From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #580 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 Thursday, April 15 1999 Volume 02 : Number 580 In this issue: Re: [CANSLIM] Date: Wed, 14 Apr 1999 22:03:15 +0100 [CANSLIM] Flotsam and Jetsam (or misc random thoughts) [CANSLIM] Is "M" Re: [CANSLIM] Is "M" Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) Re: [CANSLIM] SCAI Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) Re: [CANSLIM] SCH Climax Run? [CANSLIM] M - (was SCH Climax Run?) Re: [CANSLIM] Russell 2000, was "M" Re: [CANSLIM] Russell 2000, was "M" [CANSLIM] Changing your canslim subscription Re: [CANSLIM] SCH Climax Run? Re: [CANSLIM] Trailing Stops and SCH [CANSLIM] trying to learn ---------------------------------------------------------------------- Date: Wed, 14 Apr 1999 22:16:07 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Date: Wed, 14 Apr 1999 22:03:15 +0100 Marc, Looks like you are asking two unrelated questions on the brokerages and QCOM. Some quick thoughts - the brokerages are only now starting to report earnings, and so far they are not only strong but well above expectations, take JPM as just one example today, nearly doubled expectations, contributioning nearly a third to the Dow 20 gains at its highs. QCOM built a very nice and lengthy base at 50 leading up to the end of last year. Then in a three month period it moved from the 50 level to around 85 in a smooth and orderly fashion. Then, over the last three weeks or so, it screamed from around 85 to about 175. I think it's reasonable after the latest move that there will be profit taking, increased volatility, etc. One down day, regardless of volume, does not set a trend. I would suggest backing off a tad and taking a closer look at a picture with a longer term time horizon. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: Marc Laniado To: CANSLIM DISCUSSION LIST Date: Wednesday, April 14, 1999 5:09 PM Subject: [CANSLIM] Date: Wed, 14 Apr 1999 22:03:15 +0100 Do we reckon the brokerages etc have ended the climax run? Anyone watching qualcom (QCOM) - broke out and fell down a bit on lowish vol? I had thought this might be a High tight flag. Marc Marc E Laniado marclaniado@msn.com - - - - ------------------------------ Date: Wed, 14 Apr 1999 22:56:52 -0400 From: "Tom Worley" Subject: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) OK, my nautical side shows. Been giving some thought to why the R2000 would chose now to perform so well. One reason possible is that it contains a higher percentage of financials, and a lower percentage of tech stocks, than does the Naz. And techs have been hurting the Naz lately, while financials continue to outperform. I'm probably the only fool still holding TMBS, but I liked it fundies (fundamentals, sorry, I tend to think and write in shorthand too much) when I bot it and continue to like them, esp after today's earnings report after the close: Timberline Software (TMBS) TIMBERLINE SOFTWARE reported 1Q EPS of $0.23 vs $0.12 in the prior year period, on revenues of $13.3 mln vs $9.38 mln in 1998. Analysts' mean estimates were $0.15, according to First Call. (Reuters 05:22 PM ET 04/14/99) For the full text story. The Russell 2000 (R2000) did OK today, it's third day in a row, approaching resistance just over 420 before backing away. Finished with a fractional gain, still better than Naz, down 3%. And the Dow 30 demonstrated its thin breadth with most of its gains coming from JP Morgan's great earnings (another financial). Worth noting that Naz traded over 1.4 billion shares today, I think that may be a new record volume. Not a good sign on such a down day, but the techs, esp the internuts, are so volatile. NTBK was a good example, down around 25% and trading virtually its entire issue. Even assuming the typical double counting of volume found on Nasdaq stocks, it still traded nearly its entire float. Starting to see some gradual upturns in RS on some of the major indexes, tho not as pronounced as already occurring on the R2000. But how about that move on the Trans index today, up over 4%?? Sentiment seems too excessively optimistic on Japan and its economy lately. Granted, a proposed 25% cut across the board in taxes would boost the economy and address one of the issues, but will it pass? And where will the govt collect the lost revenues? Haven't seen too many govts lately willing to truly cut back and budget. Japan can't cut interest rates any further to stimulate economic activity, they are already practically at zero, unless they want to pay people to borrow. Interesting concept, hey, if you are willing to open a new McDonald's franchise, we will loan you the money for all the capital expenses, plus pay you half a point on the amount borrowed, then cut the taxes on the profits you expect to make. Only thing is, the banking industry is in seriously deep doo doo there, and how are they to show a profit like this without creative bookkeeping, which has been part of the problem for several decades? I think there is still some chance of another round of rate cuts in Europe this year, and the likelihood of a rate hike in USA has further diminished to near zero, at least for 1999. Oil may finally have peaked, as well as the precious metals at about the same time. Other commodities appear to be tame. I'm still looking for a site where I can examine the R2000 basics, e.g. up/down volume, new highs/lows, etc in anal detail. Gotta find some time, however. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - - ------------------------------ Date: Wed, 14 Apr 1999 22:04:04 -0500 From: "mdor" Subject: [CANSLIM] Is "M" I have been viewing my indexes (DJIA, SP500, NASDAQ, and Russell 2000) and am really confused about what I am seeing. It is up up and away for DJIA and Russell 2000 and the bottom is beginning to fall out on the SP500 and NASDAQ. I use a new indicator (Directional Movement Index) of which is not telling me anything about taking a short position on the market as of yet. But the NASDAQ is getting close to a short position. This could be an indication that the technology stocks have reached their peak and are going out of favor. Only tomorrow will tell a different story if we can rebound in the down markets and continue to show strength in the Blue Chips and small caps. If the indication continues tomorrow in the NASDAQ, then I will let you know if the index is going into a short position. What I am worried about is that the down markets will bleed into the strengthening markets and we could probably see a correction on the horizon. Hope this doesn't happen. This is only my two cents worth. I will go to bed now and dream for less confusion tomorrow. Michael Doroshenko - - ------------------------------ Date: Wed, 14 Apr 1999 23:12:33 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Is "M" Michael, I chose to follow WON's advice, as well as that of many other wise voices, and not short unless the mkt is in a bearish tread. For me, that hasn't been established. Granted a 15 or 20 % correction could be just around the corner, certainly mkt breadth is non existent. But shorting right now, or even looking for shorting opportunities, IMHO, is just fighting the tape. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: mdor To: CANSLIM Date: Wednesday, April 14, 1999 11:03 PM Subject: [CANSLIM] Is "M" I have been viewing my indexes (DJIA, SP500, NASDAQ, and Russell 2000) and am really confused about what I am seeing. It is up up and away for DJIA and Russell 2000 and the bottom is beginning to fall out on the SP500 and NASDAQ. I use a new indicator (Directional Movement Index) of which is not telling me anything about taking a short position on the market as of yet. But the NASDAQ is getting close to a short position. This could be an indication that the technology stocks have reached their peak and are going out of favor. Only tomorrow will tell a different story if we can rebound in the down markets and continue to show strength in the Blue Chips and small caps. If the indication continues tomorrow in the NASDAQ, then I will let you know if the index is going into a short position. What I am worried about is that the down markets will bleed into the strengthening markets and we could probably see a correction on the horizon. Hope this doesn't happen. This is only my two cents worth. I will go to bed now and dream for less confusion tomorrow. Michael Doroshenko - - - - ------------------------------ Date: Wed, 14 Apr 1999 20:18:06 -0700 From: Dan Cash Subject: Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) Hello Tom, I haven't looked at the construction of the Russell 2000. If, though, the info in the next paragraph is correct, it might hold some of the reasons to the explosion of the index. And if so, how would it effect your evaluation? - ------------- ...some previously small cap stocks are now the leaders and are no longer small caps.the largest stocks in the RUT are now CMGI @ $15bln, XCIT @$9bln,EGRP @14bln, MFNX @9bln, AMTD @ $10bln, RNWK @ $8bln. The RUT is a market cap weighted index which means the larger the market cap the more influence a company has on the actual index. With these previous "small cap" stocks doubling in value every week it is no wonder the RUT is exploding... Dan - ------------- Tom Worley wrote: > OK, my nautical side shows. Been giving some thought to why > the R2000 would chose now to perform so well. One reason > possible is that it contains a higher percentage of > financials, and a lower percentage of tech stocks, than does > the Naz. And techs have been hurting the Naz lately, while > financials continue to outperform. > > I'm probably the only fool still holding TMBS, but I liked > it fundies (fundamentals, sorry, I tend to think and write > in shorthand too much) when I bot it and continue to like > them, esp after today's earnings report after the close: > Timberline Software (TMBS) > > TIMBERLINE SOFTWARE reported 1Q EPS of $0.23 vs $0.12 in the > prior year period, on revenues of $13.3 mln vs $9.38 mln in > 1998. Analysts' mean estimates were $0.15, according to > First Call. (Reuters 05:22 PM ET 04/14/99) For the full text > story. > > The Russell 2000 (R2000) did OK today, it's third day in a > row, approaching resistance just over 420 before backing > away. Finished with a fractional gain, still better than > Naz, down 3%. And the Dow 30 demonstrated its thin breadth > with most of its gains coming from JP Morgan's great > earnings (another financial). > > Worth noting that Naz traded over 1.4 billion shares today, > I think that may be a new record volume. Not a good sign on > such a down day, but the techs, esp the internuts, are so > volatile. NTBK was a good example, down around 25% and > trading virtually its entire issue. Even assuming the > typical double counting of volume found on Nasdaq stocks, it > still traded nearly its entire float. > > Starting to see some gradual upturns in RS on some of the > major indexes, tho not as pronounced as already occurring on > the R2000. But how about that move on the Trans index today, > up over 4%?? > > Sentiment seems too excessively optimistic on Japan and its > economy lately. Granted, a proposed 25% cut across the board > in taxes would boost the economy and address one of the > issues, but will it pass? And where will the govt collect > the lost revenues? Haven't seen too many govts lately > willing to truly cut back and budget. Japan can't cut > interest rates any further to stimulate economic activity, > they are already practically at zero, unless they want to > pay people to borrow. Interesting concept, hey, if you are > willing to open a new McDonald's franchise, we will loan you > the money for all the capital expenses, plus pay you half a > point on the amount borrowed, then cut the taxes on the > profits you expect to make. Only thing is, the banking > industry is in seriously deep doo doo there, and how are > they to show a profit like this without creative > bookkeeping, which has been part of the problem for several > decades? > > I think there is still some chance of another round of rate > cuts in Europe this year, and the likelihood of a rate hike > in USA has further diminished to near zero, at least for > 1999. Oil may finally have peaked, as well as the precious > metals at about the same time. Other commodities appear to > be tame. > > I'm still looking for a site where I can examine the R2000 > basics, e.g. up/down volume, new highs/lows, etc in anal > detail. Gotta find some time, however. > > Tom Worley > stkguru@netside.net > chat with me at ICQ # 5568838 > get ICQ software at http://www.icq.com/icqhomepage.html > > - - - ------------------------------ Date: Wed, 14 Apr 1999 23:39:31 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) Hi Dan, Over the past three days (which is the period I have noticed the R2000 coming to life a little), the stocks you have mentioned have changed market cap as follows: CMGI - minus $2.3 billion XCIT - minus 1.3 bil EGRP - plus 1.9 bil MFNX - plus 0.3 bil AMTD - minus 1.5 bil RNWK - minus 0.5 bil So, on balance, appears that these now bigger cap stocks have not contributed to the move I am noticing. That's why I am looking for a site that would allow me to examine the breadth in more detail. These stocks may have certainly offset some of the other depreciations in the R2000 mkt cap worths over the prior several weeks or months. But they have not contributed to the move in the past several days. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: Dan Cash To: canslim@lists.xmission.com Date: Wednesday, April 14, 1999 11:20 PM Subject: Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) Hello Tom, I haven't looked at the construction of the Russell 2000. If, though, the info in the next paragraph is correct, it might hold some of the reasons to the explosion of the index. And if so, how would it effect your evaluation? - ------------- ...some previously small cap stocks are now the leaders and are no longer small caps.the largest stocks in the RUT are now CMGI @ $15bln, XCIT @$9bln,EGRP @14bln, MFNX @9bln, AMTD @ $10bln, RNWK @ $8bln. The RUT is a market cap weighted index which means the larger the market cap the more influence a company has on the actual index. With these previous "small cap" stocks doubling in value every week it is no wonder the RUT is exploding... Dan - ------------- Tom Worley wrote: > OK, my nautical side shows. Been giving some thought to why > the R2000 would chose now to perform so well. One reason > possible is that it contains a higher percentage of > financials, and a lower percentage of tech stocks, than does > the Naz. And techs have been hurting the Naz lately, while > financials continue to outperform. > > I'm probably the only fool still holding TMBS, but I liked > it fundies (fundamentals, sorry, I tend to think and write > in shorthand too much) when I bot it and continue to like > them, esp after today's earnings report after the close: > Timberline Software (TMBS) > > TIMBERLINE SOFTWARE reported 1Q EPS of $0.23 vs $0.12 in the > prior year period, on revenues of $13.3 mln vs $9.38 mln in > 1998. Analysts' mean estimates were $0.15, according to > First Call. (Reuters 05:22 PM ET 04/14/99) For the full text > story. > > The Russell 2000 (R2000) did OK today, it's third day in a > row, approaching resistance just over 420 before backing > away. Finished with a fractional gain, still better than > Naz, down 3%. And the Dow 30 demonstrated its thin breadth > with most of its gains coming from JP Morgan's great > earnings (another financial). > > Worth noting that Naz traded over 1.4 billion shares today, > I think that may be a new record volume. Not a good sign on > such a down day, but the techs, esp the internuts, are so > volatile. NTBK was a good example, down around 25% and > trading virtually its entire issue. Even assuming the > typical double counting of volume found on Nasdaq stocks, it > still traded nearly its entire float. > > Starting to see some gradual upturns in RS on some of the > major indexes, tho not as pronounced as already occurring on > the R2000. But how about that move on the Trans index today, > up over 4%?? > > Sentiment seems too excessively optimistic on Japan and its > economy lately. Granted, a proposed 25% cut across the board > in taxes would boost the economy and address one of the > issues, but will it pass? And where will the govt collect > the lost revenues? Haven't seen too many govts lately > willing to truly cut back and budget. Japan can't cut > interest rates any further to stimulate economic activity, > they are already practically at zero, unless they want to > pay people to borrow. Interesting concept, hey, if you are > willing to open a new McDonald's franchise, we will loan you > the money for all the capital expenses, plus pay you half a > point on the amount borrowed, then cut the taxes on the > profits you expect to make. Only thing is, the banking > industry is in seriously deep doo doo there, and how are > they to show a profit like this without creative > bookkeeping, which has been part of the problem for several > decades? > > I think there is still some chance of another round of rate > cuts in Europe this year, and the likelihood of a rate hike > in USA has further diminished to near zero, at least for > 1999. Oil may finally have peaked, as well as the precious > metals at about the same time. Other commodities appear to > be tame. > > I'm still looking for a site where I can examine the R2000 > basics, e.g. up/down volume, new highs/lows, etc in anal > detail. Gotta find some time, however. > > Tom Worley > stkguru@netside.net > chat with me at ICQ # 5568838 > get ICQ software at http://www.icq.com/icqhomepage.html > > - - - - - ------------------------------ Date: Wed, 14 Apr 1999 23:42:25 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] SCAI Come on, Ben. When a stock goes from $30 to $80 in a single trading day, what do you expect to happen on the following day? Ask this question again in several weeks after the market can absorb such unpredictable and irratic action, and maybe there can be more than pure guesses. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: Ben Heffer To: canslim@lists.xmission.com Date: Wednesday, April 14, 1999 7:40 PM Subject: [CANSLIM] SCAI What do you make of what happened to SCAI today? Is this a start of a cup? Thaks, Ben 963-2428 home 945-9183 work Cyber Consultants-Training, Installations, Home Page Design mailto:bheffer@sopris.net http://mt.sopris.net/bheffer/gses/gses.html - - - - ------------------------------ Date: Wed, 14 Apr 1999 22:31:13 -0800 From: "Patrick Wahl" Subject: Re: [CANSLIM] Flotsam and Jetsam (or misc random thoughts) From: "Tom Worley" To: "CANSLIM" > I'm still looking for a site where I can examine the R2000 > basics, e.g. up/down volume, new highs/lows, etc in anal > detail. Gotta find some time, however. I don't know if this is any help, but if you go to this link and click on 2000 securities, you will get a complete list of the stocks in the Russell 2000. This does require Adobe Acrobat. http://www.cme.com/market/equity/guide/rs_criteria.html - - ------------------------------ Date: Wed, 14 Apr 1999 14:02:39 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] SCH Climax Run? At 08:32 PM 13/04/99 -0400, you wrote: >Possible climax run on SCH. Same picture as others in the group: NDB, EGRP, AMTD, etc Anyone else seeing so many of these hyper extended stocks, mostly in the internet related sector? Just take a look at the new high list of the last two days. The start of a climax run in the leading internet sector maybe? On the other hand their are quite a few bullish breakouts. NASDAQ volume was spectacular Tues @ approx 1,353,000,000 shares. Per IanW/HGS: The "high road scenario" would be base low + 25% = 2224 (NASD 02/18/99) + 25% = 2780. Last time we only hit 20% (that would be 2669 now). And per the usual 9 month cycle from major correction to next major correction: we are now in 6th month (start counting from the last major correction, i.e. Oct 99). It is very hard to find true bears. Many of us have been rubbing our hands so hard, that any further rubbing would be painful since the protective skin layer has almost disappeared. ;^) All of the above leads me to be extra carefull now. Ofcourse I wouldn't be surprised if we go on to new heighs. I've been out of the market to quickly before... so take the above "careful here attitude" with a few grains of salt. - -- Johan Van Houtven - - ------------------------------ Date: Thu, 15 Apr 1999 08:22:15 -0400 From: Craig Griffin Subject: [CANSLIM] M - (was SCH Climax Run?) At 02:02 PM 4/14/99 +0200, you wrote: >At 08:32 PM 13/04/99 -0400, you wrote: >>Possible climax run on SCH. > >Same picture as others in the group: NDB, EGRP, AMTD, etc > >Anyone else seeing so many of these hyper extended stocks, mostly in the >internet related sector? Just take a look at the new high list of the last >two days. The start of a climax run in the leading internet sector maybe? Several conflicting trends yesterday. Bullish sentiment still higher than preferred. Put/call ratio has improved (more puts lately). Cyclicals look like they want to rumble. Tech heavy NAS sells off big time on big-big volume. Earnings coming in great this season overall (including techs). Small caps starting to kick up their heels. Utilities getting clobbered. Transports taking off. (several signals of strengthening (!) economy - worries over higher interest rates vis a vis the Utilities) Advance/decline line and New highs/new lows improves as the market sells off. :- looks like a broadening of the rally :) As Tom is fond of saying, one day does not a trend make. AMTD just came out with sterling earnings ... so, these "climax runs" may end up being high tight flags before it is all over. As somebody just said - - no way I would short in this market. SCH actually declined less, considering its recent gains, than a lot of the tech stocks yesterday. It certainly looks climactic on the chart - but as IOM proved several times - nothing is certain. Time will tell... Best Regards, Craig - - ------------------------------ Date: Thu, 15 Apr 1999 12:43:01 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] Russell 2000, was "M" On Wed, 14 Apr 1999 00:45:38 EDT, you wrote: :I know Tom and several on the list are strong believers of Russell 2000.= My=20 :question is what actually is Russell 2000. It is supposed to be 2000=20 :companies of small cap stocks. If you look at some of the members like = CMGI,=20 :EGRP etc. you thing these will qualify what small cap is? : :Regards : :Surindra It looks like the small caps MAY be showing signs of at last participating in the bull. A few decent to good days don't make this clear. I don't know the figures, but small caps are smaller than mid caps which are smaller than big caps, and all of these are bigger than micro caps. Dan - - ------------------------------ Date: Thu, 15 Apr 1999 12:52:50 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] Russell 2000, was "M" On Wed, 14 Apr 1999 09:02:05 -0700, you wrote: :The RUT is the 2000 stocks following the 1000 biggest stocks, by :capitilazation. It's more of a small-mid cap index. I think the Wilshire= 2000 :is the actual 2000 smallest cap stocks larger than the micro-caps, and = no I :don't know how that is defined. : Vis a vis indexes, I have been wondering about the significance of the Wilshire 5000. I heard that this essentially tracks all US stocks, indescriminant of size. I went to Wilshire's website and saw, in part, the following (I don't think they will mind my quoting the material...BTW, what is law/netiquette regarding quoting online - I'm somewhat hazy on this... something tells me that it's not such a good idea :)) Dan The Wilshire 5000 Index The Wilshire 5000 Equity Index measures the performance of all U.S. headquartered equity securities with readily available price data. Over 7,000 capitalization weighted security returns are used to adjust the index. The Wilshire 5000 base is its December 31, 1980 capitalization of $1,404.596 billion. Therefore, the index is an excellent approximator of dollar changes in the U.S. equity market. For instance, values of 2157.146 on 12/30/85 and 2164.690 on 12/31/85 represents an approximate increase of $7.5 billion. The index's actual market value and unit value differ due to additions and deletions of securities. The Wilshire 5000 capitalization is about 81% NYSE, 2% AMEX, and 17% OTC. Wilshire Associates views the performance of the Wilshire 5000 Index in several ways. Wilshire calculates price and total return indexes using both capital and equal weights. The unit value of these four indexes was set to 1.0 on December 31, 1970. - - ------------------------------ Date: 15 Apr 1999 08:00:02 -0600 From: owner-canslim@lists.xmission.com (Jeff Salisbury) Subject: [CANSLIM] Changing your canslim subscription This is a monthly posting to the CANLSLIM group. Frequently, people sign up for the canslim list and then are overwhelmed by the volume of the email. There are two remedies for this problem: 1) You can leave our group, or 2) you can switch to the digest version which "conglomerates" many canslim messages into one large message. To change your configuration, email a message to: majordomo@xmission.com The remove yourself from the canslim list, write in the body of the email: unsubscribe canslim To add yourself to the digest version of the canslim list, write in the body of the email: subscribe canslim-digest For general help with majordomo commands, write in the body of the email: help If you need further clarification, write me directly at: canslim-owner@lists.xmission.com Best Regards, Jeff Salisbury - CANSLIM list admin / owner - - ------------------------------ Date: Thu, 15 Apr 1999 11:32:24 -0400 From: Craig Griffin Subject: Re: [CANSLIM] SCH Climax Run? Johan, Very nice post ... You wrote: >It is very hard to find true bears. >Many of us have been rubbing our hands so hard, that any further rubbing >would be painful since the protective skin layer has almost disappeared. ;^) >All of the above leads me to be extra carefull now. >Ofcourse I wouldn't be surprised if we go on to new heighs. I've been out >of the market to quickly before... so take the above "careful here >attitude" with a few grains of salt. Judging from the last 2 days action, it is very useful to try to identify climactic activity. Both SCH and NTBK holders would have benefited, as well as those using such stocks as clues to market health. Best benefit to owners of these stocks would have come from recognizing intraday on Tuesday 4/13, for both stocks, that an exhaustion gap had probably developed. One could have sold based on that. Second best benefit would have come from recognizing the same thing overnight Tuesday night and then selling Wednesday 4/14 at the open (which would have happened to actually generate a tad higher price, but with far higher risk). Additionally, as Johan pointed out, these climaxes occurring at the same time and on a very high volume reversal day for the market did not bode well for the market as a whole, especially for the market's current leadership. This may be rotational (into new leadership), but at the moment it is most painful for those of us holding the old leadership. One question to be answered: is this truely a rotation, or simply a shakeout before the old leaders resume? Best Regards, Craig PS. Hindsight is 20/20, natch. - - ------------------------------ Date: Thu, 15 Apr 1999 22:13:10 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Trailing Stops and SCH Craig, I beg to differ. Using trailing stops on a rising stock is a sensible way to protect a profit, esp if you don't have to time to closely follow the trading behaviour. I really have to spend some time digging out the interview WON did some years ago for the broker's magazine, it had many good quotes. Drat, another weekend project! One of the things I learned over the years from WON's staffers, as well as reading WON interviews, etc, was that there were effectively three phases to purchasing a stock. The first was to protect capital by using a mental or actual stop based on your entry point (assuming of course that you picked a correct entry). This was done by setting a sell stop approx 8% below your purchase price. This 8% has been modified to make it also coincide with the bottom of the base it should have been breaking out from, allowing the actual stop to be slightly more or less depending on the quality of the base, how close to the base you caught it, etc. Some used stops of 15%, however WON when he first started used 10% and found this was too much, hence the 8%. The second phase is to protect against any loss at all (the first phase was to protect against a significant loss of capital). This was done by raising your stop once you were up 15% from your initial entry price. Again, WON in the interview I need to find advocated using a stop of 8%, in this case now down from the latest price. The third phase was to start protecting profits by moving your stop up (but never, EVER DOWN) as the stock continued to perform and move higher. Again, this would be 8% down from recent prices. While there has been much discussion in this group over arbitrarily selling once you are up 20%, what WON advocated to stock brokers was the above. His only support for selling with 20% or so profits was to establish confidence in the system, to get a few "base hits", to learn. But once that maturation and education was accomplished, he talked in terms of holding his best performers for a year or longer. At the time I knew of several he had held for upwards of several years and made several hundred percent profit. One point I must emphasize: the article I am referring to was written in times when volatility was only a fraction of today; investors didn't have "real time" access to information, much less to trading ability, as they do today; and virtually every investor was dealing through a broker, be it a full service or discount one. And, needless to say, there were no internet stocks (OK, I know I'm a dinosaur, but actually I'm only referring to about 1991 or so, and that's still in this decade, OK??). That's how new this whole internet thing actually is to the investing community. Considering the mkt cap size of so many compared to the GEs and P&Gs and Ts and MRKs etc, it's really hard to imagine that so many of them didn't even EXIST only a few years ago. I promise, I swear, I really mean it this time, I will search high and low for this article until I find it (of course, I'm one of the biggest procrastinators, not filing my taxes until a week ago despite being due my biggest refund in over a decade! But don't let that worry you, I really mean it this time, I'll dig until I find it). Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: Craig Griffin To: canslim@lists.xmission.com Date: Wednesday, April 14, 1999 10:01 AM Subject: [CANSLIM] Trailing Stops and SCH Rolatzi, You wrote: >I have gotten stopped out of stocks after they broke out. I do >not want to turn a profit into a loss so after the stock is >ahead 10% I will raise the stop loss to 10% less than high >price. For example I bought CMVT at 85, placed a stop loss at >7% less than that and when it went up I began to raise raised >the stop loss. At 99 I set a stop loss at 89 where it is now. >It is possible that I will get stopped out but that the stock >will then turn around and begin to move up again. Am I reading >WON wrong? Am I moving my stop losses up too quickly? Should I >give the stock more room to move? I often get stopped out with >small profits but I am taking less losses than I used to. I >would appreciate people's opinion on this matter. You should only move your stop loss one time per WON. First of course, you set your stop at 7 or 8% from your buy point. Then, once you are ahead 15% or so, you move your stop to your buy point in order to not let the 15% gain turn into a loss. If I remember correctly, this is the classic rule per WON. After this, then what does one do? Use the selling "pointers" in HTMMIS (see Chapter 10, especially the 36 rules enumerated under "Other Prime Selling Pointers".) Basicly, after you are ahead 15%+, you need to give a stock room to breath. Trace the course on a chart of any big winner. For example YHOO or DELL or CMGI. Depending on the stock, you will see variations of 10-40% frequently on the way up. This can be hard to sit through, yes. But to get the really big gains on a winning stock like NTBK you have to sit through some stuff. Once ahead 40%, would you want to be stopped out because it retraced 20% before advancing another 100%. With a 10 or 15% trailing stop, you will never hold onto the big winners for the 9 months to 3 years it takes for a 5 or 10 bagger to develop - - ------------------------------ Date: Thu, 15 Apr 1999 22:04:14 -0600 From: Deepak Kapur Subject: [CANSLIM] trying to learn I am curious about what would have been a prudent strategy for ntbk and cmvt, given the action yesterday and today. Craig and Dan, any comments? Thanks. Deepak - - ------------------------------ End of canslim-digest V2 #580 ***************************** 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.