From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #536 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 Saturday, February 20 1999 Volume 02 : Number 536 In this issue: [CANSLIM] Sell Signal Analysis Re: [CANSLIM] Sell Signal Analysis Re: [CANSLIM] Sell Signal Analysis [CANSLIM] NASDAQ Short intrest [CANSLIM] DGO New Highs, Weekly Stats, "M", Economics 101 Re: [CANSLIM] Sell Signal Analysis [CANSLIM] WIZTF Re: [CANSLIM] Sell Signal Analysis ---------------------------------------------------------------------- Date: Fri, 19 Feb 1999 14:06:27 -0500 From: Craig Griffin Subject: [CANSLIM] Sell Signal Analysis I wrote: >A close on the NASDAQ below 2289, which looks likely (currently 1:30pm at >2281), would constitute a failed rally attempt and thus a sell signal. >This would either be the first or second sell signal from the NASDAQ since >the 2/1/99 peak. (I believe 2/4/99 might also constitute a sell signal). The following is a long post, in which I attempt to analyze the recent market advance - looking for cansliM sell signals along the way. It appears that we were all asleep at the wheel in terms of reading the market day by day - at least no one posted "Sell Signal" at the time. However the discussions of distribution days and sentiment are to be applauded as useful in allowing a number of us to exit near the highs. To really follow along, it is best to have a chart of the NASDAQ that allows you to easily set a pointer on a specific date. Most of the packages on your computer allow this (like QP, Metastock, WOW, TC2000, etc.). The IQNet Website has the best JAVA charting from the Web for the NASDAQ that I could find. So, for those who need a web chart (otherwise skip this paragraph)- Go to http://www.iqc.com/ . Then select "Charts" second from the left at the top of the page. On the next screen, look just below and to the left of the "Enter Symbol" box - there you will find "More Charts: Java Version". Select "Java Version". You will then start Java and download a temporary 50k Java app. Once it has started you will see a new window with a chart of MSFT. Type in $COMPX in place of MSFT and click submit for a chart. You can then click on a bar on the graph and see the date, open, high, low, close on the bottom. Unfortunately there is no volume info. If anyone knows of a better JAVA app on the web for NASDAQ with volume or a nicer looking chart, let me know. Alternatively you may be able to follow volume and dates on some other web chart by holding a ruler or notecard up to the screen. If you have any improvements to the analysis below or questions or comments - - hit me with your best shot - I am really trying to nail this part of my game down and any feedback (pos or neg) is very welcome. Ok, here goes - I reviewed the NASDAQ for distribution days and rally failures going back to the beginning of this new bull market (10/09/98). (Assuming this really is a new bull, then it should go for 9 months or more, but that is another issue. The issue here is reading the market for sell signals.) There have been lots of days of distribution on the way up. A couple of periods with several distribution days within 2 or 3 weeks. But there have been no rally failures until recently (with one possible exception which I will discuss below). By "no rally failures" I mean, each time we pulled back from a peak and hit a short term low, from which we then rallied - the rally never failed. The rally is said to have "failed" if, after the rally starts, it eventually pulls back and establishes a lower low (closes below the prior low). This can happen the next day or several days later. The first time I see this happening is on 11/30/98 (the close undercuts the low of 1965 from 11/24). That same day, 11/24, is also about the only nearby distribution day. There are few other days of distribution on the way up, but only the one nearby. It therefore should be suspect as a sell signal, even though it is a violent down day (big volume and down 67pts - about 3% - closing at 1949). Indeed following this signal, the market does consolidate for a few weeks with a couple more big down days and distribution days. On 12/03, (only two days later) it is down 40 points to close at 1954 (but not under 1949 - so no signal generated) on big volume. Then on 12/14, following a quick 5% rally, it falls 62 pts, another 3% down day, to close at 1967 (but not under 1954 or 1949 - so no sell signal generated). From there we had an immediate and sharp rally that carried us up more than 15% (!) on the NASDAQ in about 3 weeks. If you had treated the 11/30 action as a sell signal, the buy signal would have been generated on 12/18 (up 1% on higher volume than the prior day). There would have been only the one sell sigal (sell 25% of holdings, choose weakest, per Canslim) before you recieved the "all clear" again. On 01/12/99 and 01/13 we had two big distribution days (high volume), followed by another down day that set a low close on 01/14 of 2276 (down 40 that day and down 5% in 3 days, but no sell signal, in spite of nearby distribution). From there we rallied with a big distribution day on 01/20, that I would have bet was a top (but was NOT). It was followed by two down days: down 70 and down 5 to close at 2338 on 01/22 (well above the 2276 set on 01/14). We then rallied again to a peak on 02/01/99 at 2510 on the close (with one distribution day along the way). >From there we had a down day (02/02 - dn 46 pts) which closed at 2463. A rally (02/03 - up 30 pts). Followed by a rally failure (02/04 - dn 83 pts) which closed at 2410, undercutting the 2463 of a couple of days earler in much the same way 11/30 undercut 11/24. But this time with a big difference - lots of recent distribution days including the big one on 01/20 which closed slightly higher. At this point (02/04), I would say the signs were flashing red but the signal was a bit in doubt. Would we turn and rally as we did during the period following 11/30 or would this be the first signal for a correction? After 02/04's 83 pt drop, we continued down on 02/05 with another drop of 36 pts to close at 2373. This was followed by a rally on 02/08, up 30 pts. But then on 02/09, an immediate rally failure to undercut 2373 with a close at 2310 (dn 94 pts). Clearly a sell signal. This also undercut the low set on 01/22 of 2339 for further confirmation. Therefore the first certain sell signal would be 02/09, once we were likely to close below 2373. Also, this makes the rally failure on 02/04, more likely to be a sell signal as well (remember it had lots of recent distribution, which 11/30 did not have). Therefore we may consider both 02/04 and 02/07 to be sell signals (leading us to want to raise as much as 75% cash in our Canslim account when the signal of 02/17 is included). ... And one could argue that both 02/04 and 11/30 should have been treated as sell signals, regardless. Just turns out we went on up quickly after 11/30, and not so with 02/04. We had a sharp one day rally on 02/11 (up 96 pts on slightly higher volume than the day before) - but it was really an opportunity to raise cash. It was followed by two down days both of which closed at the bottom of the range. Notice how these two down days look like downward pointing arrows. Look back at the bull market run from 10/09 and you will see few downward arrows on the chart and never two in a row, but there are lots of upward pointing arrows (closes at the high of the day). Then on 02/17 (my earlier post on this topic) we had a third rally failure, which is either the 2nd or 3rd sell signal we have gotten since the peak. We now need to start keeping a lookout for a new buy signal, which may not come for a while yet or may be only a a day or two off. Yesterday was the first day of the new rally attempt. We are looking for a 1% up day on higher volume than the prior day's volume on the 3rd - 10th days following the low as a buy signal (today is only the second day - so it will not count). I really would not expect it to come until we have quite a few new bases fleshed out (at least 4 or 5 weeks from now), but you never know. And remember, you can easily be in a rally for a couple of weeks leading into the new buy signal (1% + volume day). FWIW, the action on 02/17, while on the face of it generating a new Canslim sell signal, was also right on the 50 dma at the close. Also it looks like a candlestick "Inverted Black Hammer" or "Shaven Bottom" - which is a (bullish) reversal signal. This seems to have correctly anticipated a short term rally. Whether the rally will have legs is unknown. There is always the possibility that this second (or third) sell signal on 02/17 will also turn out to be the bottom of the consolidation. One never knows, thus, at them moment I am more than 50% cash, although I did buy some LU yesterday. I would like to look back and compare this take on the market and method of identifying sell signals to prior selloffs. When I compare it to the JPG file from O'Neil we discussed on this list many moons ago - the one difference may be O'Neil's first sell signal on the chart which may or may not be a rally failure (look back about 8 days from his first SELL comment to see what I mean). Go here to see O'Neil's file if you don't have a copy - - http://users.ccnet.com/~marto/mktstudy.jpg Well, I warned you it was long. Hope it was useful. Best Regards, Craig - - ------------------------------ Date: Fri, 19 Feb 1999 15:34:22 -0500 From: Craig Griffin Subject: Re: [CANSLIM] Sell Signal Analysis I just wrote (mid-way down in the long post): >If you had treated the 11/30 action as a sell signal, the buy signal would >have been generated on 12/18 (up 1% on higher volume than the prior day). This would have been 14 days later, which is a bit long but not too far out of the normal 10 day window. So I looked again, and actually 12/15 would have been the buy signal (the 11th day). This is the first 1% up day on higher volume than the previous day since the low of the current decline (which happens to be set on the same day as the only sell signal - 11/30). - - ------------------------------ Date: Fri, 19 Feb 1999 16:18:00 -0500 From: Craig Griffin Subject: Re: [CANSLIM] Sell Signal Analysis Oops, one more problem with my original post. I was looking at rally failures as the trigger for sell signals. But, apparently the definition I was using for "rally failure" and O'Neil's are different. His APPARENTLY is anytime a rally from a low occurs with a selloff prior to a 1% up day on volume. Because he is not waiting for the recent low to be undercut in the MKTSTUDY.JPG in the web link. I assume that a rally could be as short as 1 day, although, in his examples, the shortest happens to be 3 days. Obviously, anytime a rally has a down day is not a good enough reason to sell. So he must have a trigger for going into "selling mode on rally failures". I assume that the 4 days of distribution that he points out and the rounding top are his trigger. So the answers are less obvious than I thought, because the actual trigger is a hard thing to recognize. I need to go back and review all of the declines in the current run (from say 1990) and see if I can make a kind of semi-consistent sense out of what I think I kind of understand. Anyone who can shed any light on the situation, esp. vis-a-vis the current market, or the decline from October of last year, or the JPG, please do. Best Regards, Craig - - ------------------------------ Date: Fri, 19 Feb 1999 18:58:20 -0800 From: Robert J Knott Subject: [CANSLIM] NASDAQ Short intrest > > Do you know of another place besides DGO where you can find > out the > short position on a particular issue? > > http://www.viwes.com/invest/shorts/query.cgi - - ------------------------------ Date: Sat, 20 Feb 1999 07:59:50 -0500 From: "Tom Worley" Subject: [CANSLIM] DGO New Highs, Weekly Stats, "M", Economics 101 No surprise, a short list today. Most of the big cap, big name tech stocks didn't show up. I have been noticing the regular appearance of restaurant stocks. Group now ranked 33, GRS 80. Since dining out is for most people a luxury, I have found this group's performance a better gauge of consumer spending and consumer sentiment than any of the govt's reports. This week, there was only 95 stocks in the DG books that made a new high. Of these, only 40 had RS/EPS of 80/80 or better. Of these 40, nearly half (16) made a new high on Friday. And of these 40, 4 were restaurants. The retail sector and consumer spending was also well represented by WAG, WMT, and COST. Probably several others that I missed as well. Thus it would seem that despite all the volatility, consumer spending is alive and well. And that remains the engine driving the US economy (and with virtually no inflation despite low interest rates and extremely strong employment). Anyway, on with what you read this far for, the list: MSS, SCMM, NAV, TO, CLKB, PSO, TTILF, CTSH, BELFB, PBI, SDS, ASO, WAG, ETRC, WMT, BELFA, MMC, FDPC, QMC, EXEC (note: in process of being bot out), TYC, COST, DRI, ZQK, COMR, HDI, RAIL, UTX, TCAT, EL, ECL, WCOM, FTEN, ETEK, EAT, UFPI, AGN, TI, APPB, OSSI. With all the volatility recently, it's sometimes difficult to see the bigger picture. Here's the results for the week just ended: DOW +0.7% NASDAQ -1.6% R2000 -1.5% S&P100 +0.6% S&P500 +0.7% VIX -3.5% Tom W stkguru@netside.net ICQ # 5568838 - - ------------------------------ Date: Sat, 20 Feb 1999 06:13:23 -0800 (PST) From: rolatzi Subject: Re: [CANSLIM] Sell Signal Analysis Craig, Wonderful analysis of the NASDAQ. It is interesting to notice that in the month of December that there were 6 reversal (distribution) days between 11/30 and 12/30 andI recall at the time that I sold off some of my holdings. The period from 1/27 to and 2/17 shows three reversal days and 3 compression days (6 distribution days). The difference as you so well point out is that the lows are undercut in this revent period of distribution. I have been using fractal analysis of Bill Williams to deterine buy and sell points on stocks. The fractals are those arrows in the price action that point up and down. They represent temporary changes in the balance of buying and selling of a stock. His buy (sell) signals are generated when a previous fractal high (low) is surpassed. Most noticeably, from the start of the last up leg in November, the few sell fractals that were generated were not filled (the fractal lows were not penetrated). However, a sell fractal (signal to go short) was generated on 1/22 which was filled on 2/10. That same day a second sell fractal was generated which was filled on 2/17. This representaton may be an easy way to keep track of failures. By contrast, there were a number of buy fractals on the way up. The first sell on these buy signals came on 2/5. (His sell signal after a buy is either a filled sell fractal or a penetration below a moving average.) At least in this last leg up the use of these arrows as buy and sell signals have worked very well.The other point to note is that this methodology works if the top and the bottom of price movement rolls over. If the price turns on a dime and doesn't generate any arrows before taking off no signals are produced. Hope this helps despite it's moving away from CANSLIM. Ciao, rolatzi - ---Craig Griffin wrote: > > Oops, one more problem with my original post. I was looking at rally > failures as the trigger for sell signals. But, apparently the definition I > was using for "rally failure" and O'Neil's are different. His APPARENTLY > is anytime a rally from a low occurs with a selloff prior to a 1% up day on > volume. Because he is not waiting for the recent low to be undercut in the > MKTSTUDY.JPG in the web link. I assume that a rally could be as short as 1 > day, although, in his examples, the shortest happens to be 3 days. > > Obviously, anytime a rally has a down day is not a good enough reason to > sell. So he must have a trigger for going into "selling mode on rally > failures". I assume that the 4 days of distribution that he points out and > the rounding top are his trigger. > > So the answers are less obvious than I thought, because the actual trigger > is a hard thing to recognize. I need to go back and review all of the > declines in the current run (from say 1990) and see if I can make a kind of > semi-consistent sense out of what I think I kind of understand. > > Anyone who can shed any light on the situation, esp. vis-a-vis the current > market, or the decline from October of last year, or the JPG, please do. > > Best Regards, > Craig > > - > > _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 20 Feb 1999 09:55:55 -0500 From: "Growth Stock Analytics" Subject: [CANSLIM] WIZTF Anybody have an opinion on Wiztec Solutions (WIZTF)? Seems to fit most of the criteria, and broke out a few days ago, but has pulled back some. Growth Stock Analytics http://www.growthstockanalytics.com - - ------------------------------ Date: Sat, 20 Feb 1999 20:26:34 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] Sell Signal Analysis On Fri, 19 Feb 1999 14:06:27 -0500, you wrote: :So, for those who need a web chart (otherwise skip this paragraph)-=20 :Go to http://www.iqc.com/ . Then select "Charts" second from the left= at :the top of the page. On the next screen, look just below and to the = left :of the "Enter Symbol" box - there you will find "More Charts: Java :Version". Select "Java Version". You will then start Java and download= a :temporary 50k Java app. Once it has started you will see a new window = with :a chart of MSFT. Type in $COMPX in place of MSFT and click submit for a :chart. You can then click on a bar on the graph and see the date, open, :high, low, close on the bottom. Unfortunately there is no volume info. = If :anyone knows of a better JAVA app on the web for NASDAQ with volume or a :nicer looking chart, let me know. Alternatively you may be able to = follow :volume and dates on some other web chart by holding a ruler or notecard = up :to the screen. This connection to IQ Charts works well. I used to go to IQ Charts a couple to 3 years ago and it was one of my favorite charting sites. It became inaccessible as they evolved into a subscription service of some sort, or so it seemed. The available charts (when I frequented IQ Charts) were similar to what you get at the above site with the exception that (I think) they included volume at the bottom. They (like the chart available above) had the nice feature that you could click anywhere and get the rundown for that day's trading. Another site I like for charts is Silicon Investor: http://talk.techstocks.com/~wsapi/investor/charts I don't see a facility for charting the indexes or even symbol lookup, but have just posted an inquiry to the webmistress concerning the possibilities of doing this. The charts include volume as well as a chart giving a rundown of the last few day's action, and links to related message boards. A free registration is required for full use of the site. Used to be that emphasis was on technical issues to some degree and some charts were not available, but it seems that the range has expanded considerably. :FWIW, the action on 02/17, while on the face of it generating a new = Canslim :sell signal, was also right on the 50 dma at the close. Also it looks = like :a candlestick "Inverted Black Hammer" or "Shaven Bottom" - which is a :(bullish) reversal signal. This seems to have correctly anticipated a :short term rally. Whether the rally will have legs is unknown. There = is :always the possibility that this second (or third) sell signal on 02/17 :will also turn out to be the bottom of the consolidation. One never = knows, :thus, at them moment I am more than 50% cash, although I did buy some LU :yesterday. This is amazing, as I went to cash 100% on 2/12, and I too established a position in LU yesterday...on the *short side* at 99 13/16 !!! Looks like I may get stopped out. :) Thanks for the extensive analysis. It's quite exemplary and worthy of study. Dan - - ------------------------------ End of canslim-digest V2 #536 ***************************** 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.