From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #115 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk canslim-digest Thursday, February 12 1998 Volume 02 : Number 115 In this issue: Re: [CANSLIM] Intro: Craig Hogan Re: [CANSLIM] CNCX Re: [CANSLIM] Intro: Craig Hogan Re: [CANSLIM] OMQP [CANSLIM] Cup and handle info Re: [CANSLIM] Intro: Craig Hogan Re: [CANSLIM] Breakout volume (was Intro: Craig Hogan) [CANSLIM] World Markets Re: [CANSLIM] Spot [CANSLIM] QuotePlus Six Week Breakout Scan [CANSLIM] Quotes-Plus version 2.0 Re: [CANSLIM] Quotes-Plus version 2.0 RE: [CANSLIM] Quotes-Plus version 2.0 [CANSLIM] Nice example of failure of breakout: DMMC Re: [CANSLIM] Nice example of failure of breakout: DMMC Re: [CANSLIM] Nice example of failure of breakout: DMMC Re: [CANSLIM] Nice example of failure of breakout: DMMC Re: [CANSLIM] Nice example of failure of breakout: DMMC [CANSLIM] TR [CANSLIM] remove my email address Re: [CANSLIM] Breakouts - GX & HCFP ---------------------------------------------------------------------- Date: Wed, 11 Feb 1998 19:56:37 -0800 (PST) From: Chip Anderson Subject: Re: [CANSLIM] Intro: Craig Hogan Re: "As to the theoretical "perfect" cup and handle..." Thanks for the great description of the C&H price action, Tom. Do you know what the "ideal" behavior of the accompanying volume should be? Chip http://coolhistory.com/ChipsCharts _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Wed, 11 Feb 1998 22:05:07 -0600 From: Dave Cameron Subject: Re: [CANSLIM] CNCX Anindo Majumdar wrote: > > Does CNCX qualify as a CANSLIMER or is it just part of the group move > which has been lifting all ISPs ever since AOL announced a price hike. > Others in the group are ELNK, MSPG. > Not really.... A stock with an EPS of 40 and a RS of 70 generally is not considered CANSLIM. There are stocks that continue to have a high RS without a high EPS (AMZN, AOL, PIXR, IDTI), and may perform well for quite a while, but they are not really CANSLIM. Dave Cameron - - ------------------------------ Date: Wed, 11 Feb 1998 22:09:34 -0600 From: Dave Cameron Subject: Re: [CANSLIM] Intro: Craig Hogan Craig, If you search the archives, you may find quite a bit on this. There used to be a member of this group named Zoran Mitrovski who has a very scientific bent. I am a trained statistician, so I am familiar with validity testing. I have never taken the time to test statistical validity because there is a lot of CANSLIM which is somewhat subjective. However, Zoran had some very eloquent thoughts. I miss his insight; it would be interesting to hear his thoughts on this again. If I get ambitious, I will search for them. Dave Cameron Dan Musicant wrote: > > Craig Hogan wrote: > : > :So I'd like to start out with a question/survey. The one thing I > :don't like about the book is that O'Neil's logic always seems to work > :backwards. Maybe this is typical analysis, but there appear to be > :flaws. He will mention a concept and give examples of companies that > :skyrocketed after showing certain behavoir, but he never says how > :often this happens. I could write a book showing lots of companies > :going up after their EPS went down from the prior year- there are > :always exceptions. > > :So, does it bother anyone that he never says the approximate > :PERCENTAGE of firms that will go up based each of his methods? > :That would be a lot more valueable to me. Has anyone done a study > :that went back and applied CANSLIM to a random mix of historic data > :and come back with success percentages, rather than picking out the > :good eggs? > : > > > I think your feeling about the book is shared by many. I understand > your feeling about the backwards approach of O'Neill, and thanks for > objectifying this. Like they say, "hindsight is 20-20", and WON's > analysis of the winingest stocks of the previous 4 or 5 decades does > beg for a scientific or statistical analysis to get a handle on how > effective the methods are and just how one could apply them with a > reasonable sense of certainty. I have seen virtually the same question > asked before right here on the CANSLIM board (if I can call it that). > That is, I saw posts discussing the feasibility of objective > statistical analysis of CANSLIM stock picking techniques. I seem to > recall a few months ago a person who rather rudely asserted that > CANSLIM would not measure up to his or other criteria. With brash > bravado he challenged members of this board to a contest. However, I > believe I recall other more considered discussions of this sort here. > > - - ------------------------------ Date: Wed, 11 Feb 1998 23:12:32 -0500 From: "Connolly Family" Subject: Re: [CANSLIM] OMQP I'm new to this forum and... I'm curious... what "screen" did OMQP come up on? I'm still looking for a program to scan for canslim candidates... What are you using? - -----Original Message----- From: Jeffry White <"postwhit@sover.net"@sover.net> To: canslim@mail.xmission.com Date: Tuesday, February 03, 1998 11:51 AM Subject: [CANSLIM] OMQP >OMQP came up on my screen. Has most of the goodies, except the group is >lagging. Maybe some of you who have DG will find other defects, like >timeliness, etc. However, I bring it to the group because it's a Connie >Mack special, in my opinion. > >Pull up a two month chart with 3/7/10 EMA and slow stochastics. The >stoch crossed over on Friday's action, and today's action will cross the >EMA. Chart look great, volume dried nicely. Looks low risk in here >with a good opportunity for stop placement. TWLB showed the same >characteristics just before it rocketed from under 23 to breakout above >27, and after a little rest, now over 30 today. > >Good luck, and thanks again Connie Mack. Those two indicators have >resolved a lot of my uncertainties about entry points, etc. > >Jeffry White > >Thank you Connie Mack. > > >- > > - - ------------------------------ Date: Wed, 11 Feb 1998 21:31:52 -0800 From: "John R. Allen" Subject: [CANSLIM] Cup and handle info Craig Griffin, here's some info on cup and handle from the March 1995 issue of Technical Analysis of S & C. Anyone who has been on this list a while has seen this and can skip it. This does seem to be a much better definition than anything O'Neil has in his book. - - ----------------------------------------------------- "The cup of the pattern typically forms during intermediate-term market corrections and is usually 3 to 6 months in duration, but can be as long as 12 months during bear markets or as short as seven weeks during bull markets. The left side of the cup is a downtrend correcting the previous uptrend. The stock price bottoms and begins to advance, forming the right side of the cup. "During the formation of the cup's right side, the stock becomes subject to profit-taking at its old highs - the beginning of the cup formation - from sellers who bought at the cups bottom. In addition, investors who bought the stock near its old highs on the left side of the cup are anxious to sell." "The handle of the cup is usually more than one or two weeks long and should drift down on very low volume and form in the upper half of the pattern, preferably the upper third. A handle that drifts lower is important because it indicates that enough disbelievers are still active at that point. "... At this point, the volume should be light, indicating a lack of sellers. During the formation of the handle, new buyers step in and smart money adds to their positions, supporting the stock. When the stock breaks out from its handle, volume must surge by 40% above its avg. daily volume to confirm that demand is present at the stock's earliest emergin point." "Handles may also form slightly in new high ground [sic] when the right side of the cup drives somewhat higher than the cup's left side. ... Whatever the variation, the breakouts above the handle's high - the high on the right side of the cup - is what the investor wants to buy, which may or may not be a new high for the stock." Hopes this helps, John R. Allen - - ------------------------------ Date: Thu, 12 Feb 1998 00:50:32 -0500 (EST) From: Zoran Mitrovski Subject: Re: [CANSLIM] Intro: Craig Hogan Yes, I too remember asking the very same questions Craig asked in his intro. My stance now is that it really doesn't matter whether a given rigid interpolation of the CANSLIM rules would give satisfactory results when backtested over the universe of all stocks and for decades back in time. It simply won't prove anything. CANSLIM is merely a good basis for a wide audience of investors to start from. It teaches the importance of earnings, fundamentals, accellerated growth, healthy chart patterns, and a little bit about market psychology. I see it merely as a set of issues that have time and time again been shown to influence movements of stocks, both short- and long-term. That's all. Beyond that, we are all on our own, each with our own neural networks (brains) that respond differently to our experiences. The most important part is the "beyond" part and it is acquired only through experience. A well-trained trader's brain at some point reaches a level of complexity where it is no longer possible to present its operation via a simple set of 7 (or any other finite number of) rigid rules. But then again, who knows what I will think a year from now. This very paragraph above is nothing but an output of my neural network at its present stage of complexity and sophistication, and the training is far from over. ;^) Zoran > Craig, > > If you search the archives, you may find quite a bit on this. There used > to be a member of this group named Zoran Mitrovski who has a very scientific > bent. I am a trained statistician, so I am familiar with validity testing. > I have never taken the time to test statistical validity because there is > a lot of CANSLIM which is somewhat subjective. However, Zoran had some > very eloquent thoughts. I miss his insight; it would be interesting to > hear his thoughts on this again. If I get ambitious, I will search for > them. > > Dave Cameron - - ------------------------------ Date: Thu, 12 Feb 1998 06:28:33 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Breakout volume (was Intro: Craig Hogan) Breakout volume from any basing formation should be at least 150% of avg daily volume. Any statements or opinions are strictly my own and not that of my employer. My comments should not be interpreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. Hopefully my comments will better inform and educate all investors. tom w - -----Original Message----- From: Chip Anderson To: canslim@lists.xmission.com Date: Wednesday, February 11, 1998 10:54 PM Subject: Re: [CANSLIM] Intro: Craig Hogan >Re: "As to the theoretical "perfect" cup and handle..." > >Thanks for the great description of the C&H price action, Tom. Do you >know what the "ideal" behavior of the accompanying volume should be? > >Chip >http://coolhistory.com/ChipsCharts > > >_________________________________________________________ >DO YOU YAHOO!? >Get your free @yahoo.com address at http://mail.yahoo.com > > >- > - - ------------------------------ Date: Thu, 12 Feb 1998 07:23:39 -0500 From: "Tom Worley" Subject: [CANSLIM] World Markets Looks like we will be opening down, probably 30 - 40 pts initially. Downward moves in both Asia and Europe are moderate, but widespread. No economic news due today that is likely to help. Further discussion of Dategate testimony likely only to keep this issue of political uncertainty in the public eye. Saber rattling against Iraq definitely building, with much talk of a major, if not massive, strike next week. The one thing I have yet to figure out about the media coverage of Iraq is that there has been extensive sympathetic coverage of the thousands of children dying from malnutrition, lack of medical care, etc due to the embargo and lack of normal revenues from the sale of oil. Yet relatively little coverage that, somehow, since Desert Storm, Sad-am Insane somehow found the money and resources and materials to completely rebuild his country, including building 70 some ADDITIONAL (new) Presidential Palaces and other govt facilities. I mean, after all, how many heavily reinforced bunker type homes with escape tunnels does a guy need?? Most people make do with one (and it lacks both the bunker and the escape tunnel), some have the addl vacation home. If you're a Prez, maybe a few additional, but 70 plus?? Come on! Guess he just doesn't consider food and medicine a top priority for his people, or at least most of them. Amazing to me that he still commands such strong loyalty and following. Guess it helps when no one dares run on the ballot against you. Any statements or opinions are strictly my own and not that of my employer. My comments should not be interpreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. Hopefully my comments will better inform and educate all investors. tom w - - ------------------------------ Date: Thu, 12 Feb 1998 07:31:04 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Spot Not impressed with the lack of revenue growth, nor the EPS of 68. Any statements or opinions are strictly my own and not that of my employer. My comments should not be interpreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. Hopefully my comments will better inform and educate all investors. tom w - -----Original Message----- From: Sam Funchess To: canslim Date: Wednesday, February 11, 1998 5:37 PM Subject: [CANSLIM] Spot >If anyone is in a aggressive mood they might want to check out pan am >sat corp. Has a great n and good eps and rs. Would write more on it but >am very short on time. > >Take care >Sam > > > >- > - - ------------------------------ Date: Thu, 12 Feb 1998 09:38:06 -0500 From: Peter Newell Subject: [CANSLIM] QuotePlus Six Week Breakout Scan I've gotten some requests for this so I'm posting it: This is the six week scan the qrs, avgvol and close are changeable. I use this as a starting point. input="canslim.lst" allgroup qrs(0) >= 85 close(0) > max(-1,-251, cl) max(-1,-30,cl) * 0.98 < max(-31,-250,cl) avgvol(-1,-51) > 900 close(0) > 8 Another Scan I'm starting to use find stocks breaking a range is again this is a starting point /* This eliminates stocks with bad data and includes stocks closing in the upper range with avgvol of 50,000 */ pass1 input="canslim.lst" allgroup issuetype = common close(0) >= 10 avgvol(-1,-51) > 500 close(0) - low(0) >= 0.75 * (high(0) - low(0)) low(0) > 0 low(-1) > 0 low(-2) > 0 low(-3) > 0 low(-4) > 0 low(-5) > 0 low(-6) > 0 low(-7) > 0 low(-8) > 0 low(-9) > 0 high(0) > high(-1) /*This scan finds all stocks breaking higher on 150% vol and is changeable with a higher trading range than the previous nine days*/ pass2 input="pass1.lst" allgroup issuetype = common close(0) >= 10 vol(0) >= avgvol(-1,-51) * 2.5 close(0) - low(0) >= 0.75 * (high(0) - low(0)) low(0) > 0 low(-1) > 0 low(-2) > 0 low(-3) > 0 low(-4) > 0 low(-5) > 0 low(-6) > 0 low(-7) > 0 low(-8) > 0 low(-9) > 0 (high(0) / low(0)) > (high(-1) / low(-1)) (high(0) / low(0)) > (high(-2) / low(-2)) (high(0) / low(0)) > (high(-3) / low(-3)) (high(0) / low(0)) > (high(-4) / low(-4)) (high(0) / low(0)) > (high(-5) / low(-5)) (high(0) / low(0)) > (high(-6) / low(-6)) (high(0) / low(0)) > (high(-7) / low(-7)) (high(0) / low(0)) > (high(-8) / low(-8)) (high(0) / low(0)) > (high(-9) / low(-9)) CANSLIM.LST can be gotten from a screen using the dailygraphs online or you can just run everything. Hope this helps, Peter Newell - - ------------------------------ Date: Thu, 12 Feb 1998 09:28:38 -0700 From: "Joe J." Subject: [CANSLIM] Quotes-Plus version 2.0 I know Quotes-Plus gets a lot of mentioning on this list. I use QP myself and I was wondering when version 2.0 was going to be coming out (it promises to have added infomation such as quarterly earnings and other good stuff which would be of interest to CANSLIMers). I sent QP an e-mail on this and received the response I'm posting below. When I called to make sure I was on the mailing list, I asked how much the new version was going to cost. They said around $50 to $75 but, current subcribers would be offered a discount. > Thank you for your interest in Quotes Plus Inc. version 2.0. Presently, > we are in the beta testing phase. Although things are going well, we > are finding some small problems. Because we cannot predict what we may > come across, we are unable to give you a definite answer on the exact > date the new product will be ready. I can assure you we are working > very hard to deliver a quality product. We will be doing a mass mailing > when this product is available. If you would like to be put on our > mailing list, please call the billing department at 1-800-627-9637. > Otherwise, please check our web page at www.quotes-plus.com for a notice > on the status of availability. Thank you for your patience. > Joe J. - - ------------------------------ Date: Thu, 12 Feb 1998 09:48:54 -0700 (MST) From: Craig Hogan Subject: Re: [CANSLIM] Quotes-Plus version 2.0 > > I know Quotes-Plus gets a lot of mentioning on this list. I use QP How much more do you get for filters that cost money? I've been using the free filter here: http://w3.one.net/~stod/ Is there something wrong with that? Craig - -- ..................................................................... [ Craig Hogan ! Cure TAB archive, live Cure recordings: ] [ chogan@primenet.com ! http://www.primenet.com/~chogan/index.html ] [ Software Engineer ! "Smear this man across the wall" ] ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: - - ------------------------------ Date: Thu, 12 Feb 1998 12:53:21 -0800 From: Mike Lucero Subject: RE: [CANSLIM] Quotes-Plus version 2.0 Wow, some of my stocks have been getting huge sell spikes. The 10-minute chart on CCL shows about 900,000 shares in that 10 minutes. That's more than twice ADV for the stock. Mike On Thursday, February 12, 1998 8:49 AM, Craig Hogan [SMTP:chogan@primenet.com] wrote: > > > > I know Quotes-Plus gets a lot of mentioning on this list. I use QP > > How much more do you get for filters that cost money? I've been using > the free filter here: > > http://w3.one.net/~stod/ > > Is there something wrong with that? > > Craig > > -- > ..................................................................... > [ Craig Hogan ! Cure TAB archive, live Cure recordings: ] > [ chogan@primenet.com ! http://www.primenet.com/~chogan/index.html ] > [ Software Engineer ! "Smear this man across the wall" ] > ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: > > > > - - ------------------------------ Date: Thu, 12 Feb 1998 23:23:26 +0100 From: Johan Van Houtven Subject: [CANSLIM] Nice example of failure of breakout: DMMC Broke out yesterday, faded and broke down further today. In and out in less that 8 hours, and lost money. Luckily I'm still 6.3% ahead for the year. I'd like to know I anyone can tell me I should not have bought this breakout. In at 18 1/8 out at 17. - - ------------------------------ Date: Thu, 12 Feb 1998 15:45:03 -0800 (PST) From: Anindo Majumdar Subject: Re: [CANSLIM] Nice example of failure of breakout: DMMC Thats one of the problems when too many people look at the same indicators. The stock gets bid up to a higher price than it should as too many people buy when it crosses the breakout. Anindo > > Broke out yesterday, faded and broke down further today. > > In and out in less that 8 hours, and lost money. > > Luckily I'm still 6.3% ahead for the year. > > I'd like to know I anyone can tell me I should not have bought this > breakout. In at 18 1/8 out at 17. > > > > - > > - - ------------------------------ Date: Thu, 12 Feb 1998 20:04:11 -0500 From: Peter Newell Subject: Re: [CANSLIM] Nice example of failure of breakout: DMMC Johan, They reported earnings 2/11 which can take a stock down for a day or so. Volume was declining on downside but I'd would still have sold, not really a good cup or a flat base stock seems to spurt up then spurt down. Keep an eye on it. Peter Newell - ---------- > From: Johan Van Houtven > To: canslim@lists.xmission.com > Subject: [CANSLIM] Nice example of failure of breakout: DMMC > Date: Thursday, February 12, 1998 5:23 PM > > Broke out yesterday, faded and broke down further today. > > In and out in less that 8 hours, and lost money. > > Luckily I'm still 6.3% ahead for the year. > > I'd like to know I anyone can tell me I should not have bought this > breakout. In at 18 1/8 out at 17. > > > > - - - ------------------------------ Date: Thu, 12 Feb 1998 20:12:33 -0500 From: Connie Mack Rea Subject: Re: [CANSLIM] Nice example of failure of breakout: DMMC - --------------9878DC3F0C59DD33BCB379FB Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Evening Johan-- If I may Johan, could I offer a few thoughts. There were [are] some indicators that you were trading against. Initially, the Fast Stochastic had turned sharply down at the time you were buying. Second, momentum indicators were tracking the stock; nothing to beware of here. Third, William's %R indicator showed that the stock was quite a bit oversold the day you bought in. This indicator tracks momentum and hence overbought/oversold. Fourth, the MACD had been negative for two weeks. There are two further indicators, indicators that I rarely trade against: OBV/MF. The OBV indicator looked to be without fault; it, like the stock, had an upward bias. But the MF would have scared me off. It was not only not tracking the stock, but was showing a strong negative divergence. I mentioned indicators other than what I pay strict attention to only because other members may attend to them. One reason I pay little attention to them is that if a stock meets my criteria, I rarely see other indicators turn up negative. Always a trader or an investor should have some allotting [perhaps a percentage] to each indicator. Those in my stock group at the university think they are flexible when they refuse to set weight to an indicator. To me, their flexibleness is the result of failing to understand the significance of an indicator, especially understanding just what it checks. Not to have a written specimen of what your indicator weighs is to undo the reason for having indicators in the first place. "In-and-in" is a phrase that means repeatedly within the same or closely related stock--to breed pigs in-and-in. Many indicators are in-and-in; i.e., almost all indicators are either locally or remotely inter-related. One ought to impose structural categories, as best he can, on what these indicators measure, on what is being measured. That done, he should give each of them some specified weight. For me, my OBV/MF indicators are pre-eminent, probably 90% of my choice to buy [or sell]. Absent their favorable reading, I don't look much further. Exceptions are stocks that I know are stocks that traders work; e.g., I bought ORCL a couple of weeks ago when it looked, by all standards, rotten. It had been beaten down unmercifully. That ought not imply that I have an "unmerciful" indicator, but rather that traders work this stock; it looked ready for a dead cat bounce. A few big buys, a kick in volume, and what is a trader's stock becomes interesting to others. Too, I watch such a stock on 5 and 15 minutes' charts, and I don't put much capital at risk. Canslim criteria look at stocks breaking out to new highs. My OBV/MF indicators won't kick such stocks, for in all likelihood my OBV/MF are tracking the stock price rather than showing a positive divergence. What my indicators would tell the Canslimer is that the stock, by these criteria, is strong. In Johan's case, MF ought to have given him pause. What the OBV/MF do for me is to discover a breakout from a low or intermediate low. In this instance there is room for the indicator to positively diverge from price. When a stock in breaking out of a high, there can be no positive divergence. There can, however, be a negative divergence, which is a powerful danger sign. A double negative divergence would, to me, indicate a prospective short. I have posted all but a few of the stocks that the OBV/MF kicked out recently, not more than 15 or so in a couple of months. I have sold 95% of my stocks; none were sold at their highs. Three or four of you have said you are still holding onto some of my list--and you have done well. But don't try to get the last 1/8th out of a stock. Traders take their piece out of the middle; that's why we can live on 60% of winning trades. There is always another horse to ride, and if not saddled the next day, then the one after that, or after that. I'm itchy, for I have not traded in over a week. I have left 10-15 percent of possible profits of the stocks I sold on the table. This leaving of possible profits on the table is as it should be for a trader; even higher leavings are perfectly okay, for when there is a correction, I will not have a single loser to worry about. My every thought will be to find another stock. I infer that some Canslimers have had always a stock or two that dragged down your capital and that you spend time on trying to get out even or with some acceptable loss. Nothing is worse for a trader or an investor than having a loser that he can't get rid of; a single loser can make every hour of your day and night miserable. I have thought about an analogy between investors/traders and hawks/falcons: Hawks take prey on the ground; falcons take prey on the fly. The lesson to be learned is not to prefer one to the other, for both the hawk and the falcon find sufficient prey, but rather to know which you are and be the best hawk or falcon you can be. Both the hawks and falcons can take a look at CMW. I will buy the stock after there is a bit of correction. There are a few of my other postings that I will re-look at. I'll post them later. Connie Mack Johan Van Houtven wrote: > Broke out yesterday, faded and broke down further today. > > In and out in less that 8 hours, and lost money. > > Luckily I'm still 6.3% ahead for the year. > > I'd like to know I anyone can tell me I should not have bought this > breakout. In at 18 1/8 out at 17. > > - - --------------9878DC3F0C59DD33BCB379FB Content-Type: text/html; charset=us-ascii Content-Transfer-Encoding: 7bit Evening Johan--

If I may Johan, could I offer a few thoughts.

There were [are] some indicators that you were trading against.  Initially, the Fast Stochastic had turned sharply down at the time you were buying.

Second, momentum indicators were tracking the stock; nothing to beware of here.

Third, William's %R indicator showed that the stock was quite a bit oversold the day you bought in.  This indicator tracks momentum and hence overbought/oversold.

Fourth, the MACD had been negative for two weeks.

There are two further indicators, indicators that I rarely  trade against: OBV/MF.  The OBV indicator looked to be without fault; it, like the stock, had an upward bias.

But the MF would have scared me off.  It was not only not tracking the stock, but was showing a strong negative divergence.

I mentioned indicators other than what I pay strict attention to only because other members may attend to them.  One reason I pay little attention to them is that if a stock meets my criteria, I rarely see other indicators turn up negative.

Always a trader or an investor should have some allotting [perhaps a percentage] to each indicator.  Those in my stock group at the university think they are flexible when they refuse to set weight to an indicator.  To me, their flexibleness is the result of failing to understand the significance of an indicator, especially understanding just what it checks.

Not to have a written specimen of what your indicator weighs is to undo the reason for having indicators in the first place.  "In-and-in" is a phrase that means repeatedly within the same or closely related stock--to breed pigs in-and-in.  Many indicators are in-and-in; i.e., almost all indicators are either locally or remotely inter-related.  One ought to impose structural categories, as best he can, on what these indicators measure, on what is being measured.

That done, he should give each of them some specified weight.  For me, my OBV/MF indicators are pre-eminent, probably 90% of my choice to buy [or sell].  Absent their favorable reading, I don't look much further.  Exceptions are stocks that I know are stocks that traders work; e.g., I bought ORCL a couple of weeks ago when it looked, by all standards, rotten.  It had been beaten down unmercifully.  That ought not imply that I have an "unmerciful" indicator, but rather that traders work this stock; it looked ready for a dead cat bounce.  A few big buys, a kick in volume, and what is a trader's stock becomes interesting to others.  Too, I watch such a stock on 5 and 15 minutes' charts, and I don't put much capital at risk.

Canslim criteria look at stocks breaking out to new highs.  My OBV/MF indicators won't kick such stocks, for in all likelihood my OBV/MF are tracking the stock price rather than showing a positive divergence.  What my indicators would tell the Canslimer is that the stock, by these criteria, is strong.  In Johan's case, MF ought to have given him pause.

What the OBV/MF do for me is to discover a breakout from a low or intermediate low.  In this instance there is room for the indicator to positively diverge from price.  When a stock in breaking out of a high, there can be no positive divergence.  There can, however, be a negative divergence, which is a powerful danger sign.  A double negative divergence would, to me, indicate a prospective short.

I have posted all but a few of the stocks that the OBV/MF kicked out recently, not more than 15 or so in a couple of months.  I have sold 95% of my stocks; none were sold at their highs.  Three or four of you have said you are still holding onto some of my list--and you have done well.  But don't try to get the last 1/8th out of a stock.  Traders take their piece out of the middle; that's why we can live on 60% of winning trades.  There is always another horse to ride, and if not saddled  the next day, then the one after that, or after that.

I'm itchy, for I have not traded in over a week.   I have left 10-15 percent of possible profits of the stocks I sold on the table.  This leaving of possible profits on the table is as it should be for a trader; even higher leavings are perfectly okay, for when there is a correction, I will not have a single loser to worry about.  My every thought will be to find another stock.

I infer that some Canslimers have had always a stock or two that dragged down your capital and that you spend  time on trying to get out even or with some acceptable loss.  Nothing is worse for a trader or an investor than having a loser that he can't get rid of; a single loser can make every hour of your day and night miserable.

I have thought about an analogy between investors/traders and hawks/falcons:  Hawks take prey on the ground; falcons take prey on the fly.  The lesson to be learned is not to prefer one to the other, for both the hawk and the falcon find sufficient prey, but rather to know which you are and be the best hawk or falcon you can be.

Both the hawks and falcons can take a look at CMW.  I will buy the stock after there is a bit of correction.  There are a few of my other postings that I will re-look at.  I'll post them later.

Connie Mack
 
 
 
 

Johan Van Houtven wrote:

Broke out yesterday, faded and broke down further today.

In and out in less that 8 hours, and lost money.

Luckily I'm still 6.3% ahead for the year.

I'd like to know I anyone can tell me I should not have bought this
breakout. In at 18 1/8 out at 17.

-

   - --------------9878DC3F0C59DD33BCB379FB-- - - ------------------------------ Date: Thu, 12 Feb 1998 20:15:51 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Nice example of failure of breakout: DMMC I did more than my usual perusal of this chart at DG Online. Using CANSLIM data all the way, I can't fault either the selection of this stock or your entry point. In fact, the only minor fault I found at all is that management only owns 10%, and this is a small cap where I would expect more like 40 or 50%, thus their interest in the stock price likely lies in the form of stock options with no cost basis. What I might fault is exiting the stock on declining volume. My calculations show that even a conservative, CANSLIM style stop loss of 8% meant you stopped out at 16.67, and with the tight base you could have likely justified even 16.56 or even lower, thus I wouldn't be surprised to see this stock right back in its base at 18 rather quickly. I did note debt is at 46%, but not sure if this is high for its industry. Also noted the news that they expect Q4 to show 100% sales increase due holiday sales, which likely accounts for what turned out to be a false breakout. Right now it looks like this stock found support at the 50dma, which it has done five times before in the past six months. One problem with this stock is that earnings are inconsistent with sales, thus the 100% sales increase may or may not translate into substantial growth in earnings (two qtrs ago they earned 23 cents on 32.9 mil in sales while in latest qtr they only earned 13 cents on 31.7 mil, as just one example of this). This may be ultimately what is wrong here, but won't know till earnings reported (due 2/11 per DG Online but don't know if this accurate, if so could also be the problem since they either reported already or are late, I didn't check news on this). Any statements or opinions are strictly my own and not that of my employer. My comments should not be interpreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. Hopefully my comments will better inform and educate all investors. tom w - -----Original Message----- From: Johan Van Houtven To: canslim@lists.xmission.com Date: Thursday, February 12, 1998 5:20 PM Subject: [CANSLIM] Nice example of failure of breakout: DMMC >Broke out yesterday, faded and broke down further today. > >In and out in less that 8 hours, and lost money. > >Luckily I'm still 6.3% ahead for the year. > >I'd like to know I anyone can tell me I should not have bought this >breakout. In at 18 1/8 out at 17. > > > >- > - - ------------------------------ Date: Thu, 12 Feb 1998 18:43:39 -0700 From: carolreynolds@juno.com Subject: [CANSLIM] TR I bought TR a few days ago. It has gone up. I am new at investing. When should I sell? _____________________________________________________________________ You don't need to buy Internet access to use free Internet e-mail. Get completely free e-mail from Juno at http://www.juno.com Or call Juno at (800) 654-JUNO [654-5866] - - ------------------------------ Date: Thu, 12 Feb 1998 22:25:24 EST From: JEFFLUST@aol.com Subject: [CANSLIM] remove my email address please remove my email address.....thank you.. JEFFLUST@AOL.COM - - ------------------------------ Date: Thu, 12 Feb 1998 23:15:14 -0500 From: Neil Himber Subject: Re: [CANSLIM] Breakouts - GX & HCFP Peter Christiansen wrote: > > ** Reply to note from Neil Himber Mon, 09 Feb 1998 21:07:13 -0500 > > > Several months ago you said that you thought Superior Telecom was about > > to breakout. I've been watching it since and it has done nothing. Do > > you have any idea why? > > It did break out on 2/2, but the breakout appears to be failing. If I had bought on the > breakout, I would be selling on any further weakness. As for why it is failing... I haven't a > clue, and don't really care. I just let the price action tell me what to do. Trying to come up > with a rational explanation for a stock's price movement is an exercise in futility. IMHO > > Peter Christiansen > Chiang Mai, Thailand > > Connected with OS/2 Warp 3.0 & The Post Road Mailer > _____________________________________________________________________________________ > > Sex is like a bridge game: If you don't have a good partner, you better have a good hand. > > - Hi Pete: Thanks for the reply to my inquiry about SUT's predicted breakout. I don't really care whether you care if the breakout is failing or not. I am trying to learn what led you, or what might lead me or anyone to expect a breakout. What was it that you saw that led you to believe that SUT was breaking out three months ago, when you made that post? What criteria should I look for, to indicate a breakout is probable, and when should I conclude that the expected breakout has not, and probably will not materialize? Thanks, Neil - - ------------------------------ End of canslim-digest V2 #115 ***************************** 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.