected in the measurement until well after the move is underway. - -GRS is based on the average price of all stocks in the industry. Approx 70% of the rank is based on more recent price action, 30% on older price action. The industry ranks are then based on rank ordering each industry by their GRS. Leading stocks will *lead* the industry price action and their favorable price action will not show up in the overall industry rankings unless other stocks follow suit. WON suggests that you restrict most of your buying to top industries, but also says that it is more important to look for a strong stock and then verify that there is at least one other strong stock in the same industry as a double check on the action. A filter that forces selection only from stocks in certain industries will miss the boat on some of the best stocks out there. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Treb Courie Sent: Sunday, June 15, 2003 6:19 AM To: canslim@lists.xmission.com Subject: [CANSLIM] How do you CANSLIM? CANSLIMmers, There are many discussions on this list about the CANSLIM characteristics of particular stocks, but not nearly as many about what I consider teh harder part of CANSLIMming--how to pick out those stocks out of the thousands of stocks out there. Some people here have said that they use "Where the Big Money is Flowing" or other IBD-sorted lists--and others have mentioned some problems with using those lists (if the big money is flowing there, it's already too late). For discussion, here is how I do it. I am still refining this method and know that it has some limitations. - -Every weekend I go to DGO and download the Daily Graphs Company Index (I'm pretty new to DGO and not familiar with all the powerful features on it.) - -I put it into an Excel Spreadsheet and Filter the Data, usually >75 EPS, >75 RS, SMR B or better, A/C B or better, >70 Comp, >50 Group RS. - -I then go through all of those stocks (this week about 140 stocks) and view the weekly graph, looking for a basic chart pattern. For those with a pattern, I check the daily (esp. if it has a short handle) to look more closely at the recent activity. - -Any stocks that I feel comfortable with I will record the pivot point and watch that stock all week for a breakout. This week I am only watching four stocks. - -The following week, I will repeat the entire process. This process has some downsides. One is that it takes a long time to view that many charts, but I haven't figured out a good way to keep notes on the stocks weekly while downloading the new ratings into my spreadsheet. Another is that too many of the stocks that I view have already broken out--I need to change my criteria to spot them before breaking out without increasing my chart-analysis workload. I'd love to hear how others select their stocks and any comments others may have about my system. For example, for those of you who use the IBD ratings, what do you use as your minimums? Treb - - - -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: Mon, 16 Jun 2003 17:48:06 -0000 From: "Treb Courie" Subject: [CANSLIM] TSCO Is TSCO breaking out today? It's got good fundamentals and is on my watch list. However, I think I'm going to stay off of it--it looks to me like it broke out of a sloppy handle on 2 June and is too extended now. Regards, Treb - - - -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: Mon, 16 Jun 2003 13:04:25 -0500 From: "Fred Richards" Subject: RE: [CANSLIM] TSCO I can't count the number of times that people have not bought TSCO since it first caught our attention in December 2001. Seems all of them wanted to find just the exact right point to buy. TSCO is a stock with great fundamentals, quality management, an excellent business plan and will probably continue to move up for the next year or so with minor pull backs. Look at the weekly chart. This is a stock to buy and then buy some more on a pull-back. It has a very unique market niche, and should be rewarding to those smart enough to buy it. - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Treb Courie Sent: Monday, June 16, 2003 12:48 PM To: canslim@lists.xmission.com Subject: [CANSLIM] TSCO Is TSCO breaking out today? It's got good fundamentals and is on my watch list. However, I think I'm going to stay off of it--it looks to me like it broke out of a sloppy handle on 2 June and is too extended now. Regards, Treb - - - -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: Mon, 16 Jun 2003 13:06:54 -0500 From: "Katherine Malm" Subject: RE: [CANSLIM] TSCO Hi Treb, Here's the chart as I see it: http://www.cwhcharts.com/katherine/TSCO061603.JPG Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Treb Courie Sent: Monday, June 16, 2003 11:48 AM To: canslim@lists.xmission.com Subject: [CANSLIM] TSCO Is TSCO breaking out today? It's got good fundamentals and is on my watch list. However, I think I'm going to stay off of it--it looks to me like it broke out of a sloppy handle on 2 June and is too extended now. Regards, Treb - - - -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: Mon, 16 Jun 2003 11:11:29 -0700 (PDT) From: Marc Deiter Subject: Re: [CANSLIM] TSCO Treb, In my opinion it is extended past it's pivot point - unless the action over the last 8 days or so can be considered a high-handle. Volume is lighter during the "handle" from 6/9-6/13. However, it doesn't appear at this time that today's volume will be greater than 50% of the average. Looking at the daily chart, I see the handle starting on 4/16 with a pivot at 43.55 and the breakout on 5/2. Disclosure: Purchased on 5/2, stopped out on 5/19. Marc - --- Treb Courie wrote: > Is TSCO breaking out today? It's got good fundamentals and is on > my watch list. However, I think I'm going to stay off of it--it > looks to me like it broke out of a sloppy handle on 2 June and is > too extended now. > > Regards, > Treb > > - > -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: Mon, 16 Jun 2003 12:25:23 -0500 From: michael_niemotka@baxter.com Subject: Re: [CANSLIM] stop losses and profits Katherine, A while back you shared the below sell rules with me, and I was wondering if you could provide a clarification on item #2. After a stock has been held 2 weeks, you stated that you move your stop loss to break even, and I was wondering if that was independent of the action of the stock. In particular, if you buy a stock that breaks out, and in the first couple of weeks moves down a little ( -1 to -3% from pivot), but then moves back up into a + terrritory, do you still move to break even, or do you keep the 7-8% stop loss in place, and if so, for how long? Thanks Mike "Katherine Malm" To: canslim@lists.xmission.com Sent by: cc: owner-canslim@lists.xm Subject: Re: [CANSLIM] stop losses and profits ission.com 08/20/2002 02:41 PM Please respond to canslim HI Mike, I know I talked a bit in circles on this topic and it may have been because I didn't read your question/response closely enough. Here's the summary of my thinking on this issue: I separate my sell rules into several distinct time periods, and the rules vary a bit depending on what the stock does within a certain amount of time. All of this also assumes a healthy "M", of course: 1. Time period: 1st 2 wks after breakout: If the stock rises, regardless of the percentage, then falls back on low volume, the 8% rule still holds. I do not add to a position unless the stock falls back near the pivot on *low volume.* I am skeptical and keep a sharp eye if it drops below the pivot, but it's not uncommon for this to happen, especially in iffy markets, and especially in the first week. That's what the 8% rule is there for, it gives you some leeway, but there are times where it goes up quickly and then falls back and you're stuck with the 8% loss. When the volume picks up to the downside, I'll move the stop to breakeven. If the volume is severe, I'll be out before it hits that point. 2. Once the stock passes the 2 wk mark and up to the 8th week: I've moved my stop to breakeven. That way, I don't have to take a loss in a stock that's risen and stayed above its pivot. 3. Once the 8 wk mark passes, new sell rules kick in. On something like NCEN, in particular, you were fighting against tide to begin with, so there was already extra risk in your purchase. The market was in a clear downtrend and had shown no signs of follow-thru. Second warning was the churning it put in on 6/27, 6/28. Lots of volume and very little price progress--yellow flag. That makes 2 because the poor market is a yellow flag to begin with. Next warning: a big tail down on 7/1, though the volume was relatively benign and didn't qualify as a "distribution" day. Last warning to head for the exits: 7/2. A big volume day and big tail down. That's 4 yellow flags in a row. Time to exit if you haven't already done so. If it wasn't clear on 7/2, it was screaming for attention on 7/5--an up day on very low volume. Assuming you'd missed all the signals, then you still would be saved by a breakeven stop if you'd entered on the breakout 6/19. All in all, the 8% stop is useful, but far less important than all the other sell rules after a stock breaks out. Katherine - ----- Original Message ----- From: To: Sent: Tuesday, August 20, 2002 2:19 PM Subject: Re: [CANSLIM] stop losses and profits | | Katherine, | | I actually followed this thinking and watched a nice profit (15%) in NCEN | turn into an 8% loss as the bottom dropped out. I think it has made me | make a modification to stop at break even if I end up at 15% gain, at least | until M has be proven to be turned. I came up with this based on assuming | a stock that breaks out would "normally" be expected to rise about 25-30% | before re-basing, so if never gets up by that amount from my buy point, | then I should exit sooner rather than later... | | | Mike Niemotka , PE | Sr. Principal Engineer | Baxter Healthcare Corporation | Route 120 & Wilson Road | Round Lake, IL 60073 | Tel (847) 270-4075 | Fax (847) 270-4525 | michael_niemotka@baxter.com | | | | "Katherine Malm" | To: canslim@lists.xmission.com | Sent by: cc: | owner-canslim@lists.xm Subject: Re: [CANSLIM] stop losses and profits | ission.com | | | 08/16/2002 05:01 PM | Please respond to | canslim | | | | | | | Oops...I realize now I misread your question. | | I would *hold on* up to 8% below buy price, but if the stock comes back and | *kisses* the pivot, then I would buy more. I'm not inclined to buy more | when the stock drops *below* the pivot, unless it shows strong volume | pushing it back up to the pivot and beyond. Now I think I've confused even | myself! | | This is the way I think of it "Kiss the pivot, second chance to buy | more---Hit the pivot, yellow flag" | | Katherine | | ----- Original Message ----- | From: "Katherine Malm" | To: | Sent: Friday, August 16, 2002 4:55 PM | Subject: Re: [CANSLIM] stop losses and profits | | | Hi Mike, | | | | 8% standard stop loss, though I don't see this happen too often when the | | market is healthy. | | | | Katherine | | | | ----- Original Message ----- | | From: | | To: | | Sent: Friday, August 16, 2002 2:54 PM | | Subject: Re: [CANSLIM] stop losses and profits | | | | | | | | | | Katherine, | | | | | | I knew I could count on you for a good answer. As a follow up to your | | | answer #4, if you made 10-15% in one week, how low would you allow the | | | stock to drop on low volume and still buy more, as opposed to selling | out? | | | | | | Put another way, if it ran up 15% in a week, would you allow it to go | | below | | | your original buy point, even if it was at low volume? | | | | | | | | | Have a great weekend everyone! | | | | | | Mike | | | | | | Mike Niemotka , PE | | | Sr. Principal Engineer | | | Baxter Healthcare Corporation | | | Route 120 & Wilson Road | | | Round Lake, IL 60073 | | | Tel (847) 270-4075 | | | Fax (847) 270-4525 | | | michael_niemotka@baxter.com | | | | | | | | | | | | "Katherine Malm" | | | To: | | canslim@lists.xmission.com | | | Sent by: cc: | | | owner-canslim@lists.xm Subject: Re: | | [CANSLIM] stop losses and profits | | | ission.com | | | | | | | | | 08/16/2002 02:31 PM | | | Please respond to | | | canslim | | | | | | | | | | | | | | | | | | | | | Hi Nancy, | | | | | | Let me try and clear up some of your confusion: | | | | | | 1. A stock's "rise" does not occur *in* a base, but *between* bases. | While | | | the price will fluctuate up and down within the base itself, the amount | of | | | fluctuation will vary depending on the severity of correction and the | time | | | it takes to form the area of consolidation. The stock is essentially | | | *absorbing* the gains of its previous advance. | | | | | | 2. When you purchase a stock, you will always purchase it as it *breaks | | | out* | | | of that base. This preferred buy point is referred to as the "pivot" | and | | is | | | again defined by the pattern that the base forms. | | | | | | 4. When a stock begins a healthy rising pattern after it breaks out, it | | can | | | rise *any* amount before it consolidates (bases) again. There is no | hard | | | and | | | fast rule as to how much it will rise before basing, though WON | suggests | | | that if it is >=25%, the next base would then be considered a "new | stage | | | base." This is only important in that his studies show that most stocks | | | can't muster the oomph to keep going after they've reached the 3rd or | 4th | | | stage base. | | | | | | 3. Mike's question about a sell rule is not dependent on *which* base | in | | | the | | | base count we are evaluating. A base is a base. If the stock breaks out | as | | | it should and begins to rise, how are you going to handle selling it | | | when/if | | | the time comes? | | | | | | 4. WON suggests that, if you buy correctly at the pivot (or no more | than | | 5% | | | above it), that you should never have to suffer a loss of more than 8%. | | | This | | | is because, in his studies, he has found that a healthy stock never | falls | | | more than 8% below the pivot before continuing a healthy advance. | | | | | | 5. Mike's question, specifically, was "if a stock breaks out of a base, | | | then | | | rises 10-15%, then falls back, where do you place your sell stop? 8% | below | | | your buy price or something other than that?" In other words, should | you | | be | | | willing to accept *any* loss if a stock has managed to rise 10-15% in 6 | | | wks, | | | then falls back to where you bought it. My vote is, if it takes 6 wks | to | | | rise and then erases the entire advance, I don't want to take an 8% | loss. | | | If | | | it rose 10-15% in *one* week and then fell back on low volume, I'd look | at | | | that as "normal" and might consider it a second chance to *buy* more. | | | | | | Katherine | | | | | | | | | ----- Original Message ----- | | | From: "NANCY POLCARO" | | | To: | | | Sent: Friday, August 16, 2002 1:47 PM | | | Subject: Re: [CANSLIM] stop losses and profits | | | | | | | | | | Katherine-let me see if I am following correctly please. My question | is | | | | that previously I understood that after the third rise in a base | | | formation | | | a | | | | stock may correct by dropping below the previous base and then | starting | | | up | | | | again if all is well with the stock. Then the bases start to be | | | recounted | | | | again. In this case, if you just bought in during the third rise in | the | | | | base, which from my understanding would probably go up between | 15%(Mikes | | | | figure) and 25%( the amount of each rise in a base of a healthy | stock) | | | you | | | | would sell(not you personally but someone with my amount of | experience | | or | | | | the like) before the 8% drop, to protect your gain. Then follow the | | | stock | | | | and watch for a buy in again at some point depending on how the stock | | | acts | | | | from this point on? Is that close to correct ??? Thanks for your | | | thoughts | | | | Nancy | | | | | | | | | | | | >From: "Katherine Malm" | | | | >Reply-To: canslim@lists.xmission.com | | | | >To: | | | | >Subject: Re: [CANSLIM] stop losses and profits | | | | >Date: Fri, 16 Aug 2002 13:09:30 -0500 | | | | > | | | | >HI Mike, | | | | > | | | | >I think you'll get a hundred different answers on this one, so I'll | | just | | | | >answer from my personal point of view. | | | | > | | | | >If a stock breaks out of a well-formed base on volume, then takes 6 | | | weeks | | | | >to | | | | >rise 10 or 15 percent, then I sure wouldn't want to risk 8% loss at | | that | | | | >point, even if it were falling back "normally" as you suggest. To me | | | that | | | | >means that no sell signals were triggered on the way up, and that | the | | | | >general pattern included up days on higher volume than down days, | | | support | | | | >at | | | | >the 50 day moving average, etc. My personal preference, however, | would | | | be | | | | >to | | | | >move my stop to breakeven or slightly below (3-4% max, depending on | | | market | | | | >conditions) if the stock had risen like this. | | | | > | | | | >Katherine | | | | > | | | | > | | | | >----- Original Message ----- | | | | >From: | | | | >To: | | | | >Sent: Friday, August 16, 2002 9:17 AM | | | | >Subject: [CANSLIM] stop losses and profits | | | | > | | | | > | | | | >| Group, | | | | >| | | | | >| In reading WON, he makes a statement that you should never let a | | stock | | | in | | | | >| which you are up 10-15% turn into a loss, but I was wondering you | | have | | | | >| interpreted that along with the sell at no more than an 8% loss | rule. | | | | >| | | | | >| Say you buy a stock, at a breakout, and it rises 10-15% over a few | | (6+ | | | | >| weeks), and then is started to correct....Do you sell at you break | | | even | | | | >| point, or do you allow it to go to your 8% loss point before | selling? | | | | >This | | | | >| is assuming that the stock is NOT giving any strong sell signals, | but | | | | >| appears to be pulling back "normally". | | | | >| | | | | >| Thanks | | | | >| | | | | >| Mike Niemotka , PE | | | | >| Sr. Principal Engineer | | | | >| Baxter Healthcare Corporation | | | | >| Route 120 & Wilson Road | | | | >| Round Lake, IL 60073 | | | | >| Tel (847) 270-4075 | | | | >| Fax (847) 270-4525 | | | | >| michael_niemotka@baxter.com | | | | >| | | | | >| | | | | >| | | | | >| - | | | | >| -To subscribe/unsubscribe, email "majordomo@xmission.com" | | | | >| -In the email body, write "subscribe canslim" or | | | | >| -"unsubscribe canslim". 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Do not use quotes in your email. ------------------------------ Date: Tue, 17 Jun 2003 08:02:20 -0500 From: "Katherine Malm" Subject: RE: [CANSLIM] stop losses and profits Hi Mike, I had to stretch my brain cells to remember back to this discussion from last year! Refining and redefining my sell rules has been a number one priority for me since early 2000, so you'll probably understand why I've modified these since last year. Part of what makes sell rules more complex is that the market will influence how breakouts behave, and therefore how much "tolerance" one would give a stock after the breakout. Last August, when this note was written, we were deep into the Bear. Very few stocks were breaking out and for those that were, the action was always very tentative. This "low tolerance" point of view was part of the responsiveness to market conditions. Now, I've developed a more sophisticated means of monitoring breakouts in addition to the general market health warnings that we can see from simply looking at the price/volume chart of the index averages, so the sell rules can be specific, but still adaptable to strong vs weak markets. From a market perspective, the initial tolerance is affecting by asking if this is a "strong" or "weak" market: (1) Is the market in a confirmed rally? (2) Are the number of breakouts increasing? (3) What percentage of the breakouts are up >=20% within the first 3 weeks after their breakout? For the stock itself, the intial tolerance is affected by asking if this was a "strong" or "weak" breakout: (1) Was the breakout on strong volume? (2) If the breakout was on strong volume, did it close above or slightly below the pivot? (3) Did the breakout follow through (i.e., show the ability to continue to move up, however small, after the breakout)? (4) Was the volume on the breakout week higher than the previous week? In simple terms you can then have 4 combinations: (1) Strong Market, Strong BO (highest tolerance) (2) Strong Market, Weak BO (midrange tolerance) (3) Weak Market, Strong BO (midrange tolerance) (4) Weak Market, Weak BO (lowest tolerance) The initial sell stop is set either at 8-10% below purchase (high tolerance), 4-5% below purchase (midrange tolerance) or at breakeven (low tolerance). You'll notice I'm more tolerant on the initial stop loss than WON, as some stocks exhibit a particular volatility pattern that would force you out unnecessarily. I also do not use hard stops unless I'm out of town and can't review my holdings. I use end of day prices to determine these points. Often, when a stock has a wide-bar range, it kicks in a sell stop unneccesarily. If the stock is weakening, hitting the stop intraday, but doesn't close below the stop, I will watch action on the next day and determine whether the stock is bouncing back on volume (showing strength) or wandering up on low volume (showing continued weakness). Regardless of market strength, after one of the following, the initial stop is moved to breakeven: (1) For high liquidity stocks (>=100K shares), did it rise >=20% after the BO? (2) For low liquidity stocks (<100K shares), did it rise >=15% after BO? (3) Has 3 weeks passed since the BO? Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of michael_niemotka@baxter.com Sent: Monday, June 16, 2003 11:25 AM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] stop losses and profits Katherine, A while back you shared the below sell rules with me, and I was wondering if you could provide a clarification on item #2. After a stock has been held 2 weeks, you stated that you move your stop loss to break even, and I was wondering if that was independent of the action of the stock. In particular, if you buy a stock that breaks out, and in the first couple of weeks moves down a little ( -1 to -3% from pivot), but then moves back up into a + terrritory, do you still move to break even, or do you keep the 7-8% stop loss in place, and if so, for how long? Thanks Mike "Katherine Malm" To: canslim@lists.xmission.com Sent by: cc: owner-canslim@lists.xm Subject: Re: [CANSLIM] stop losses and profits ission.com 08/20/2002 02:41 PM Please respond to canslim HI Mike, I know I talked a bit in circles on this topic and it may have been because I didn't read your question/response closely enough. Here's the summary of my thinking on this issue: I separate my sell rules into several distinct time periods, and the rules vary a bit depending on what the stock does within a certain amount of time. All of this also assumes a healthy "M", of course: 1. Time period: 1st 2 wks after breakout: If the stock rises, regardless of the percentage, then falls back on low volume, the 8% rule still holds. I do not add to a position unless the stock falls back near the pivot on *low volume.* I am skeptical and keep a sharp eye if it drops below the pivot, but it's not uncommon for this to happen, especially in iffy markets, and especially in the first week. That's what the 8% rule is there for, it gives you some leeway, but there are times where it goes up quickly and then falls back and you're stuck with the 8% loss. When the volume picks up to the downside, I'll move the stop to breakeven. If the volume is severe, I'll be out before it hits that point. 2. Once the stock passes the 2 wk mark and up to the 8th week: I've moved my stop to breakeven. That way, I don't have to take a loss in a stock that's risen and stayed above its pivot. 3. Once the 8 wk mark passes, new sell rules kick in. On something like NCEN, in particular, you were fighting against tide to begin with, so there was already extra risk in your purchase. The market was in a clear downtrend and had shown no signs of follow-thru. Second warning was the churning it put in on 6/27, 6/28. Lots of volume and very little price progress--yellow flag. That makes 2 because the poor market is a yellow flag to begin with. Next warning: a big tail down on 7/1, though the volume was relatively benign and didn't qualify as a "distribution" day. Last warning to head for the exits: 7/2. A big volume day and big tail down. That's 4 yellow flags in a row. Time to exit if you haven't already done so. If it wasn't clear on 7/2, it was screaming for attention on 7/5--an up day on very low volume. Assuming you'd missed all the signals, then you still would be saved by a breakeven stop if you'd entered on the breakout 6/19. All in all, the 8% stop is useful, but far less important than all the other sell rules after a stock breaks out. Katherine - ----- Original Message ----- From: To: Sent: Tuesday, August 20, 2002 2:19 PM Subject: Re: [CANSLIM] stop losses and profits | | Katherine, | | I actually followed this thinking and watched a nice profit (15%) in NCEN | turn into an 8% loss as the bottom dropped out. I think it has made me | make a modification to stop at break even if I end up at 15% gain, at least | until M has be proven to be turned. I came up with this based on assuming | a stock that breaks out would "normally" be expected to rise about 25-30% | before re-basing, so if never gets up by that amount from my buy point, | then I should exit sooner rather than later... | | | Mike Niemotka , PE | Sr. Principal Engineer | Baxter Healthcare Corporation | Route 120 & Wilson Road | Round Lake, IL 60073 | Tel (847) 270-4075 | Fax (847) 270-4525 | michael_niemotka@baxter.com | | | | "Katherine Malm" | To: canslim@lists.xmission.com | Sent by: cc: | owner-canslim@lists.xm Subject: Re: [CANSLIM] stop losses and profits | ission.com | | | 08/16/2002 05:01 PM | Please respond to | canslim | | | | | | | Oops...I realize now I misread your question. | | I would *hold on* up to 8% below buy price, but if the stock comes back and | *kisses* the pivot, then I would buy more. I'm not inclined to buy more | when the stock drops *below* the pivot, unless it shows strong volume | pushing it back up to the pivot and beyond. Now I think I've confused even | myself! | | This is the way I think of it "Kiss the pivot, second chance to buy | more---Hit the pivot, yellow flag" | | Katherine | | ----- Original Message ----- | From: "Katherine Malm" | To: | Sent: Friday, August 16, 2002 4:55 PM | Subject: Re: [CANSLIM] stop losses and profits | | | Hi Mike, | | | | 8% standard stop loss, though I don't see this happen too often when the | | market is healthy. | | | | Katherine | | | | ----- Original Message ----- | | From: | | To: | | Sent: Friday, August 16, 2002 2:54 PM | | Subject: Re: [CANSLIM] stop losses and profits | | | | | | | | | | Katherine, | | | | | | I knew I could count on you for a good answer. As a follow up to your | | | answer #4, if you made 10-15% in one week, how low would you allow the | | | stock to drop on low volume and still buy more, as opposed to selling | out? | | | | | | Put another way, if it ran up 15% in a week, would you allow it to go | | below | | | your original buy point, even if it was at low volume? | | | | | | | | | Have a great weekend everyone! | | | | | | Mike | | | | | | Mike Niemotka , PE | | | Sr. Principal Engineer | | | Baxter Healthcare Corporation | | | Route 120 & Wilson Road | | | Round Lake, IL 60073 | | | Tel (847) 270-4075 | | | Fax (847) 270-4525 | | | michael_niemotka@baxter.com | | | | | | | | | | | | "Katherine Malm" | | | To: | | canslim@lists.xmission.com | | | Sent by: cc: | | | owner-canslim@lists.xm Subject: Re: | | [CANSLIM] stop losses and profits | | | ission.com | | | | | | | | | 08/16/2002 02:31 PM | | | Please respond to | | | canslim | | | | | | | | | | | | | | | | | | | | | Hi Nancy, | | | | | | Let me try and clear up some of your confusion: | | | | | | 1. A stock's "rise" does not occur *in* a base, but *between* bases. | While | | | the price will fluctuate up and down within the base itself, the amount | of | | | fluctuation will vary depending on the severity of correction and the | time | | | it takes to form the area of consolidation. The stock is essentially | | | *absorbing* the gains of its previous advance. | | | | | | 2. When you purchase a stock, you will always purchase it as it *breaks | | | out* | | | of that base. This preferred buy point is referred to as the "pivot" | and | | is | | | again defined by the pattern that the base forms. | | | | | | 4. When a stock begins a healthy rising pattern after it breaks out, it | | can | | | rise *any* amount before it consolidates (bases) again. There is no | hard | | | and | | | fast rule as to how much it will rise before basing, though WON | suggests | | | that if it is >=25%, the next base would then be considered a "new | stage | | | base." This is only important in that his studies show that most stocks | | | can't muster the oomph to keep going after they've reached the 3rd or | 4th | | | stage base. | | | | | | 3. Mike's question about a sell rule is not dependent on *which* base | in | | | the | | | base count we are evaluating. A base is a base. If the stock breaks out | as | | | it should and begins to rise, how are you going to handle selling it | | | when/if | | | the time comes? | | | | | | 4. WON suggests that, if you buy correctly at the pivot (or no more | than | | 5% | | | above it), that you should never have to suffer a loss of more than 8%. | | | This | | | is because, in his studies, he has found that a healthy stock never | falls | | | more than 8% below the pivot before continuing a healthy advance. | | | | | | 5. Mike's question, specifically, was "if a stock breaks out of a base, | | | then | | | rises 10-15%, then falls back, where do you place your sell stop? 8% | below | | | your buy price or something other than that?" In other words, should | you | | be | | | willing to accept *any* loss if a stock has managed to rise 10-15% in 6 | | | wks, | | | then falls back to where you bought it. My vote is, if it takes 6 wks | to | | | rise and then erases the entire advance, I don't want to take an 8% | loss. | | | If | | | it rose 10-15% in *one* week and then fell back on low volume, I'd look | at | | | that as "normal" and might consider it a second chance to *buy* more. | | | | | | Katherine | | | | | | | | | ----- Original Message ----- | | | From: "NANCY POLCARO" | | | To: | | | Sent: Friday, August 16, 2002 1:47 PM | | | Subject: Re: [CANSLIM] stop losses and profits | | | | | | | | | | Katherine-let me see if I am following correctly please. My question | is | | | | that previously I understood that after the third rise in a base | | | formation | | | a | | | | stock may correct by dropping below the previous base and then | starting | | | up | | | | again if all is well with the stock. Then the bases start to be | | | recounted | | | | again. In this case, if you just bought in during the third rise in | the | | | | base, which from my understanding would probably go up between | 15%(Mikes | | | | figure) and 25%( the amount of each rise in a base of a healthy | stock) | | | you | | | | would sell(not you personally but someone with my amount of | experience | | or | | | | the like) before the 8% drop, to protect your gain. Then follow the | | | stock | | | | and watch for a buy in again at some point depending on how the stock | | | acts | | | | from this point on? Is that close to correct ??? Thanks for your | | | thoughts | | | | Nancy | | | | | | | | | | | | >From: "Katherine Malm" | | | | >Reply-To: canslim@lists.xmission.com | | | | >To: | | | | >Subject: Re: [CANSLIM] stop losses and profits | | | | >Date: Fri, 16 Aug 2002 13:09:30 -0500 | | | | > | | | | >HI Mike, | | | | > | | | | >I think you'll get a hundred different answers on this one, so I'll | | just | | | | >answer from my personal point of view. | | | | > | | | | >If a stock breaks out of a well-formed base on volume, then takes 6 | | | weeks | | | | >to | | | | >rise 10 or 15 percent, then I sure wouldn't want to risk 8% loss at | | that | | | | >point, even if it were falling back "normally" as you suggest. To me | | | that | | | | >means that no sell signals were triggered on the way up, and that | the | | | | >general pattern included up days on higher volume than down days, | | | support | | | | >at | | | | >the 50 day moving average, etc. My personal preference, however, | would | | | be | | | | >to | | | | >move my stop to breakeven or slightly below (3-4% max, depending on | | | market | | | | >conditions) if the stock had risen like this. | | | | > | | | | >Katherine | | | | > | | | | > | | | | >----- Original Message ----- | | | | >From: | | | | >To: | | | | >Sent: Friday, August 16, 2002 9:17 AM | | | | >Subject: [CANSLIM] stop losses and profits | | | | > | | | | > | | | | >| Group, | | | | >| | | | | >| In reading WON, he makes a statement that you should never let a | | stock | | | in | | | | >| which you are up 10-15% turn into a loss, but I was wondering you | | have | | | | >| interpreted that along with the sell at no more than an 8% loss | rule. | | | | >| | | | | >| Say you buy a stock, at a breakout, and it rises 10-15% over a few | | (6+ | | | | >| weeks), and then is started to correct....Do you sell at you break | | | even | | | | >| point, or do you allow it to go to your 8% loss point before | selling? | | | | >This | | | | >| is assuming that the stock is NOT giving any strong sell signals, | but | | | | >| appears to be pulling back "normally". | | | | >| | | | | >| Thanks | | | | >| | | | | >| Mike Niemotka , PE | | | | >| Sr. Principal Engineer | | | | >| Baxter Healthcare Corporation | | | | >| Route 120 & Wilson Road | | | | >| Round Lake, IL 60073 | | | | >| Tel (847) 270-4075 | | | | >| Fax (847) 270-4525 | | | | >| michael_niemotka@baxter.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. | | | | > | | | | > | | | | >- | | | | >-To subscribe/unsubscribe, email "majordomo@xmission.com" | | | | >-In the email body, write "subscribe canslim" or | | | | >-"unsubscribe canslim". Do not use quotes in your email. | | | | | | | | | | | | | | | | | | | | _________________________________________________________________ | | | | Send and receive Hotmail on your mobile device: http://mobile.msn.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. | | | | | | | | | - | | | -To subscribe/unsubscribe, email "majordomo@xmission.com" | | | -In the email body, write "subscribe canslim" or | | | -"unsubscribe canslim". 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