From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #155 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk X-No-Archive: yes canslim-digest Thursday, March 19 1998 Volume 02 : Number 155 In this issue: RE: [CANSLIM] New Prospects [CANSLIM] XEIKY... train leaving the station Re: [CANSLIM] New Prospects Re: [CANSLIM] New Prospects Re: [CANSLIM] New Prospects [Connie Mack's reply] Re: [CANSLIM] New Prospects Re: [CANSLIM] XEIKY... train leaving the station [CANSLIM] DG online [CANSLIM] BLDPF [CANSLIM] NON CANSLIM - US Fiscal Payments [CANSLIM] Pivot Points (1 of 2) - Repost from Dec 5, 1996 [CANSLIM] Pivot Point (2 of 2) - Repost from Feb 2 1997 Re: [CANSLIM] XEIKY... train leaving the station ---------------------------------------------------------------------- Date: Thu, 19 Mar 1998 11:57:01 -0800 From: Mike Lucero Subject: RE: [CANSLIM] New Prospects I understand you want both OBV and MF to positively diverge before you buy. What if, after you buy, they don't agree? I asked about CCL before. Since January, OBV has been following the stock, but MF has been negatively diverging, until just now. Thanks, Mike On Thursday, March 19, 1998 7:23 AM, Connie Mack Rea [SMTP:rea1998@gte.net] wrote: > Members-- > > There are some interesting stocks that my OBV/MF scan kicked out last > night. Three are new stocks and three are stocks that have appeared > between one and three times in the last two weeks. > > I'll comment briefly on each one. > > FMAX: Has appeared before. The OBV/MF is extremely powerful. Despite > the late two-day run-up, there appears to be a bit left if the market is > flat to strong. > > IBSF: A reappearance from a few days ago. Still some upside > remaining. OBV/MF strong. > > AKS: A reappearance. Still some short term upside. OBV/MF strong. > > ATS: This, and the stocks following, are new appearances. OBV/MF are > extremely strong. The SlowSto is modestly negative the last two days. > > MGM: Strong OBV/MF. The SlowSto and the MACD are divergent. If I had > to guess, I'd wait to see if the MACD turns positive. > > ILFO: The MF has been light but steady. However, the OBV has been > strong and equally uniform. The FastSto is rising from a lower boundary > as is the MACD. The MACD, if it turns positive, could give the stock a > nice kick. > > CBIZ: OBV/MF is a bit ragged, but still strong. The MACD turned > positive a couple of days ago. > > Keep in mind that each of these stocks has met my OBV/MF divergence. > The stocks are not just strong [OBV/MF tracking price] but that each is > positively divergent [stronger than the price indicates]. > > As most of the members know, I am indifferent that the stocks do or do > not meet Canslim criteria. However, for those of you who do a bit of > trading along with your Canslim investing, these are the stocks that I > trade. That I don't trade all of them is because I am fully invested or > am maintaining a less than full investment. I am holding my trading > account to about 75% invested as of this morning. > > Be sure to look at BigCharts, for it is this site that I am always > pointing to. If you wish to look beyond my OBV/MF criteria, look next > at [of no particular preference] MACD, Slow and Fast Stochastics, and > SAR. > > To determine an entry point, I use a 3/7/10 EMA, which is quick. and > pushing what indicators can tell without jerking you all over the > place. The default 3-EMA for BigCharts is 5/10/15. My 3/7/10 entry > point has, in some instances, been met earlier, sometimes much earlier. > In these instances, you might, if you wish for a safer entry, increase > your EMA numbers. Too, notice if the EMA 3/7/10 lines are still fully > separated and appear to be almost parallel. If so, and they remain > parallel, you may infer that there is further upside. > > As the 3-EMA crosses down through the 7-EMA, there is a minor correction > in the works. If the 3-EMA passes through the 10-EMA, there is a > further correction coming. If the 7-EMA passes through the 10-EMA, > there is still more correction to come. > > Use the reverse principle to determining how daring you want to be to > re-enter. I.e., to enter when the 3-EMA rises through the 7-EMA is to > be daring, and you must expect some jerking around. > > I will attempt to buy small lots in three or four of the stocks. I was > late getting all my charts together this morning and have not looked at > the spreads. In stocks with wide spreads, 1/2 or more, you can > sometimes buy between the spread, especially at the close. > > Connie Mack > > << File: ATT00000.htm >> - - ------------------------------ Date: Thu, 19 Mar 1998 21:40:00 +0100 From: Johan Van Houtven Subject: [CANSLIM] XEIKY... train leaving the station Those who are on the XEIKY train. Congrats. Broke out nicely today. I can only wave them goodbye... :-) - - ------------------------------ Date: Thu, 19 Mar 1998 12:49:10 -0800 From: Kom Tukovinit Subject: Re: [CANSLIM] New Prospects Hi, I am reading this book (1/4 qtr through), Technical Analysis Explained, by Martin J Pring. The general concept I get out of this is, technical readings often serve as warnings / confirmations to trend reversal. However, the deterioration in the technical readings should not be taken as buy / sell signals until the price breaks the trend (with heavy volume on the upside and any volume on the down side.) Here's my reading on CCL: 1) There is an obvious uptrend channel (parallel top and bottom) since last july (DG doesn't go further than that) 2) A steeper channel seems to have developed since December - the stock price is currently at the upper channel line, and ABOVE the upper channel line of the previous channel 3) However, when the price breaks above the old channel at the mid/end of Feb, MF indicator negatively diverges. 4) Also, the volume since the break-out point is lower than the historical volume since last July; this is also a negative divergence. My conclusion would be, since there are at least 2 confirming negatively diverging readings, if the stock price breaks below a support level, I should sell (I don't own any) this stock. Unfortunately, I have no clue what a good "support" level for the stock is (previous channel? This channel?) I would appreciate any insight on this reading also. kom Mike Lucero wrote: > I understand you want both OBV and MF to positively diverge before you buy. > What if, after you buy, they don't agree? I asked about CCL before. Since > January, OBV has been following the stock, but MF has been negatively > diverging, until just now. > > Thanks, > > Mike > - - ------------------------------ Date: Thu, 19 Mar 1998 16:45:26 -0500 (EST) From: Deepak Kapur Subject: Re: [CANSLIM] New Prospects Connie, >FMAX: Has appeared before. The OBV/MF is extremely powerful. Despite >the late two-day run-up, there appears to be a bit left if the market is >flat to strong. What a call!!! Up 3 1/8. Congratulations!!! Deepak - - ------------------------------ Date: Thu, 19 Mar 1998 17:07:33 -0500 From: Connie Mack Rea Subject: Re: [CANSLIM] New Prospects [Connie Mack's reply] - --------------F6A98AFF33C3CA6FEF7695A8 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Mike-- When you say, "I asked about CCL before," I am unsure whether you mean that you asked me or whether you made an inquiry of other members. I do not recall that I made any observations. May I, however, comment on your observations of CCL and OBV/MF. The stock would never have made it through my OBV or MF filter. First, on a 3-mos chart in BigCharts, the MF from the end of January to the present is a negative divergence. Either a negative divergence or no divergence would eliminate the stock from my filters. The OBV does track the price until the last few days at which time it appears to turn down. Even if the OBV tracks the stock, it would fail my filters. Just tracking the stock is insufficient. Both the OBV and the MF must positively diverge. That two very influential indicators are applied so restrictively powerfully increases the risk/reward ratio of the stock. Add to these the MACD, Fast/Slow Stochastics, and the SAR, and you have a still more restrictive application of risk/reward. Some traders like to use the McClellan Oscillator in one of its variations as a short term indicator. You can pile on the indicators ad infinitum until your reading of risk/reward is almost entirely reward [a foolish exaggeration]. E.g., a couple of the stocks I posted this morning are further corroborated by indicators beyond my OBV/MF. I like for other indicators to corroborate my OBV/MF, but, for me, so powerful is the OBV/MF indicator that I won't dismiss the stock if other indicators are weak. Those of you who use more sophisticated programs than BigCharts can add further variations of OBV and MF. One of the most difficult and the most necessary deductions for the trader and investor is to decide whether you are in a trending or a trading market. Several indicators are read differently--and indicate differently--depending upon your reading of the market. Most investors and a few traders aren't aware of the significance of knowing what market they are in and, therefore, don't read indicators against a trending or a trading market. If you are a long term investor, and especially one who dollar averages, you need not know a trading market from a trending market. Traders always want to know which market they are in. Such knowledge makes for subtle and not so subtle changes in strategy, especially as the market is passing from one type to the other. Ask anyone who has tried to short in what he thought was a trading market and discovered too late that he was in an up-trending market. Don't think that smart people haven't erred in reading the market. Until you have traded three to five years, you likely don't know, or apply, the subtleties. During the last few years, a child could have made money--serious money--by just investing in any of the indices and growing into manhood and wealth as if both were genetic determined. Investing was less demanding than being a lichen, which demands little more than a few minerals and moisture to grow. A trader has to earn his money in every market; he cannot choose to sit out one type of market until one more suitable to his style cycles by. Some of my investor friends have made more money than I over certain arbitrary time periods; and they--lichen-like--have done so with the same ease as predicting what the spring leaves of the snow-covered maple will look like. For these friends, they would have learned as much about investing had they played Monopoly or watched Seinfeld. They haven't seen their capital diminish in a 20-25 percent correction. As you invest and, perhaps later trade, you learn to filter error as you learn to filter stocks. My father called the practice the Caesar-principle. Recall that Brutus in his address to the mob told them that only Caesar's vices had been slain, while his virtues lived on, still active. This an an anodyne for trading and investing: You learn to slay your trading and investing vices and let the virtues live on. If you do not abide by the Caesar-principle, you will eventually slay both your vices and your virtues of trading--and you will curse both the light and the darkness. The trading I have done in this market for the last two months or so, I've done against a gut feeling that something is amiss: I can't "feel" the market. I am trading on a mechanical approach. My indicators still read "up." But my sense, somehow, is down. As in flying, when in doubt let your instruments tell you what to do. My market instruments are doing my trading. I seem to be flying IFR [Instrument Flight Rules] in a VFR [Visual Flight Rules] market. But. . . . Connie Mack Mike Lucero wrote: > I understand you want both OBV and MF to positively diverge before you > buy. > What if, after you buy, they don't agree? I asked about CCL before. > Since > January, OBV has been following the stock, but MF has been negatively > diverging, until just now. > > Thanks, > > Mike > > On Thursday, March 19, 1998 7:23 AM, Connie Mack Rea > [SMTP:rea1998@gte.net] > wrote: > > Members-- > > > > There are some interesting stocks that my OBV/MF scan kicked out > last > > night. Three are new stocks and three are stocks that have > appeared > > between one and three times in the last two weeks. > > > > I'll comment briefly on each one. > > > > FMAX: Has appeared before. The OBV/MF is extremely powerful. > Despite > > the late two-day run-up, there appears to be a bit left if the > market is > > flat to strong. > > > > IBSF: A reappearance from a few days ago. Still some upside > > remaining. OBV/MF strong. > > > > AKS: A reappearance. Still some short term upside. OBV/MF strong. > > > > ATS: This, and the stocks following, are new appearances. OBV/MF > are > > extremely strong. The SlowSto is modestly negative the last two > days. > > > > MGM: Strong OBV/MF. The SlowSto and the MACD are divergent. If I > had > > to guess, I'd wait to see if the MACD turns positive. > > > > ILFO: The MF has been light but steady. However, the OBV has been > > strong and equally uniform. The FastSto is rising from a lower > boundary > > as is the MACD. The MACD, if it turns positive, could give the > stock a > > nice kick. > > > > CBIZ: OBV/MF is a bit ragged, but still strong. The MACD turned > > positive a couple of days ago. > > > > Keep in mind that each of these stocks has met my OBV/MF divergence. > > > The stocks are not just strong [OBV/MF tracking price] but that each > is > > positively divergent [stronger than the price indicates]. > > > > As most of the members know, I am indifferent that the stocks do or > do > > not meet Canslim criteria. However, for those of you who do a bit > of > > trading along with your Canslim investing, these are the stocks that > I > > trade. That I don't trade all of them is because I am fully > invested or > > am maintaining a less than full investment. I am holding my trading > > > account to about 75% invested as of this morning. > > > > Be sure to look at BigCharts, for it is this site that I am always > > pointing to. If you wish to look beyond my OBV/MF criteria, look > next > > at [of no particular preference] MACD, Slow and Fast Stochastics, > and > > SAR. > > > > To determine an entry point, I use a 3/7/10 EMA, which is quick. and > > > pushing what indicators can tell without jerking you all over the > > place. The default 3-EMA for BigCharts is 5/10/15. My 3/7/10 entry > > > point has, in some instances, been met earlier, sometimes much > earlier. > > In these instances, you might, if you wish for a safer entry, > increase > > your EMA numbers. Too, notice if the EMA 3/7/10 lines are still > fully > > separated and appear to be almost parallel. If so, and they remain > > parallel, you may infer that there is further upside. > > > > As the 3-EMA crosses down through the 7-EMA, there is a minor > correction > > in the works. If the 3-EMA passes through the 10-EMA, there is a > > further correction coming. If the 7-EMA passes through the 10-EMA, > > there is still more correction to come. > > > > Use the reverse principle to determining how daring you want to be > to > > re-enter. I.e., to enter when the 3-EMA rises through the 7-EMA is > to > > be daring, and you must expect some jerking around. > > > > I will attempt to buy small lots in three or four of the stocks. I > was > > late getting all my charts together this morning and have not looked > at > > the spreads. In stocks with wide spreads, 1/2 or more, you can > > sometimes buy between the spread, especially at the close. > > > > Connie Mack > > > > << File: ATT00000.htm >> > > - - --------------F6A98AFF33C3CA6FEF7695A8 Content-Type: text/html; charset=us-ascii Content-Transfer-Encoding: 7bit Mike--

When you say, "I asked about CCL before," I am unsure whether you mean that you asked me or whether you made an inquiry of other members.  I do not recall that I made any observations.

May I, however, comment on your observations of CCL and OBV/MF.

The stock would never have made it through my OBV or MF filter.  First, on a 3-mos chart in BigCharts, the MF from the end of January to the present is a negative divergence.  Either a negative divergence or no divergence would eliminate the stock from my filters.

The OBV does track the price until the last few days at which time it appears to turn down.  Even if the OBV tracks the stock, it would fail my filters.  Just tracking the stock is insufficient.  Both the OBV and the MF must positively diverge.  That two very influential indicators are applied so restrictively powerfully increases the risk/reward ratio of the stock.

Add to these the MACD, Fast/Slow Stochastics, and the SAR, and you have a still more restrictive application of risk/reward.  Some traders like to use the McClellan Oscillator in one of its variations as a short term indicator.  You can pile on the indicators ad infinitum until your reading of risk/reward is almost entirely reward [a foolish exaggeration].  E.g., a couple of the stocks I posted this morning are further corroborated by indicators beyond my OBV/MF.  I like for other indicators to corroborate my OBV/MF, but, for me, so powerful is the OBV/MF indicator that I won't dismiss the stock if other indicators are weak.

Those of you who use more sophisticated programs than BigCharts can add further variations of OBV and MF.

One of the most difficult and the most necessary deductions for the trader and investor is to decide whether you are in a trending or a trading market.  Several indicators are read differently--and indicate differently--depending upon your  reading of the market.  Most investors and a few traders aren't aware of the significance of knowing what market they are in and, therefore, don't read indicators against a trending or a trading market.

If you are a long term investor, and especially one who dollar averages, you need not know a trading market from a trending market.  Traders always want to know which market they are in.  Such knowledge makes for subtle and not so subtle changes in strategy, especially as the market is passing from one type to the other.  Ask anyone who has tried to short in what he thought was a trading market and discovered too late that he was in an up-trending market.  Don't think that smart people haven't erred in reading the market.

Until you have traded three to five years, you likely don't know, or apply, the subtleties.  During the last few years, a child could have made money--serious money--by just investing in any of the indices and growing into manhood and wealth as if both were genetic determined.  Investing was less demanding than being a lichen, which demands little more than a few minerals and moisture to grow.

A trader has to earn his money in every market; he cannot choose to sit out one type of market until one more suitable to his style cycles by.  Some of my investor friends have made more money than I over certain arbitrary time periods; and they--lichen-like--have done so with the same ease as predicting what the spring leaves of the snow-covered maple will look like.  For these friends, they would have learned as much about investing had they played Monopoly or watched Seinfeld.  They haven't seen their capital diminish in a 20-25 percent correction.

As you invest and, perhaps later trade, you learn to filter error as you learn to filter stocks.  My father called the practice the Caesar-principle.  Recall that Brutus in his address to the mob told them that only Caesar's vices had been slain, while his virtues lived on, still active.  This an an anodyne for trading and investing: You learn to slay your trading and investing vices and let the virtues live on.  If you do not abide by the Caesar-principle, you will eventually slay both your vices and your virtues of trading--and you will curse both the light and the darkness.

The trading I have done in this market for the last two months or so, I've done against a gut feeling that something is amiss: I can't "feel" the market.  I am trading on a mechanical approach.  My indicators still read "up."  But my sense, somehow, is down.

As in flying, when in doubt let your instruments tell you what to do.  My market instruments are doing my trading.  I seem to be flying IFR [Instrument Flight Rules] in a VFR [Visual Flight Rules]  market.

But. . . .

Connie Mack
 
 
 

Mike Lucero wrote:

I understand you want both OBV and MF to positively diverge before you buy.
What if, after you buy, they don't agree? I asked about CCL before. Since
January, OBV has been following the stock, but MF has been negatively
diverging, until just now.

Thanks,

Mike

On Thursday, March 19, 1998 7:23 AM, Connie Mack Rea [SMTP:rea1998@gte.net]
wrote:
> Members--
>
> There are some interesting stocks that my OBV/MF scan kicked out last
> night.  Three are new stocks and three are stocks that  have appeared
> between one and three times in the last two weeks.
>
> I'll comment briefly on each one.
>
> FMAX:  Has appeared before.  The OBV/MF is extremely powerful.  Despite
> the late two-day run-up, there appears to be a bit left if the market is
> flat to strong.
>
> IBSF:  A  reappearance from a few days ago.  Still some upside
> remaining.  OBV/MF strong.
>
> AKS:  A reappearance.  Still some short term upside. OBV/MF strong.
>
> ATS:  This, and the stocks following, are new appearances.  OBV/MF are
> extremely strong.  The SlowSto is modestly negative the last two days.
>
> MGM: Strong OBV/MF.  The SlowSto and the MACD are divergent.  If I had
> to guess, I'd wait to see if the MACD turns positive.
>
> ILFO:  The MF has been light but steady.  However, the OBV has been
> strong and equally uniform.  The FastSto is rising from a lower boundary
> as is the MACD.  The MACD, if it turns positive, could give the stock a
> nice kick.
>
> CBIZ: OBV/MF is a bit ragged, but still strong.  The MACD turned
> positive a couple of days ago.
>
> Keep in mind that each of these stocks has met my OBV/MF divergence.
> The stocks are not just strong [OBV/MF tracking price] but that each is
> positively divergent [stronger than the price indicates].
>
> As most of the members know, I am indifferent that the stocks  do or do
> not meet Canslim criteria.  However, for those of you who do a bit of
> trading along with your Canslim investing, these are the stocks that I
> trade.  That I don't trade all of them is because I am fully invested or
> am maintaining a less than full investment.  I am holding my trading
> account to about 75% invested as of this morning.
>
> Be sure to look at BigCharts, for it is this site that I am always
> pointing to.   If you wish to look beyond my OBV/MF criteria, look next
> at [of no particular preference] MACD, Slow and Fast Stochastics, and
> SAR.
>
> To determine an entry point, I use a 3/7/10 EMA, which is quick. and
> pushing what indicators can tell without jerking you all over the
> place.  The default 3-EMA for BigCharts is 5/10/15.  My 3/7/10 entry
> point has, in some instances, been met earlier, sometimes much earlier.
> In these instances, you might, if you wish for a safer entry, increase
> your EMA numbers.  Too, notice if  the EMA 3/7/10 lines are still fully
> separated and appear to be almost parallel.  If so, and they remain
> parallel, you may infer that there is further upside.
>
> As the 3-EMA crosses down through the 7-EMA, there is a minor correction
> in the works.  If the 3-EMA passes through the 10-EMA, there is a
> further correction coming.  If the 7-EMA passes through the 10-EMA,
> there is still more correction to come.
>
> Use the reverse principle to determining how daring you want to be to
> re-enter.  I.e., to enter when the 3-EMA rises through the 7-EMA is to
> be daring, and you must expect some jerking around.
>
> I will attempt to buy small lots in three or four of the stocks.  I was
> late getting all my charts together this morning and have not looked at
> the spreads.  In stocks with wide spreads, 1/2 or more, you can
> sometimes buy between the spread, especially at the close.
>
> Connie Mack
>
>  << File: ATT00000.htm >>

-

   - --------------F6A98AFF33C3CA6FEF7695A8-- - - ------------------------------ Date: Thu, 19 Mar 1998 17:10:28 -0500 From: Connie Mack Rea Subject: Re: [CANSLIM] New Prospects - --------------D88B716327F1388177E97EAB Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Evening Deepak-- Thanks for the mail. I can pay the rent and rent me an intern. Connie Mack Deepak Kapur wrote: > Connie, > > >FMAX: Has appeared before. The OBV/MF is extremely powerful. > Despite > >the late two-day run-up, there appears to be a bit left if the market > is > >flat to strong. > > What a call!!! Up 3 1/8. Congratulations!!! > > Deepak > > - - --------------D88B716327F1388177E97EAB Content-Type: text/html; charset=us-ascii Content-Transfer-Encoding: 7bit

Evening Deepak--

Thanks for the mail.

I can pay the rent and rent me an intern.

Connie Mack
 

Deepak Kapur wrote:

Connie,

>FMAX:  Has appeared before.  The OBV/MF is extremely powerful.  Despite
>the late two-day run-up, there appears to be a bit left if the market is
>flat to strong.

What a call!!! Up 3 1/8. Congratulations!!!

Deepak

-

   - --------------D88B716327F1388177E97EAB-- - - ------------------------------ Date: Thu, 19 Mar 1998 17:43:29 -0500 From: Ari Lawson Subject: Re: [CANSLIM] XEIKY... train leaving the station Can someone please explain how you know where the pivot point for any stock may be?Also what is that point for XEIKY. Thanks - - ------------------------------ Date: Thu, 19 Mar 1998 17:49:19 -0000 From: "Robert Miller" Subject: [CANSLIM] DG online This is a multi-part message in MIME format. - ------=_NextPart_000_000A_01BD535F.578870C0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Anyone know exactly what time the DG online prices are updated each day? Thanks - ------=_NextPart_000_000A_01BD535F.578870C0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Anyone know exactly what time the DG online prices = are updated=20 each day?
 
Thanks
 
- ------=_NextPart_000_000A_01BD535F.578870C0-- - - ------------------------------ Date: Thu, 19 Mar 1998 17:55:51 -0500 From: Jeffry White <"postwhit@sover.net"@sover.net> Subject: [CANSLIM] BLDPF Anindo, you wrote: > What about BLDPF ? How can anyone justify its > valuation? > > Anindo > No, is the answer, I think. And that's why I shorted it yesterday at 125. Jeffry - - ------------------------------ Date: 20 Mar 98 10:43:44 From: Dean Edwards Subject: [CANSLIM] NON CANSLIM - US Fiscal Payments Could anyone tell me which day of the calender week and how often, (e.g fortnighty, weekly or monthly) the US Federal Government distributes pensions, social welfare and payments to government employees . Thanks - - ------------------------------ Date: Thu, 19 Mar 1998 19:16:12 -0500 From: Craig Griffin Subject: [CANSLIM] Pivot Points (1 of 2) - Repost from Dec 5, 1996 **** This is a repost of a pivot point explanation. I have not updated the stocks in the post, so you will need to look at some long term charts if you try to reference them. **** Date: Thu, 5 Dec 1996 15:30:53 GMT X-Sender: cagriffin@pop.mindspring.com X-Mailer: Windows Eudora Light Version 1.5.4 (16) To: canslim@xmission.com From: Craig Griffin Subject: Re: [CANSLIM] Pivot points Sender: owner-canslim@xmission.com Reply-To: canslim@xmission.com Linda, The pivot point is the buy point. Sometimes it is also called the breakout point. The reason to call it a pivot point is that breakout implies a "breakout to a new high in price", which is often, but not always the best buy point. Most CANSLIM'rs I have known will use break point, pivot point, and buy point interchangably. How does one identify a pivot point? First, a pivot point cannot exist without referencing the base pattern that has formed. There are 3 main types of bases: 1) the flat base, 2) the cup w/ handle base, and 3) the double bottom. In general, the pivot point is the point at which 97% (to choose a number) of overhead resistance has been overcome. For this reason, it need not be an absolute new high in price, but it will always be close to one on a 12 month basis. Overhead resistance older than 12 months is not as powerful as recent overhead resistance. In a flat base, the base doesn't seem to have a pattern, sometimes it is called a rolling base. Take a look at Three Com's Chart (COMS). Notice how it rolls along in a 30% range from 36 in Jan to 52 in late Feb to 36 in Apr to 52 in May to 33 1/2 in July? Finally it sort of sneaks up on 50 and then spikes through it to 52 1/4 in one day in Sept. It's done something almost the same 3 time before. But the earlier spikes were either too early in the base, or starting from too low in the base, or on inadequate volume. Several fakeouts before the real thing to get everyone sick of the stock! But the real thing is clear and strong, closing at it's high for the day with good volume. The actual pivot point can really only be determined on THAT DAY. If you watch this stock you would know it was going to be in the 50ish area. But the chart pattern has finally filled out and as it moves through 52 or so with the volume, you could see that resistance is broken and buy. You could probably even see it earlier in the day as it moves through 51 on volume. This is both an art and a science as you can see. In a cup with handle base, the pivot is the top of the handle. Take a look at Mastec (MASX). Note the long cup which forms from May's peak at about 39 through Sept at 39 1/2. The long handle then forms ending in late Oct. with the volume drying up almost completely for a couple of weeks at the end. Finally comes the spike in price and volume on that day at the end of the drooping down handle. The price moves from 38 to 40 1/4 on high volume. The pivot point in this case is 38! Almost all of the work in the handle was done below 38 and so was virtually all of the work in the cup! This gives you a 2 point (5%) head start on those who wait for it to clear the old high of 39 1/2. But they are not wrong either. You get two chances to buy: 1) from 38 and up 5%, and 2) from 39 1/2 and up 5%! Both are valid pivots, but 38 is obviously the most advantageous one. Once again, until you saw the handle form the pivot point was not apparent. The pivot on the double bottom base is similarly determined to the two above. The basic technique is to wait for the base to be fleshed out and to then start watching very closely, re-evaluating the stock daily. But you will quickly begin to see the points where "97%" of the overhead resistance is gone. Hope this helps. Best regards, Craig At 11:47 AM 12/3/96 -0500, you wrote: >... >So, I've been trying to identify the pivot points O'Neil writes about but without much success. So I thought I'd put the following question to the list: How do you identify a pivot point? And how reliable is this identification? - - ------------------------------ Date: Thu, 19 Mar 1998 19:17:00 -0500 From: Craig Griffin Subject: [CANSLIM] Pivot Point (2 of 2) - Repost from Feb 2 1997 **** This is a repost of a pivot point explanation. I have not updated the stocks in the post, so you will need to look at some long term charts if you try to reference them. **** Date: Sun, 2 Feb 1997 00:57:58 -0500 X-Sender: cagriffin@pop.mindspring.com X-Mailer: Windows Eudora Light Version 1.5.4 (16) To: canslim@xmission.com From: Craig Griffin Subject: [CANSLIM] Pivot Points Sender: owner-canslim@xmission.com Reply-To: canslim@xmission.com Jim, You wrote: >Craig, could you please restate for me what are the typical pivot points in >the CANSLIM chart? I assume from this post that the top of the handle is >one. What about the lowest part of the handle before it starts up again? > I'll do my best. The pivot point in my mind is the point at which a stock is said to have "broken out". The pivot point is therefore literally the old high for the stock (1/8 past that point it will have broken out to a new high). Given a stock that forms a base between 24 and 18. The stock may touch 24 or 23 1/2 or whatever at several times during the base. But the literal pivot point is the old high of 24. Given that, there are a number of subtleties, which affect the pivot. The basic idea (IMHO) of those subtleties is that the real pivot point is the point at which 99% of the overhead resistance has been overcome. Therefore, given a FLAT BASE, and a stock that trades at $24 the day the base begins, and then bases for 2 months between the prices of $18 and $23 1/2, never again exceeding 23 1/2 in the base, but touching 23 1/2 several times. Then I would say that the pivot is 23 1/2, rather than 24 and get a possible earlier entry on a breakout. But remember, for the breakout to be valid, it also needs to be exhibiting strong volume that is likely to exceed 150% of average daily volume by the time the day is out. When the stock given above is trading at 23 3/4 on 15% of ADV at 10:00am, you can be pretty sure and go for it. But on low volume or normal volume at the same price and time, you may want to pause and reflect. A recent example of a flat base is MCAF. After looking at all of the intraday highs going back to the beginning of the base (10/15/96), I would say the pivot is $52. You might say the pivot is $51.75. Someone else might say it is $52.625. We would all be "correct enough". See if you can see why all three are valid answers for this particular chart (and for extra credit see why my answer of $52 is best :^), just kidding). Given a CUP WITH HANDLE BASE, the pivot point is at the top of the handle (which will normally be even with or slightly below the rim of the cup, but sometimes it is slightly above. Take the cup w/handle on DHI, for example: the stock peaked back on 02/07/96 at $12, this is the left rim of the cup. It then formed this long cup stretching until 12/18/96 with a high of 11.25, this is the right rim of the cup, but also the "top of the handle". The handle then began forming and drooping down until 1/21/97 with a low of 10.125. At that point the price began "climbing back up the handle". Some Canslimmers will chance a buy on a stock (which has already had earnings released as this one did, "halfway up the handle"). For DHI the handle drooped from 11.25 down to 10.125. Therefore, once the price had climbed back to 10.50 or so, you could CHANCE a buy in a strong market - but it is not "pure" Canslim. I digress, sorry, the pivot point is at 11.25 the top of the handle, not 12.00 the left rim of the cup. Once it breaks through 11.25 with 150% of ADV as it did Friday, you've got a breakout. It seems that in some regards "pivot point" is a bad term, because pivot seems to imply the point at which the turn comes (such is at the bottom of the handle), when in fact it refers to the point at which overhead resistance is broken (such as at a new high, or a near new high). Hope this helps. Best regards, Craig PS. One added note re: handles. The handle must form in the top 20% or less of the cup. If a handle forms midway up the cup, for example, it is a weak formation and failure prone. You like to see the handle form starting from a nice high point in the right side of the cup. Then you like to see it drooping down 5% or less (deep drooping is not good - see for example RSYS on Friday - sometimes these work out, but for RSYS it was disaster - also an example of the risk one takes buying half way up the handle before earnings are out). When you get this nice droop, you also like to see the volume "dry up" in the handle. Meaning progressive days or progressive weeks with a steady reduction of volume. In the case of DHI, the volume dry up was not obvious to me, but that's ok, just not ideal. Very few of them have all of the ideal characteristics. But the closer to ideal, the better (the higher the chance of success). - - ------------------------------ Date: Thu, 19 Mar 1998 19:20:13 EST From: DCSquires Subject: Re: [CANSLIM] XEIKY... train leaving the station In a message dated 98-03-19 17:45:45 EST, you write: << Can someone please explain how you know where the pivot point for any stock may be?Also what is that point for XEIKY. >> My understanding of pivot points is that they can only be identified in hindsight. The definition of a pivot point is the point where the stock changed direction. I think what you are asking about is how to identify the buy point. Pivot point and buy point are often used interchangeably but I thought I would clarify the distinction. A buy point is a price where a security breaches some particular area of resistence. In a cup and handle formation it is usaully the top of the right side of the cup. For a flat base it is a tick or two above the former price peaks in the base. For XEIKY my buy point would have been between 19 7/8 and 20 1/8 or maybe a few ticks earlier if there was significant volume. A stock can have several buy points coming up the right side of the cup, one coming through the handle, which is where traditional CS'er buy, and serveral after the breakout. I generally like the buy on the right side of the cup because the C&H breakouts are less reliable these days. Your key to finding buy points is to first learn to identify sound base structures. The buy point on XEIKY is not as clear because it had a non- fatal breakout failure in early Feb. To more easily illustrate a C&H but point take a look at DHOM. This stock has a sound 10 week base and my buy point is between 12-12 1/4. CRLBF is another great example with a five month base in the form of a C&H. My buy point is between 21-22 depending on volume and price momentum on the breakout attempt. DSquires - - ------------------------------ End of canslim-digest V2 #155 ***************************** 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.