From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #301 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, June 25 1998 Volume 02 : Number 301 In this issue: Re: [CANSLIM] MWD [CANSLIM] LHSPF [CANSLIM] "W" 's ?? [CANSLIM] Date: Thu, 25 Jun 1998 08:58:00 -0400 [CANSLIM] flat basing pattern [CANSLIM] Non Canslim Pick For trader guys Re: [CANSLIM] FINL [Connie to Bill] Re: [CANSLIM] FINL [CANSLIM] M - And now for something completely different. Re: [CANSLIM] ROMC [CANSLIM] Re: How rude we ARE. Re: [CANSLIM] M - And now for something completely different. Re: [CANSLIM] M - And now for something completely different. Re: [CANSLIM] Re: Dang! -- A bibliography [CANSLIM] This just in (non-CANSLIM) RE: [CANSLIM] Re: Dang! -- A bibliography Re: [CANSLIM] flat basing pattern [CANSLIM] RE: FINL: Trading the bounce {Connie} Re: [CANSLIM] "M" [CANSLIM] Stock lists Re: [CANSLIM] "W" 's ?? Re: [CANSLIM] What about Canslim? Re: [CANSLIM] OBV/MF [CANSLIM] Re. Mkt Groups [CANSLIM] MSON Re: [CANSLIM] M - And now for something completely different. ---------------------------------------------------------------------- Date: Thu, 25 Jun 1998 06:56:44 -0400 From: Robert Bomba <73223.2767@compuserve.com> Subject: Re: [CANSLIM] MWD >> so its probably good, anyway, Morgan Stanley (MWD) seemed to breakout today. << I bought MWD yesterday @ the open along with CTYA. Bob P.S. Someone mentioned growth estimates? IMHO they don't mean squat. I wish they would predict 0 growth so we can be surprised to the up side. - - ------------------------------ Date: Thu, 25 Jun 1998 08:45:13 -0400 From: Jeffry White Subject: [CANSLIM] LHSPF Oh my! http://biz.yahoo.com/bw/980625/lernout_ha_1.html Good luck out there, CM. A huge gap up open on the NAS, followed by a selloff to unchanged to lower on the day would make sense today or tomorrow, I would think. - - ------------------------------ Date: Thu, 25 Jun 1998 07:53:10 -0400 From: "Deral Rackley" Subject: [CANSLIM] "W" 's ?? Pardon my ignorance; but someone please explain "W" and significance. Deral - - ------------------------------ Date: Thu, 25 Jun 1998 07:09:03 -0600 From: "Deral Rackley" Subject: [CANSLIM] Date: Thu, 25 Jun 1998 08:58:00 -0400 DP. Thanks for the "Clarificaiton" of OBV. I think I will follow your advice and use price and volume relationships of which I am beginning the understand and interpret my analysis of stocks. Deral - - ------------------------------ Date: Thu, 25 Jun 1998 06:49:03 -0700 (PDT) From: rolatzi Subject: [CANSLIM] flat basing pattern DB: I found your discussion of use of Slo Sto early warning combined with MACD for stocks basing to be really exciting. As a result of that discussion, I have tried to screen looking for CANSLIM stocks, that is, stocks with good steady growth in earnings and sales which at the same time have not broken out, which are not forming cup and handles but which are trading in a narrow range. Unfortunately, my screens have not really come up with any viable candidates. My guess is that such a pattern is of low probability, especially now that the market is so extended. I will continue to screen and refine my paramters. I am using marketplayer for my screening, which is not terribly sophisticated but which is free and which is IMHO better than that of Zacks, which is not free. I would be interested in knowing if you have followed up this idea yourself. Ciao, Rolatzi _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Thu, 25 Jun 1998 06:48:22 -0800 From: "Patrick Wahl" Subject: [CANSLIM] Non Canslim Pick For trader guys Three Com (COMS) reported earnings yesterday after the market close, this morning is up 4 1/2. Looks like it may have made a bottom, but this is not a canslim pick, like the header says. On the chart are two levels of support, one at about 29, one about 24. It has hit both of them in the last 8 months, is now back above both of them. If this worked out, could be a big one, but buying off a bottom is riskier. - - ------------------------------ Date: Wed, 24 Jun 1998 21:28:44 -0400 From: Connie Mack Rea Subject: Re: [CANSLIM] FINL [Connie to Bill] Bill-- Sounds like bad timing and what. You did, however, take a dollar away from me. Was not the close 26.75 rather than 25.75? Damn, you guys are tough on a trader. Let me explain how a trader would look at FINL. OBV/MF through May had a positive divergence on a 3-mos chart. On a 2-mos chart my 3/7/10 would have invited me to enter, but the Stochastic didn't confirm until the last trading day in May. I'm in no later than June 1 at 24 or so; I don't have an intraday chart. On the 9th of June, my Stochastic would take me out, but my EMA doesn't confirm. I hold since there is no confirmation. On June 15, my Stochastic returns to buy; the EMA is weakening, but no sell is given. At yesterday's close, I'm still in at 30.75 or so with about a 6-point gain. The Stochastic is weakening, but the EMA is at its apogee. Recall that on the 9th the two indicators acted exactly the same way: EMA at apogee; Stochastic right at breakdown. So I hold. But the stock is pushing against its 52-week high. This is not the time to play loose with stops. I set one. This morning I am stopped out almost immediately. I take away 5 points or so. I had said that the investor might consider buying at 28; the stock might be entering a trading range. On an intraday chart, you can see that 28 to 28.25 held until about 2:00. Note, too, that the heavy selling in the first few minutes climaxed at 28. Of course, I know that something has happened for the stock to take such a hit. But I keep watching; there may be a chance for a bounce. Because I don't read the news on stocks I trade, I guess that the bad news was out when I posted or very soon thereafter. The close at 26.75 isn't alarming. From the 11th to the 16th, 27 plus or minus an 1/8 has formed support. Today, the stock closed on that support. Break this support and the next close could be real alarming. The chance for a bounce is stronger now than at 28. I might make a couple of bucks tomorrow. This is what I will do, Bill. If FINL looks sticky at 26.75, I'll buy 500 and attempt a day trade. I'll post my confirmation. [You're not going to ask for a certified copy, are you?] Bill, early tomorrow I'll know if everybody who owns FINL has had a chance to count his chickens. If no other bad news comes down, the trade is not a dangerous one. I'd say the odds are 65-35 in my favor. Those are good odds for a trader. You can pay the rent and buy the mistress an expensive present on such numbers. Now, Bill, what will you do? Connie Mack Bill wrote: > Bad timing or what? > > Athletic footwear retailer The Finish Line (Nasdaq:FINL - news) was > stomped for $3 1/8 to $25 3/4 after Raymond James downgraded the firm to > "accumulate" from "buy" > > Connie Mack Rea wrote: > > > > If you own it, I would hold. If you wish to buy, you might consider it at > > 28. > > > > - - - ------------------------------ Date: Wed, 24 Jun 1998 23:00:07 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] FINL I'll try to give you the simple answer, and one that I happen to subscribe to and agree with. The "house analyst" gets a paycheck from the house he works for. His job, among other tasks, is to support his "house", including the retail and institutional managers there. I spend about 5 hours every day/night on the internet on stock and investment related efforts. Am I willing to give away the product of that effort before I am already positioned in (or out) of a stock?? Of course not. The same holds true for the house analyst who actually draws a paycheck for his efforts while my paycheck comes from picking good stocks and timing my entry. Thus, the house analyst's "advice" comes out before the mkt open, and by the time the "news" of the upgrade/downgrade becomes public, most clients have already made any changes. House analysts follow most closely the stocks where their firm makes a mkt or holds inventory. Why not, this is the biggest risk arena for their employer. One failing of the big wire houses is that they try to sell their customers on "in house' mutual funds. If an "in house" funds already holds a substantial position in a stock just cut by a "house analyst", what do you think the portfolio manager wil do? Does this lead naturally to negotiated "block" sales (or buys since it works the other way as well) before the mkt has even opened, much less upon the open?? Of course. Is this portfolio manager trading on "inside" info?? No, he's (or rarely she's) just using the "talents" of the in house analyst, which his or her employer is already paying for. How much "advance" info goes to the market makers? In my opinion, very little. On the other hand, MMers are well aware of where stock is concentrated, so when they see one firm, known to have a large position, consistently hitting the bid or going low offer (assuming they are also a MM), they are astute enough to back away from the mkt. Tom W - -----Original Message----- From: Bill To: canslim@lists.xmission.com Date: Wednesday, June 24, 1998 10:15 PM Subject: Re: [CANSLIM] FINL >Tom, how much of this 'advance' information goes to the market makers >(MM?) I have noted some large blocks printed on the tape with no effect >on the price days before the announcement. Could it be that the MM is >preparing to 'feed the kitty' in anticipation of a ratings change? > >I assume that the large blocks are a negotiated transactions between the >beneficial owner and the MM in either/both directions. > >I need to brush up on Joe Granville's work in the use of OBV as an >advance predictor of price action. His work correlates positively with >the homily that WON disseminates in reference to volume shrinkage etc. > >Thanks, > >Bill-->> > > >Tom Worley wrote: >> >> While I've stayed out of much of the discussion on this one (it's not >> on my watch list, never followed it, just made some quick snapshot >> comments on it) I would add that Raymond James cut its rating on it >> today, from buy to accumulate, which may account for much of today's >> actions. If so, beware of news, its often a flash in the pan, esp >> where brokerage houses are concerned. >> >> When major brokerage houses make ratings changes, it's often first >> thing in the morning, before the mkt opens, and gives brokers (who are >> commission compensated) an excuse to call a client and say "Mr Client, >> we just cut our ratings on ABCD and I would suggest we sell ABCD and >> use the money to buy WXYZ (or WXY if you are a NYSE fan)". This way >> the broker makes two commissions and is within the guidelines of his >> "house analysts". Of course, this initial selling pressure gives other >> investors, not aware of this downgrade, or playing by technical rules >> only, an excuse to sell as well, thus adding to the selling pressure. >> >> I haven't studied or investigated FINL, so don't know if it represents >> a buy, hold, sell or short. No advice here. Just a comment on "M" and >> news as it relates to this stock. >> >> May be just one more example of why the brokerage business needs to >> change from commission based to performance or "management fee" based, >> even tho that tends to move clients more into house "proprietary" >> products. >> >> Tom W >> >> - > >- > - - ------------------------------ Date: Wed, 24 Jun 1998 23:51:46 -0400 From: "Frank V. Wolynski" Subject: [CANSLIM] M - And now for something completely different. I jumped out of bed with a pounding headache this AM. I had the following dream: Countertrend rally substantially complete. The Dow should top out on Thursday, (maybe Friday) at 9020 for a high and close at 8963. It should then be ready for the next descent to 8164. This downdraft will be as quick as in October. Substantially completed within 2 days. Then I took two Tylenol and a BC. I need a vacation. I feel better now, but damned if I can find anything I'm ready to call leaders for this up move. The biggest gains in groups have been those substantially oversold. Semi's and Oil's. SHOO looks good, (no pun intended). $11 3/8, new highs, EPS/RS 93/89 last look. I can't call the group in that great of shape though. Although it is ranked at #43. As little ago as the 1st of March this group was in the 150's and higher. Cables looked good all through the correction, no surprise they are poppin, all of them! AT&T finally found somebody to buy, again, again, again..... The financials look the strongest. Investment Management, Services-Misc. Even #34 Computer Software-Financials is firming up very well. Home Builders bouncing up. I'm watching Leisure Services, held its 200 day well, OBV lifted off when price touched the 200day. My group chart shows a divergence, yes I know what one is, and then tracking positive for the last 3 days. Threatening the 50day with a breakout. Weekly MACD histogram just went positive tonight. #13, been performing in the top 30 since December. I'll feel better when the Dow can hold above its 50day MOV and the RUT can get back above its 200day MOV. Then again it may just remnants of my headache. Frank Wolynski - - ------------------------------ Date: Thu, 25 Jun 1998 09:32:56 +0300 From: "David S. Pinhasik" Subject: Re: [CANSLIM] ROMC Tom, Db, and Mike - Thanx! This group has helped (everyone can vouch for that) me so much, it really would be a shame if people started unsubscribing because of one or two rude posters (especially since the ru= de ones also have so many great comments, suggestions and advice). I personally think the bad M has been eating at everyones nerves lately, = and that, like everything else in life, will pass too. David - -----Original Message----- From: Tom Worley To: canslim@lists.xmission.com Date: =E9=E5=ED =E7=EE=E9=F9=E9 25 =E9=E5=F0=E9 1998 03:34 Subject: Re: [CANSLIM] ROMC >David, >Sorry I didn't respond sooner, but don't want to become a "DGO data >source". I read the chart (at DGO) as showing a lengthy trading range >in the 27-29 level. In the past two weeks, it appears to be trying to >establish a new pattern, that of a staircase (short base on short >base), however I also note that in the past five weeks, it only broke >ADV on four occasions. Even with the sloppy and bearish "M" we have >had, that's pretty light. > >I also note funds already have 28% of the float locked up, however >management appears still committed with 34% of the issue. > >The rest of the CS technical data all look fine to me. > >As to whether the stock is buyable at 32?? Well, if it does succeed >in making a staircase pattern become common, then it would probably >work, but too early to tell. If it doesn't, then 32 is well over 10% >extended from a high 20s base area. > >Tom W > >-----Original Message----- >From: David S. Pinhasik >To: canslim@mail.xmission.com >Date: Wednesday, June 24, 1998 10:25 AM >Subject: [CANSLIM] ROMC > > >> >>I am reposting this under a new subject name. >> >>>ROMC: Has been in a trading channel for couple of months. If it >closes >>>above 29.87 or 30 and doesn't labor, the trading range would be >broken >>>to the upside and a new move could get underway. The OBV/MF implies >the >>>breakout would hold. >> >> >>Is this still buyable at around 32? I am reading it as just about 10% >over >>the pivot.Without DGO I am finding it hard to determine all the CS >elements >>easily. Does the volume qualify as a valid CS breakout? >>Any help appreciated! >> >>David >> >> >> >> >> >>- >> > > >- > > - - ------------------------------ Date: Thu, 25 Jun 1998 13:58:30 GMT From: musicant@autobahn.org (Dan Musicant) Subject: [CANSLIM] Re: How rude we ARE. On Wed, 24 Jun 1998 12:23:29 -0400, you wrote: : :!!!!!!! : :Really now. What can ANYONE say? This is over the top of rude. Stop = it!!! : :Connie, your yesterday posts were nearly as bad. Not quite, but... : :Walter Stock, how do I get in touch from Bramptom? : :Averil Strauss (Lurker) :averil@legendcomm.com :800-668-7077 Yes, well ... I perused that stuff (Tom's, Jeffry's and Connie's) and would like to make a pithy comment or two: I don't share J.'s feeling that Tom should desist from "crowing" about how well he's been doing. I'm glad that Tom's doing well and am just as glad to hear about it. I remember when the prevailing feeling seemed to be that Tom was astute BUT he couldn't tame his investment strategies (MSON, SOCR, and some pretty wierd attachments to microcaps from $10 - $15, etc.) and was repeatedly knashing his teeth over missed opportunities. Maybe his teeth are still getting a licking, but I am pleased that he's doing well and am not the leased bothered by his crowing about it. If anyone wants to crow, I'm all ears (I know what real crows sound like!). Hearing that someone is doing very well may make me envious or otherwise bent, but it is also definitely coal in the furnace to make me try harder, and I can use that. And Connie! I think it's a little funny that this guy who calls himself a "guest" starts getting curt with people. I guess another side of him was showing at that point. Well, who's perfect? Dan - - ------------------------------ Date: Thu, 25 Jun 1998 07:11:40 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] M - And now for something completely different. <> Early in the week I mentioned Computer Services and the leaders continue to do well. The group may still be worth looking at. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Thu, 25 Jun 1998 07:18:48 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] M - And now for something completely different. I already sent this once but it got kicked back due to Frank's use of the "d" word. Funny how that word gets caught and a*****e doesn't. <> Early in the week I mentioned Computer Services and the leaders continue to do well. The group may still be worth looking at. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Thu, 25 Jun 1998 14:24:41 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] Re: Dang! -- A bibliography On Wed, 24 Jun 1998 20:49:55 -0500 (CDT), you wrote: :Jeffry White, : :Yes, "Reminiscence of a Stock Operator" is excellent and a plus :for any trader/investor. : :Mary : Well, I'm not touting these, and can't even say that I've *thoroughly* read O'Neil, but I gleaned this bibliography concerning stock investing. This is mostly from the Stock Farmer website: http://www.accessone.com/~logical/read.htm with a few additions. Any commentary, welcome. - -------------------------------------------------------------------------= - ---- The Official Reading List=20 How to Make Money in Stocks - William J. O'Neil=20 Investor's Business Daily (newspaper)=20 How I Made 2 Million Dollars in the Stock Market - Darvas=20 Reminiscences of a Stock Operator - LeFevre=20 How to Trade in Stocks - Jesse Livermore=20 The Battle for Investment Survival - Gerald Loeb=20 Trading for a Living - Alex Elder=20 Trader Vic - Methods of a Wall Street Master - Victor Sperandeo=20 The Stock Trader's Almanac - Hirsch (annual publication)=20 The Great Crash 1929 - John Kenneth Galbraith=20 The Anti-Capitalistic Mentality - Ludwig Von Mises=20 =20 "What is Stan Weinstein's book?" - Secrets for Profiting in Bull and Bear Markets. It is an excellent book that deals with technical aspects of trading. =20 -- Peter Christiansen Zen in the Markets -- (recommended by Harlan, who posts occasionally to the CANSLIM bulletin board) The New Contrarian Investment Strategy -- David Dreman, and recommended (and given me) by an old friend of mine. - - ------------------------------ Date: Thu, 25 Jun 1998 07:37:46 -0700 (PDT) From: dbphoenix Subject: [CANSLIM] This just in (non-CANSLIM) Open word and type "I'd like to see you naked", highlight it, shift F7 - --Db (and I didn't do this, Microsoft did) _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Thu, 25 Jun 1998 07:40:33 -0700 From: Brian Nash Subject: RE: [CANSLIM] Re: Dang! -- A bibliography I just finished this one, and found it entertaining (but not a must-read): It Was a Very Good Year : Extraordinary Moments in Stock Market History, by Martin S. Fridson (managing director at Merrill Lynch) ISBN: 0471174009 Analysis of the social/political/economic backdrop of the best 10 individual years in 20th century US stock market history. More interesting and scholarly than practically useful. > -----Original Message----- > From: musicant@autobahn.org [SMTP:musicant@autobahn.org] > Sent: Thursday, June 25, 1998 10:25 AM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] Re: Dang! -- A bibliography > > On Wed, 24 Jun 1998 20:49:55 -0500 (CDT), you wrote: > > :Jeffry White, > : > :Yes, "Reminiscence of a Stock Operator" is excellent and a plus > :for any trader/investor. > : > :Mary > : > Well, I'm not touting these, and can't even say that I've *thoroughly* > read O'Neil, but I gleaned this bibliography concerning stock > investing. This is mostly from the Stock Farmer website: > http://www.accessone.com/~logical/read.htm > with a few additions. Any commentary, welcome. > -------------------------------------------------------------------------- > --- > The Official Reading List > How to Make Money in Stocks - William J. O'Neil > Investor's Business Daily (newspaper) > How I Made 2 Million Dollars in the Stock Market - Darvas > Reminiscences of a Stock Operator - LeFevre > How to Trade in Stocks - Jesse Livermore > The Battle for Investment Survival - Gerald Loeb > Trading for a Living - Alex Elder > Trader Vic - Methods of a Wall Street Master - Victor Sperandeo > The Stock Trader's Almanac - Hirsch (annual publication) > The Great Crash 1929 - John Kenneth Galbraith > The Anti-Capitalistic Mentality - Ludwig Von Mises > > "What is Stan Weinstein's book?" - Secrets for Profiting in Bull and > Bear Markets. It is an excellent book that deals with technical > aspects of trading. > -- Peter Christiansen > > Zen in the Markets -- (recommended by Harlan, who posts occasionally > to the CANSLIM bulletin board) > > The New Contrarian Investment Strategy -- David Dreman, and > recommended (and given me) by an old friend of mine. > > > > - - - ------------------------------ Date: Thu, 25 Jun 1998 07:54:05 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] flat basing pattern <> This sort of thing is always ongoing. Understanding the markets is like trying to nail Jello to the wall--as soon as you've come up with an approach that consistently brings in the money, something changes to put you back to square one (well maybe not one, but back nonetheless). Then you have to refine whatever it is you're doing to deal with the new conditions. Looking for bases, for example, is still viable, IMO. The market is only beginning to wake up (though it could fall asleep again without any notice at all) and we've been going nowhere for almost two months. It's during these periods that lots of nice bases show up. Like HCFP. But there are also lots of cups and handles out there, several of which are in Computer Services. Over the past few days, many of these have reached 50% retracement levels and moved strongly and rapidly higher, and you could have found them by noting the stochastic and MACD patterns. Understand, however, that these indicators are just that--indicators. They are nothing more than a different way of stating moving averages of price. You don't need them to find attractive stocks in constructive patterns, but if you're using a computer to find the stocks, you have to give it something specific to look for, even if it's only "price is above 50d MA". As far as the ongoing work goes, I work with several friends on a daily basis on this stuff. We all do our own searches, share the work, share the results. These are the only people I provide "lists" to because everybody does his own share and because I know that no one of them is going to buy something just because I happened to find it. Finding a few people to work with on this basis can be extremely beneficial to a novice (or anyone, for that matter). Not only do you work less, but what you do is far more productive. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Thu, 25 Jun 1998 11:11:57 -0400 From: Connie Mack Rea Subject: [CANSLIM] RE: FINL: Trading the bounce {Connie} Members-- I was filled in FINL at 26.6. Ordinarily a trader wouldn't expect a bounce of this dimension. I've sold 250 of the original 500 at the market. Greed has taken more than one life from the cat and the trader. The intraday OBV/MF is correcting. The SloSto has just turned down. The MACD looks weaker. The Volume+ has two red spikes. I'll closely watch from 2:30-3:00 and from 3:30 to 4:00. These are often informative periods. Bounces act like no other stock action. Connie Mack - - ------------------------------ Date: Thu, 25 Jun 1998 16:16:29 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] "M" DB wrote: >>So my guess is that it is highly unlikely that tomorrow >>will be another 1% day. (No kiddin' ;^) > >Gee, Johan. What have you been reading? Hooters Magazine, obviously. Wait until I get the video's! }B^) >In case anybody's wondering, the right shoulder was formed in the >1870-1880 area. And we are trying to punch through that resistance right now. Might be shorters covering their bets. As I said: I will be VERY glad if I'm wrong. >Tell you what, Jeffry. Let's both hope. - -- Johan Van Houtven - - ------------------------------ Date: Thu, 25 Jun 1998 17:26:30 +0200 From: Johan Van Houtven Subject: [CANSLIM] Stock lists Greg wrote: >More stock lists, less bickering. Less bickering, I agree with. Stock lists? I can certainly understand that one wants to see stock lists. However, consider this proverb: Give a man a fish, and you feed him for a day. Learn a man to fish, and you feed him for a life time. For me, what DB and some others are doing, i.e. 'learning a man to fish', is much more admirable and gratifying than if they were simply supplying me with stock lists. Think about it for a while. - -- Johan Van Houtven - - ------------------------------ Date: Thu, 25 Jun 1998 08:09:49 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] "W" 's ?? <> Unfortunately, you're not on AOL, so you can't look up the IBD article. However, O'N devotes TWO WHOLE PARAGRAPHS to the subject on p.156 in HTMMIS. Typically, his explanation leaves something to be desired. The article is much better. What's important, as with cups and handles and bases, is not the pattern itself, but what causes the pattern to form. In other words, you don't peer fixedly at the formation but rather at the investor behavior behind the formation. Stocks decline for all sorts of reasons. But once they've started to decline, the nature of the decline depends entirely on the kind of people who are holding the stock. But without getting into all that, let's look at the W specifically. In this case, the decline may be a bit more rapid than with a cup. Perhaps too many people bought at or near the top (the pattern leading up to the W has a lot to do with what happens thereafter). Some of them are going to get rattled and sell. Some are going to hope that the stock turns around, though they may also be fearful that it won't (in either or both cases, they won't be thinking clearly). Others may be smug, thinking that this is all unimportant, somebody will buy the dips, this is a wonderful stock, etc., and hold on. But the angle of descent will relatively severe. Then, at some point, buyers come in. There's no room here to go into all the reasons why this may happen--fundamentals, indicators, computer programs, news, chart patters, etc.--but it happens (at least with the W). The fearful heave a sigh of relief. The smug buy more. Those who got rattled are ticked and may buy back in. Shorts may cover, driving the price up further. Unfortunately, the demand just isn't strong enough to push the stock up to a new high--sometimes nowhere near it--and the stock turns, sometimes on a dime, and plummets again. Now the buyers who were so easily rattled the first time are even more rattled, their self-confidence even more shaken, and they either hope for the best or get out immediately and put it all into mutual funds. The smug aren't quite so smug. They're starting to pay attention. The hopeful continue to hope. The shorts reenter. Then, if everything goes right, the second leg of the W will sink lower than the first. This gets rid of the remainder of the rattled, the fearful and even some of the smug who aren't so smug anymore. The aggressive will buy here. The more prudent will wait until they have real evidence that the demand that will be necessary to really push this thing is in fact strong enough to do so, and this will be evidenced when the stock is able to surpass the midpoint of the W. Even though all the overhead supply has not been absorbed, a lot of it has been taken care of during that second leg. There may still be a pause at the old high, but the odds are not in favor of the buyer. Does this help? - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Thu, 25 Jun 1998 17:21:09 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] What about Canslim? Peter C. wrote: >I would like to strongly second Robert's sentiments. At first the bickering >was slightly amusing. Now it has become thoroughly boring. I have lost >interest in posting and am very close to unsubscribing. Presently, I am >finding very little of value here. Peter, What specifically would you value? Stock lists, discussion of stock selection criteria, CANSLIM related TA, ...? - -- Johan Van Houtven - - ------------------------------ Date: Thu, 25 Jun 1998 11:43:17 EDT From: Subject: Re: [CANSLIM] OBV/MF I'll show you mine if you show me yours! Jeff, just seems like your overly critical of others picks. I don't mind comments on what I'm watching but would like to be able to return the salvo. : ). Greg - - ------------------------------ Date: Thu, 25 Jun 1998 12:19:10 EDT From: Subject: [CANSLIM] Re. Mkt Groups Jeffrey, In issue 299 of Canslim Digest you wrote that oil and chips led the previous up-swing. Today's IBD has an article on the current mkt leadership. Here it is: If bull markets depend on strong stocks to pave the way, this rally could hardly expect a better crop of leaders. Telecom, computer and other tech issues, under assault for weeks, have rallied broadly. Techs, of course, have played a star role in the 7 1/2-year bull market. Many market pros regarded a tech reprise as key to further progress in the broader market. I N V E S T O R ' S C O R N E R Another healthy sign came in the quality of individual stocks. The stocks setting new highs Wednesday had an average Relative Strength of 86 on the New York Stock Exchange, 92 on the Nasdaq and 88 on the American Stock Exchange. A stock with an 88 RS, for example, appreciated more than 88% of all other stocks in the past 52 weeks. Professionals differ on whether the current rally represents the end of the correction that began in April or a mere bounce on the way to new lows. Mark Minervini, winner of the 1997 Money Manager Verified Ratings Contest with a return of 155%, declared a bottom in a Wednesday morning memo to his institutional clients. Minervini sees a surge in the number of stocks conforming to his investment criteria, which include accelerating earnings and high Relative Strength ranks. Minervini says he's moving aggressively from cash into stocks as his picks break into higher ground. Stephen Shobin, chief technical analyst at Lehman Brothers, sees lower lows ahead. ''Too many excesses occurred in March and April, and too much damage occurred in April and May, to think the correction is over,'' Shobin said. ''Our call has been for an interim trading rally well into July with a resumption of the correction.'' The S&P 500 and Nasdaq composite peaked April 22. The S&P entered a jagged trading range. The Nasdaq dropped into an eight-week downturn, which the Dow joined after its May 13 top. During the retreat, declining issues outnumbered gainers, while stocks hitting new price lows led new highs. The three major indexes put in their closing lows of the downturn on June 15. On Tuesday, the stock market confirmed the rally in classic form with a follow-through day. A follow-through occurs when any one of the major indexes posts a gain of 1% or better on an increase in volume over the prior session. A strong follow- through occurs four to seven days from the bottom. Valid but weaker confirmation days can occur further out. Tuesday's follow-through came on the rally's sixth day and was confirmed by the three major indexes. Within the Tuesday follow-through was an improving batch of stocks. Consider IBD'S daily Nasdaq and NYSE ''Stocks In The News.'' To be included in those sections, a stock must be making or nearing a new price high or undergo a favorable increase in volume. Of the 52 stocks that made the cut for Wednesday's newspaper, 36 had an RS of 90 or better. That compares to 15 stocks with a 90 RS or better that appeared in the April 23 edition. But some market watchers see strong factors working to thwart a sustained advance. Robert Dickey, director of technical analysis at Dain Rauscher Inc., expects more market-buffeting news in the approaching earnings season. He thinks second-quarter earnings reports will carry more jolts from Asia. Such news, Dickey says, could trigger the kind of exhaustion sell-off that has marked the end of recent corrections. ''Investors can buy from that point on, and they should do very well,'' he said. But Tuesday was ''a bounce. I don't see a green light yet - not even an ember yet.'' Shobin also doesn't see many typical signs of a bottom. The S&P 500, he notes, hasn't come close to its 200-day moving average. And sentiment indicators, which usually show a surge in skepticism, remain in mild ranges. And judging by the indexes, the latest correction, if over, looks rather mild. The Nasdaq notched a 10.5% dip from its April 22 closing high to the June 15 low. Its three prior corrections ranged between 12% and 14%. The S&P 500 gave up less than 5% from April 22 to June 15. It set a new closing high Wednesday. Anthony O'Bryan, market analyst at A.G. Edwards, thinks the market averages have masked deeper losses in individual stocks. ''A bottom is easier to recognize when you get the classic sell-off, but I think we've had more of a stealth correction,'' O'Bryan said. He thinks the market put in a bottom last week. A recent study by A.G. Edwards weighed the impact of the correction on all stocks over $5 a share on the New York Stock Exchange. The average stock fell 17.6% from its high of the year. Of the sample, 36% of the stocks gave up at least 20% from their highs. The damage was greater on the Nasdaq, O'Bryan notes. Of Nasdaq stocks over $5, the average stock fell 23.4% from its '98 high. Of the total sample, 59% of the stocks fell at least 20%. O'Bryan believes the earnings season holds relatively few bad surprises going forward. ''We've had a fair amount of pre- announcements,'' O'Bryan said. ''I think we've got most of those out of the way. The results we see in the second quarter from here on in should be in line with expectations.'' If a rally is under way, how should investors play it? Minervini says to buy high RS and high earnings- growth stocks as they move into new high ground from sound price patterns. And don't hold out for the ''favorites'' on your watch list. ''Buy stocks in order of breakout,'' Minervini said. ''Everybody makes a list of stocks, which has a few favorites they've always wanted to own. Then they sit and do nothing while a whole bunch of great stocks take off. That's a mistake. The ones that move first are the leaders. Let the strength of the market tell you where to put your money.'' jans - - ------------------------------ Date: Thu, 25 Jun 1998 11:54:34 EDT From: Subject: [CANSLIM] MSON Tom and others interested. This Macro appears on the move today. Not sure why, any ideas? Not pure CS by any means but has been discussed here previously and is on my watch list. (there's one Jeff). - - ------------------------------ Date: Thu, 25 Jun 1998 12:24:16 -0400 From: Craig Griffin Subject: Re: [CANSLIM] M - And now for something completely different. Frank, Hope your headache is better. Thanks for the flip side view - good thinking and always a possibility. So we will see how today works out. Here's my view --- I have been buying big cap stocks that I perceive to be leaders as they break out: LU MSFT DELL (not a b/o yet) YHOO AOL Not coincidentally (?!) - all technology. It simply appeared to me that MSFT, DELL, and AOL have been the leaders for years. And here they go again (although there still might be some question on DELL). YHOO is of course a young pup without CS numbers - but this group (Internet) is so strong, that like biotech in days of yore, it seems one must overlook the numbers a bit and look for those that are truely building franchises. I still remember, as we have discussed, when CSCO was "overvalued" for year after year, but never became "reasonably valued". It has always been expensive merchandise. YHOO looks like it is priced for all its growth over the next 5 years, but I will let the price/volume action tell me when it is done rather than trying to "value" it. This is the other end of CS from the microcaps where Tom is so fond of playing - both are not the "real stuff" so to speak. I will be looking at the middle tier stocks, where the best opportunities generally lie (IMO) as time goes on with this new market buy signal. But the big caps are easy to move into and out of quickly (in most market scenarios). So it was a good place to pounce as things took off. I still like the KTIE's and EAII's of the world, and others, but jumped ship to ride the market surge in the bigger names as they left their bases. (And I love those tiny spreads as a percent of share price in the higher priced issues). Sorta sorry I missed AMZN ;^) (to put it mildly). Instead of all that talk about shorting on valuation - we should have been looking at the nice base (about 25% and drooping down nicely as it should) and then reacted to the News (however silly it sounded to us) and the breakout. Back to that Zen thing of believing what you SEE, not what you THINK. Of course it is important to be able to SEE clearly and avoid jumping on lower quality merchandise (like KTEL for example) - just because it is getting hyped. Of course buying within 5% of the pivot (or at worst 10%) helps to keep one out of that kind of trouble. Well this is running too long... Best Regards, Craig PS. There may very well be a pullback / shakeout as you envisioned, but the move looks real based on leadership and volume (at this point in time). As always, one day at the time for reading the market. Just the facts, please. - - ------------------------------ End of canslim-digest V2 #301 ***************************** 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.