From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #131 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk canslim-digest Sunday, March 1 1998 Volume 02 : Number 131 In this issue: Re: [CANSLIM] OPEC Increased Production -- 2/28 Re: [CANSLIM] Intro Ron Mulkey [CANSLIM] Elder's Triple Screen Re: [CANSLIM] Elder's Triple Screen Connie Mack's Re: [CANSLIM] EPIQ [CANSLIM]New stock on my watch list: IFS [CANSLIM] Changing your canslim subscription Re: [CANSLIM] Elder's Triple Screen Re: [CANSLIM] Elder's Triple Screen Re: Connie Mack's Re: [CANSLIM] EPIQ & BKE ---------------------------------------------------------------------- Date: Sun, 1 Mar 1998 07:07:03 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] OPEC Increased Production -- 2/28 While they may cut back "official" production, I doubt they will cut it back as much as the most recent increase, which was decided upon prior to Iraq being approved for an increase from one million barrels a day to two. And actual production usually runs higher than the "official" quotas permit. A "threat" or rumor of production cutback is an attempt to send the futures pricing up, then forward sell into that gain. They may not even actually cut production, just talk of doing so. 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: Dan Musicant To: canslim@lists.xmission.com Date: Saturday, February 28, 1998 10:42 AM Subject: Re: [CANSLIM] OPEC Increased Production -- 2/28 Aha! Looking at this Reuters article more closely I see that the merger was reported. What caught my eye was the news that OPEC was moving to reduce oil production. Dan - - - - ------------------------------ Date: Sun, 1 Mar 1998 07:22:58 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Intro Ron Mulkey Welcome to the group, Ron, you've found probably the most civilized and mature site on the internet. The goal of the group is to help each other improve our use of CANSLIM in our investing. You should be able to find Wm O'Neill's book "How To Make Money In Stocks" (HTMMIS) at any major bookstore, or possibly order it right from his company (try 800-472-7479). If you're into investing, it's the best $20 you are likely to spend. It may also be available on line at Barnes and Noble or Amazon sites. You may also want to call the nr above for a free two week trial to WON's newspaper, Investor's Business Daily. The group has about 600 members, some active, many lurking. Investing experience, as well as experience with CANSLIM, ranges from the total novice to the very experienced. Professional background ranges widely as well, myself I am ex military (USCG) and have now spend 10 years in the securities industry, first as a broker and for the past four years in Operations running the "back office" and handling Compliance. When you first read HTMMIS, read it like a novel. Then go back and treat it like a college textbook. Study each chapter individually (doesn't have to be in order necessarily) until you think you understand it. If you are already experienced at investing, then you may want to start with a topic that especially interests you. CANSLIM is not right for every investor. Oftentimes you are buying a stock as it's setting a new high. Some investors are "value shoppers" and would never touch a stock at a new high, rather they want to wait for it to decline before buying, feeling they get better value. But CANSLIM is one of the few investing philosophies I have found that is a complete discipline, including lots of rules and guidance on when to sell (both for a profit and for a loss). In real life, what usually happens is that those investors that choose to use CANSLIM eventually develop their own version that suits their temperment and risk tolerance. I have been using CANSLIM for about 8 years, and glad that a former client steered me to it. 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: Ronald A. Mulkey To: canslim-digest@lists.xmission.com Date: Saturday, February 28, 1998 5:16 PM Subject: [CANSLIM] Intro Ron Mulkey Hello, My name is Ron Mulkey. I am a Captain in the Army and am teaching Army ROTC at Washington University. I am taking MS/IS 480, a graduate management information systems class. As part of the mid-term exam, I had to join a discussion group, send a message to the group and print any response received. Truthfully, I waited a few days, before sending this message so that I could read a little bit about Canslim. I had never heard of it before, but am interested. Where can I get a copy of the book? Ron Mulkey - - ------------------------------ Date: Sun, 01 Mar 1998 07:33:16 -0500 From: Jeffry White <"postwhit@sover.net"@sover.net> Subject: [CANSLIM] Elder's Triple Screen News is a negative to me because it makes the stock "too obvious" and, thus, prone to failure. When a stock breaks out on colossal volume for no apparent reason at all, the signal is clear: some folks want it bad NOW because of what's to come, not because of what everybody knows. When everybody knows, most often it's time to take profits (witness EPIQ and SYNT). The SI thread, Motley Fool, AOL, YAHOO individual investors often miss the stocks that are telling stories before the news, and the charts reflect that. I find the "non-obvious" breakouts behave the best, allow reasonable entry points, stop loss placement and less chance for failure than those that are catching the headlines (even in IBD). I'm such a fanatic about avoid the obvious stocks that I monitor SI, YAHOO, etc. to avoid the stocks with too much "noise". If it's obvious, it's probably not going to work in a manageable way. THQI's earnings report was so huge, that I'm willing to give it a chance. However, it will probably not behave in a way that makes me comfortable. It's too obvious! Jeffry - - ------------------------------ Date: Sun, 1 Mar 1998 07:49:20 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Elder's Triple Screen While a stock that is being "hyped" on the internet, whether at SI, Yahoo, or some little heard of site, is certainly a candidate to avoid, a stock that breaks out on solidly positive news is still buyable even if "everyone" knows. Many of those fresh buys are ones that were held until that "positive news" could confirm something, rather than buying earlier when it was just rumor. I do agree that a stock that breaks out on news is prone to more failure, as many of those new buyers simply reacted to the news without doing their homework, and thus may have false expectations. If the stock fails to continue moving up, then many are equally quick to exit the stock. In fact, the day trader that sub-leases space from my office ONLY trades (short or long) on news and his interpretation of it. I'm not sure I understand your ref to EPIQ, it neither broke out or corrected on news as I recall. 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: Jeffry White <"postwhit@sover.net"@sover.net> To: canslim@mail.xmission.com Date: Sunday, March 01, 1998 7:30 AM Subject: [CANSLIM] Elder's Triple Screen >News is a negative to me because it makes the stock "too obvious" and, >thus, prone to failure. When a stock breaks out on colossal volume for >no apparent reason at all, the signal is clear: some folks want it bad >NOW because of what's to come, not because of what everybody knows. >When everybody knows, most often it's time to take profits (witness EPIQ >and SYNT). > >The SI thread, Motley Fool, AOL, YAHOO individual investors often miss >the stocks that are telling stories before the news, and the charts >reflect that. I find the "non-obvious" breakouts behave the best, allow >reasonable entry points, stop loss placement and less chance for failure >than those that are catching the headlines (even in IBD). I'm such a >fanatic about avoid the obvious stocks that I monitor SI, YAHOO, etc. to >avoid the stocks with too much "noise". If it's obvious, it's probably >not going to work in a manageable way. > - - ------------------------------ Date: Sun, 1 Mar 1998 08:58:11 -0500 From: "bamend" Subject: Connie Mack's Re: [CANSLIM] EPIQ This is a multi-part message in MIME format. - ------=_NextPart_000_0011_01BD44F0.29C10F80 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Would this analysis also hold true for BKE? The price is still going up = while the MoneyFlow is way negative and has been for some time. - -----Original Message----- From: Connie Mack Rea To: canslim Date: Friday, February 27, 1998 1:20 PM Subject: [CANSLIM] EPIQ =20 =20 Members--=20 Several members have commented on EPIQ in the last few days. May I = pass on some comment that Tom and I have had about the stock recently.=20 =20 I don't have my mail to Tom, but, as I recall, I strongly cautioned = him to beware of the stock. I may have suggested that he considering = taking at least some of his profits, for he had made a nice piece of = change.=20 =20 My concern can be easily seen in one of my primary indicators: = MoneyFlow. Pull up BigC and set the lower window indicator to MF for = both 3 and 6 month charts. [Before quitting the post, pull up a = 12-month chart. Notice that in February 1997, the MF began a negative = divergence that lasted two months; then it began to track price once = more.]=20 =20 Draw a trend line across the tops in early and late December on the = 3-month chart. Extend the trend line on into January.=20 =20 Now draw a trend line on the stock. Look at the negative = divergence. This divergence ought to be read as extreme danger that = will, if the indicator is fulfilled in the price of the stock, cause a = serious correction, or even a collapse. The indicator does not specify = a precise time.=20 =20 Too, that the negative divergence is a couple of months old makes = its fulfillment, if it is to be fulfilled, less significant than were it = only a week or so old. Nevertheless, the divergence is not to be waived = because of its age. It promises a surprise down the road.=20 =20 A trend line from the front of December to the middle of February is = also declining against the rise of the stock. Then note the 5-6 down = spike a few days ago and this against a further rise in the stock. This = will be the last warning you'll get [unless you go back to the 12-month = chart mentioned above]. And it is a powerful warning, especially in = conjunction with the earlier one.=20 =20 The month-long flattening of the slow stochastic is a sign of = congestion that has already been hinted at as being to the downside by = the MF indicator.=20 =20 Too, for those of you who do not discount candlestick indicators, = there is a further hint.=20 =20 The OBV volume has tracked the stock nicely and has given no warning = yet.=20 =20 A part of every trader's and investor's strategy ought to be the = assigning of weight to his indicators. Not to make this assignment is = to waver when indicators are deteriorating or to vacillate about your = judgment because you don't have faith in the indicators. Until you set = weights on your indicators, you will allow yourself to be influenced by = peripheral indicators. To do this is to enter a crap shoot.=20 =20 I expect that Tom was not sure about his exit of EPIQ, for it did = move up after he and I talked. He left some money on the table. There = is nothing wrong with leaving money on the table, but there is something = wrong when you have lost the table too.=20 =20 I dislike to give advice on stock, and would not have given any to = Tom had I not known that he was a professional trader/investor and knew = what I knew: That no one finally knows.=20 =20 A couple of members have asked me about the future of EPIQ. I admit = that I don't know. The stock has not lied: It gave two hints that all = was not well. But I'm not sure that I can trust it to tell me when to = get back in.=20 =20 Connie Mack=20 =20 - ------=_NextPart_000_0011_01BD44F0.29C10F80 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Would this = analysis also=20 hold true for BKE?  The price is still going up while the MoneyFlow = is way=20 negative and has been for some time.
-----Original = Message-----
From:=20 Connie Mack Rea <rea1998@gte.net>
To: = canslim=20 <canslim@mail.xmission.com&g= t;
Date:=20 Friday, February 27, 1998 1:20 PM
Subject: [CANSLIM]=20 EPIQ

Members--=20

Several members have commented on EPIQ in the last few = days.  May=20 I pass on some comment that Tom and I have had about the stock=20 recently.=20

I don't have my mail to Tom, but, as I recall, I strongly = cautioned=20 him to beware of the stock.  I may have suggested that he = considering=20 taking at least some of his profits, for he had made a nice piece of = change.=20

My concern can be easily seen in one of my primary indicators: = MoneyFlow.  Pull up BigC and set the lower window indicator to = MF for=20 both 3 and 6 month charts.  [Before quitting the post, pull up = a=20 12-month chart.  Notice that in February 1997, the MF began a = negative=20 divergence that lasted two months; then it began to track price once = more.]=20

Draw a trend line across the tops in early and late December = on the=20 3-month chart.  Extend the trend line on into = January.=20

Now draw a trend line  on the stock.  Look at the = negative=20 divergence.  This divergence ought to be read as extreme danger = that=20 will, if the indicator is fulfilled in the price of the stock, cause = a=20 serious correction, or even a collapse.  The indicator does not = specify=20 a precise time.=20

Too, that the negative divergence is a couple of months old = makes its=20 fulfillment, if it is to be fulfilled, less significant than were it = only a=20 week or so old.  Nevertheless, the divergence is not to be = waived=20 because of its age.  It promises a surprise down the = road.=20

A trend line from the front of December to the middle of = February is=20 also declining against the rise of the stock.  Then note the = 5-6 down=20 spike a few days ago and this against a further rise in the = stock. =20 This will be the last warning you'll get [unless you go back to the = 12-month=20 chart  mentioned above].  And it is a powerful warning, = especially=20 in conjunction with the earlier one.=20

The month-long flattening of the slow stochastic is a sign of=20 congestion that has already been hinted at as being to the downside = by the=20 MF indicator.=20

Too, for those of you who do not discount candlestick = indicators,=20 there is a further hint.=20

The OBV volume has tracked the stock nicely and has given no = warning=20 yet.=20

A part of every trader's and investor's strategy ought to = be  the=20 assigning of weight to his indicators.  Not to make this = assignment is=20 to waver when indicators are deteriorating or to vacillate about = your=20 judgment because you don't have faith in the indicators.  Until = you set=20 weights on your indicators, you will allow yourself to be influenced = by=20 peripheral indicators.  To do this is to enter a crap = shoot.=20 =20

I expect that Tom was not sure about his exit of EPIQ, for it = did move=20 up after he and I talked.  He left some money on the = table.  There=20 is nothing wrong with leaving money on the table, but there is = something=20 wrong when you have lost the table too.=20

I dislike to give advice on stock, and would not have given = any to Tom=20 had I not known that he was a professional trader/investor and knew = what I=20 knew:  That no one finally knows.=20

A couple of members have asked me about the future of = EPIQ.  I=20 admit that I don't know.  The stock has not lied: It gave two = hints=20 that all was not well.  But I'm not sure that I can trust it to = tell me=20 when to get back in.=20

Connie Mack

- ------=_NextPart_000_0011_01BD44F0.29C10F80-- - - ------------------------------ Date: Sun, 01 Mar 1998 15:40:25 +0100 From: Johan Van Houtven Subject: [CANSLIM]New stock on my watch list: IFS IFS: "Fully integrated real-estate management organisation..." 75 67 A (not exactly the hottest numbers) GRS: 84 Funds: 48%. Ouch. ADV = 85K U/D 2.2 Timeliness: B Last real base @ 50DMA, forming secondary mini base. Personally I looking to get a 'few-day trade" out of it, if it break-out from this mini-base on good volume. - - ------------------------------ Date: Sun, 01 Mar 1998 08:00:08 -0700 From: jeff@scrooge.csd.sdl.usu.edu (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@xmission.com Best Regards, Jeff Salisbury - CANSLIM list admin / owner - - ------------------------------ Date: Sun, 1 Mar 1998 10:16:53 -0500 (EST) From: Zoran Mitrovski Subject: Re: [CANSLIM] Elder's Triple Screen > > I too prefer entering a trade at quiet times, especially close > > to an important (as shown by past precedents in price behavior) > > moving average or support/resistance level. One of my most > > comfortable (and profitable) entry strategies has been entering > > at bottoms of short-term retracements after a high-volume breakout > > run on a strong RS stock. > > I like that scenario because of the high information content > > yielded by the set-up: Quite often it is prefectly obvious from the > > daily-intraday volume behavior that the big block buyers who entered > > at the break-out are still holding on to their positions during the > > trickle-down volume retracements and are only waiting for the proper > > time to enter again. I have found these situations to be one of the > > most predictable ones. In addition, these entry points are almost > > always very close to the "something's wrong" point so losses can > > be minimized, especially when confirmed with "wrong" volume behavior. > > > > Zoran > > > After a long silence, that is a very interesting post. An example(s) > would be very useful to illustrate your comment. > > Regards, > > Deepak Deepak, there have been better ones but the most recent ones are TMBS (noticed it after Dave Cameron mentioned it) and GART which I also saw mentioned here. As I said in one of my previous posts. I look at much more things in a stock that I can actually describe here. So anything I say here is NEVER in itself a reason for my increased confidence in a stock. The more things I like, the more confidence I gain, hence the larger my entry position becomes. I liked the behavior of TMBS preceding its pull-back to 16 (among other things I liked both chartwise and fundamentals-wise). Notice the two new highs in price confirmed by the two new highs in volume. Also notice how the old resistance levels became new support levels regularly tested on decreasing volume. So I got in at 16 on very quiet volume and with a limit buy order that got executed sometimes during the day. (I don't have the chart in front of me so I can't speak of exact dates). I liked GART partly because of its two previous bounces just above the 50 dma line. The volume acted properly as well. Zoran - - ------------------------------ Date: Sun, 1 Mar 1998 10:33:26 -0500 (EST) From: Zoran Mitrovski Subject: Re: [CANSLIM] Elder's Triple Screen Jeffry, my comments are inserted below: > Zoran, you wrote: > > > > > Joe J. wrote: > > > > > portion of the book, I can see Elder's basic premise is to enter the > > > trade at "quiet" times and exit during the mad rush times. Really quite > > > opposite of WON. > > > > I have read the book, and I will recommend it (again) to the group. > > I too prefer entering a trade at quiet times, especially close > > to an important (as shown by past precedents in price behavior) > > moving average or support/resistance level. One of my most > > comfortable (and profitable) entry strategies has been entering > > at bottoms of short-term retracements after a high-volume breakout > > run on a strong RS stock. > > I like that scenario because of the high information content > > yielded by the set-up: Quite often it is prefectly obvious from the > > daily-intraday volume behavior that the big block buyers who entered > > at the break-out are still holding on to their positions during the > > trickle-down volume retracements and are only waiting for the proper > > time to enter again. I have found these situations to be one of the > > most predictable ones. In addition, these entry points are almost > > always very close to the "something's wrong" point so losses can > > be minimized, especially when confirmed with "wrong" volume behavior. > > > > Zoran > > > > > > > > > This is precisely how I learned to enter most CANSLIM trades. Because I > almost always miss the breakout on huge volume, I used to sit and wait > for volume to dry up and price to edge down to the base or breakout > point. Sometimes I was right, sometimes I was wrong. But my efforts > now incorporate Connie Mack's slow stochastics and 3/7/10 EMA crossovers > in that type of entry point. Those indicators provide good, solid > confirmation that you have actually reasched a point in the correction > where the likelihood of a resumption is higher than the failure. Entry > points using these indicators make 8% stop loss points easy. Not > perfect, but it certainly has improved my trading. February 98 will be > a month to remember for me due largely to use of these indicators to > enhance my entry point. I assume these indicators do not include volume in their calculations, so that would be one of the reasons I wouldn't use them for my trades. To me volume is a big part of the picture, and a significant actor in the story for the particular stock. Also I don't believe that a rigid set of parameters (such as 3/7/10 EMA and the look-back time windows in the slow stochastics) would actually give me THE BEST entry point for EVERY stock I am viewing. Until I get the proper tools to build my own charting screens, I will continue simply viewing charts and train my own neural network to pick on details that can often be overlooked by the plethora of off-the-shelf indicators out there. However I'd like to hear more details as to how you (and Connie) exactly use them. Private email (zmitrov@ee.rochester.edu) would also do. > THQI is on my watch list for this type of entry point, along with > several others. The only thing I don't like about THQI is that it broke > out on news (which to me is automatically a cautionary signal). > > I would also mention that these indicators work extremely well on LLUR > stocks, such as WFMI, but not as well on stocks that are still in the > "handle", such as OMQP (but TWLB suggests it's not to be totally > ignored). > > Thanks for you thoughts about entry point, which, next to the "M", is > the most critical and most difficult point of the game, in my opinion. Thanks for your comments as well. > Jeffry Zoran - - ------------------------------ Date: Sun, 01 Mar 1998 11:36:50 -0500 From: Connie Mack Rea Subject: Re: Connie Mack's Re: [CANSLIM] EPIQ & BKE - --------------A9156016B43E94B5E86550E4 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bamend-- There is a parallel between EPIQ and BKE. To me, it is a stock that has some undesirable corrective ambush lurking in the background. When that correction comes, if it comes, the precise time will not be given by the OBV/MF, for these are not precise buy/sell indicators. They are sometimes lagging indicators in that what they imply--a pressure to breakout--may lie latent for weeks or months. At other times their positive divergence pressure may be manifested within a few days as indicated by a 3/7/10 or 5/10/15 EMA. The OBV has tracked the stock faithfully. It is, therefore, read as positive. There is no hint of anything to be wary of. Throughout December, both the stock and the MF have been in decline: the MF in mild decline and the stock in severe. In January, the stock moves steadily up, but the MF takes a decidedly and sever down slope. At the beginning of February, the MF has but a slight upward bias as it tracks the stock. It is the sever down slope that forebodes danger. The SAR gave a buy early in February and has been positive ever since. Nothing baleful here. When the OBV and MF give divergent readings, you have to go elsewhere for a decision. [But see below why I'd never have to make this decision.] First, go the the SlowStochastics. For three weeks the SS has been congested around 75-80, a level approaching overbought. Were there not the divergence, I would not be much concerned that the SS is so high and would think that the congestion would be resolved to the upside. The MACD is congested in February, but has a mild upward bias that neither confirms nor denies price. The Volume+ indicator shows a decline in volume while the stock continues to rise. Momentum is in slight decline. The 5/10/15 EMAs have parallel separation and imply further increase in price. For more perspective, put up a 12-mos chart and check the indicators. In my post on EPIQ, I said that you must weight your indicators and you must believe them; otherwise, you're in a crap shoot because peripheral indicators that you may read as giving you flexibility are really making you indecisive. I weight OBV/MF equally and heavily. I don't usually buy stocks that have just positive OBV/MF, i.e., stocks in which OBV/MF are tracking price. These are strong stocks, but there are other stocks which, because they have positive divergence as indicated by OBV/MF, offer safer prospects and easier profits. Stocks that meet OBV/MF criteria are 95 percent of the time stocks making corrections. Should such a correction occur at a double bottom--the most frequent and perhaps the most powerful reversal pattern--there are the prospects for much gain and little risk. Though I have about 250 stocks in my data base, I have no more than 20 at a time that meet my OBV/MF criteria. I do look at over 200 stocks daily, mostly different from the 250 in my data base, for new OBV/MF prospects. I have posted almost all of these 20 to the members. Every day I evaluate these 20. I own eight of the 20 presently. I also have a "hunch" list of a half dozen. I have a short list of day trading stocks with high beta, high volatility, and high volume; I have added NOVL, an old friend, a couple of days ago. I have traded TTNP three times in the last week. What would I do with BKE? First, I would not have been interested because I look only at stocks from about 5 to 25 dollars when I apply OBV/MF. Statistically stocks in this range have larger percentage moves than higher priced stocks; this just happens to fit my style of trading; there are many other and equally good styles. Second, the negative MF divergence would have eliminated the stock from further consideration. Both OBV/MF must be positively divergent to pass through the screen. I get only one or two stocks from a daily screen; often they are stocks already in the OBV/MF list. For me, there is no reason to play with stocks have only a single positive divergence. Either establish and weight your criteria and don't kid yourself that you are one of the new age eclectics with super-sophisticated indicators that see through to a stock's essence, an essence hidden from the profane. Third, were I already in BKE, I'd watch it like a pimp watches his girls, for this girl has been doing some business on her own. The more indicators you have and the more they are equally weighted, the more indecisiveness you've built in. Two, maybe three, heavily weighted, and perhaps equally weighted, indicators are enough. Don't mistake multiplicity for clarity and flexibility for settled dispositions. Remember that Newton did more with one apple than lesser men have done with an orchard. I am playing with an indicator made up of a cluster of EMAs. It has kicked out some interesting stocks: SDII, ATA, TAVI, FMAX, and IBSF. There does appear to be positive correlation between the EMA clusters and OBV/MF. I'll post if it appears to have further promise. Connie Mack I bamend wrote: > Would this analysis also hold true for BKE? The price is still going > up while the MoneyFlow is way negative and has been for some time. > > -----Original Message----- > From: Connie Mack Rea > To: canslim > Date: Friday, February 27, 1998 1:20 PM > Subject: [CANSLIM] EPIQMembers-- > > Several members have commented on EPIQ in the last few > days. May I pass on some comment that Tom and I have had > about the stock recently. > > I don't have my mail to Tom, but, as I recall, I strongly > cautioned him to beware of the stock. I may have suggested > that he considering taking at least some of his profits, for > he had made a nice piece of change. > > My concern can be easily seen in one of my primary > indicators: MoneyFlow. Pull up BigC and set the lower > window indicator to MF for both 3 and 6 month charts. > [Before quitting the post, pull up a 12-month chart. Notice > that in February 1997, the MF began a negative divergence > that lasted two months; then it began to track price once > more.] > > Draw a trend line across the tops in early and late December > on the 3-month chart. Extend the trend line on into > January. > > Now draw a trend line on the stock. Look at the negative > divergence. This divergence ought to be read as extreme > danger that will, if the indicator is fulfilled in the price > of the stock, cause a serious correction, or even a > collapse. The indicator does not specify a precise time. > > Too, that the negative divergence is a couple of months old > makes its fulfillment, if it is to be fulfilled, less > significant than were it only a week or so old. > Nevertheless, the divergence is not to be waived because of > its age. It promises a surprise down the road. > > A trend line from the front of December to the middle of > February is also declining against the rise of the stock. > Then note the 5-6 down spike a few days ago and this against > a further rise in the stock. This will be the last warning > you'll get [unless you go back to the 12-month chart > mentioned above]. And it is a powerful warning, especially > in conjunction with the earlier one. > > The month-long flattening of the slow stochastic is a sign > of congestion that has already been hinted at as being to > the downside by the MF indicator. > > Too, for those of you who do not discount candlestick > indicators, there is a further hint. > > The OBV volume has tracked the stock nicely and has given no > warning yet. > > A part of every trader's and investor's strategy ought to > be the assigning of weight to his indicators. Not to make > this assignment is to waver when indicators are > deteriorating or to vacillate about your judgment because > you don't have faith in the indicators. Until you set > weights on your indicators, you will allow yourself to be > influenced by peripheral indicators. To do this is to enter > a crap shoot. > > I expect that Tom was not sure about his exit of EPIQ, for > it did move up after he and I talked. He left some money on > the table. There is nothing wrong with leaving money on the > table, but there is something wrong when you have lost the > table too. > > I dislike to give advice on stock, and would not have given > any to Tom had I not known that he was a professional > trader/investor and knew what I knew: That no one finally > knows. > > A couple of members have asked me about the future of EPIQ. > I admit that I don't know. The stock has not lied: It gave > two hints that all was not well. But I'm not sure that I > can trust it to tell me when to get back in. > > Connie Mack > - --------------A9156016B43E94B5E86550E4 Content-Type: text/html; charset=us-ascii Content-Transfer-Encoding: 7bit Bamend--

There is a parallel between EPIQ and BKE.  To me, it is a stock that has some undesirable corrective ambush lurking in the background.  When that correction comes, if it comes, the precise time will  not be given by the OBV/MF, for these are not precise buy/sell indicators.  They are sometimes lagging indicators in that what they imply--a pressure to breakout--may lie latent for weeks or months.  At other times their positive divergence pressure may be manifested within a few days as indicated by a 3/7/10 or 5/10/15 EMA.

The OBV has tracked the stock faithfully.  It is, therefore, read as positive.  There is no hint of anything to be wary of.

Throughout December, both the stock and the MF have been in decline:  the MF in mild decline and the stock in severe.  In January, the stock moves steadily up, but the MF takes a decidedly and sever down slope.  At the beginning of February, the MF has but a slight upward bias as it tracks the stock.  It is the sever down slope that forebodes danger.

The SAR gave a buy early in February and has been positive ever since.  Nothing baleful here.

When the OBV and MF give divergent readings, you have to go elsewhere for a decision. [But see below why I'd never have to make this decision.]  First, go the the SlowStochastics.  For three weeks the SS has been congested around 75-80, a level approaching  overbought.  Were there not the divergence, I would not be much concerned that the SS is so high and would think that the congestion would be resolved to the upside.

The MACD is congested in February, but has a mild upward bias that neither confirms nor denies price.  The Volume+ indicator shows a decline in volume while the stock continues to rise.  Momentum is in slight decline.

The 5/10/15 EMAs have parallel separation and imply further increase in price.

For more perspective, put up a 12-mos chart and check the indicators.

In my post on EPIQ, I said that you must weight your indicators and you must believe them; otherwise, you're in a crap shoot because peripheral indicators that you may read as giving you flexibility are really making you indecisive.

I weight OBV/MF equally and heavily.  I don't usually buy stocks that have just positive OBV/MF, i.e., stocks in which OBV/MF are tracking price.  These are strong stocks, but there are other stocks which, because they have positive divergence as indicated by OBV/MF, offer safer prospects and easier profits.  Stocks that meet OBV/MF criteria are 95 percent of the time stocks making corrections.  Should such a correction occur at a double bottom--the most frequent and perhaps the most powerful reversal pattern--there are the prospects for much gain and little risk.

Though I have about 250 stocks in my data base, I have no more than 20 at a time that meet my OBV/MF criteria.  I do look at over 200 stocks daily, mostly different from the 250 in my data base, for new OBV/MF prospects.  I have posted almost all of these 20 to the members.  Every day I evaluate these 20.  I own eight of the 20 presently.  I also have a "hunch" list of a half dozen.  I have a short list of day trading stocks with high beta, high volatility, and high volume; I have added NOVL, an old friend, a couple of days ago.

I have traded TTNP three times in the last week.

What would I do with BKE?  First, I would not have been interested because I look only at stocks from about 5 to 25  dollars when I apply OBV/MF.  Statistically stocks in this range have larger percentage moves than higher priced stocks; this just happens to fit my style of trading; there are many other and equally good styles.

Second, the negative MF divergence would have eliminated the stock from further consideration.  Both OBV/MF must be positively divergent to pass through the screen.  I get only one or two stocks from a daily screen; often they are stocks already in the OBV/MF list.  For me, there is no reason to play with stocks have only a single positive divergence.  Either establish and weight your criteria and don't kid yourself that you are one of the new age eclectics with super-sophisticated indicators that see through to a stock's essence, an essence hidden from the profane.

Third, were I already in BKE, I'd watch it like a pimp watches his girls, for this girl has been doing some business on her own.

The more indicators you have and the more they are  equally weighted, the more indecisiveness you've built in.  Two, maybe three, heavily weighted, and perhaps equally weighted,  indicators are enough.  Don't mistake multiplicity for clarity and flexibility for settled dispositions.

Remember that Newton did more with one apple than lesser men have done with an orchard.

I am playing with an indicator made up of a cluster of EMAs.  It has kicked out some interesting stocks:  SDII,  ATA, TAVI,  FMAX,  and  IBSF.  There does appear to be positive correlation between the EMA clusters and OBV/MF.  I'll post if it appears to have further promise.

Connie Mack

I
 
 

bamend wrote:

 Would this analysis also hold true for BKE?  The price is still going up while the MoneyFlow is way negative and has been for some time.
-----Original Message-----
From: Connie Mack Rea <rea1998@gte.net>
To: canslim <canslim@mail.xmission.com>
Date: Friday, February 27, 1998 1:20 PM
Subject: [CANSLIM] EPIQMembers--

Several members have commented on EPIQ in the last few days.  May I pass on some comment that Tom and I have had about the stock recently.

I don't have my mail to Tom, but, as I recall, I strongly cautioned him to beware of the stock.  I may have suggested that he considering taking at least some of his profits, for he had made a nice piece of change.

My concern can be easily seen in one of my primary indicators: MoneyFlow.  Pull up BigC and set the lower window indicator to MF for both 3 and 6 month charts.  [Before quitting the post, pull up a 12-month chart.  Notice that in February 1997, the MF began a negative divergence that lasted two months; then it began to track price once more.]

Draw a trend line across the tops in early and late December on the 3-month chart.  Extend the trend line on into January.

Now draw a trend line  on the stock.  Look at the negative divergence.  This divergence ought to be read as extreme danger that will, if the indicator is fulfilled in the price of the stock, cause a serious correction, or even a collapse.  The indicator does not specify a precise time.

Too, that the negative divergence is a couple of months old makes its fulfillment, if it is to be fulfilled, less significant than were it only a week or so old.  Nevertheless, the divergence is not to be waived because of its age.  It promises a surprise down the road.

A trend line from the front of December to the middle of February is also declining against the rise of the stock.  Then note the 5-6 down spike a few days ago and this against a further rise in the stock.  This will be the last warning you'll get [unless you go back to the 12-month chart  mentioned above].  And it is a powerful warning, especially in conjunction with the earlier one.

The month-long flattening of the slow stochastic is a sign of congestion that has already been hinted at as being to the downside by the MF indicator.

Too, for those of you who do not discount candlestick indicators, there is a further hint.

The OBV volume has tracked the stock nicely and has given no warning yet.

A part of every trader's and investor's strategy ought to be  the assigning of weight to his indicators.  Not to make this assignment is to waver when indicators are deteriorating or to vacillate about your judgment because you don't have faith in the indicators.  Until you set weights on your indicators, you will allow yourself to be influenced by peripheral indicators.  To do this is to enter a crap shoot.

I expect that Tom was not sure about his exit of EPIQ, for it did move up after he and I talked.  He left some money on the table.  There is nothing wrong with leaving money on the table, but there is something wrong when you have lost the table too.

I dislike to give advice on stock, and would not have given any to Tom had I not known that he was a professional trader/investor and knew what I knew:  That no one finally knows.

A couple of members have asked me about the future of EPIQ.  I admit that I don't know.  The stock has not lied: It gave two hints that all was not well.  But I'm not sure that I can trust it to tell me when to get back in.

Connie Mack

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