From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #317 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 Monday, July 6 1998 Volume 02 : Number 317 In this issue: Re: [CANSLIM] BKS Re: [CANSLIM] Johan's Portfolio and a Canslim Puzzle [CANSLIM] ANF + more Re: [CANSLIM] ANF + more Re: [CANSLIM] Your Weekend Review Re: [CANSLIM] Leaders leaving the station before the 06/23 follow-through day [CANSLIM] Triple Screen Demo using BKS Re: [CANSLIM] Triple Screen Demo using BKS Re: [CANSLIM] Triple Screen Demo using BKS Re: [CANSLIM] Triple Screen Demo using BKS Re: [CANSLIM] Triple Screen Demo using BKS - MACD and Stochastic [CANSLIM] NON CANSLIM - US/Global Economy ---------------------------------------------------------------------- Date: Mon, 06 Jul 98 11:45:59 PDT From: "Walter Stock" Subject: Re: [CANSLIM] BKS Hi Surindra, In terms of Canslim, BKS earnings over the last five quarters are a litt= le ugly. They only made positive earnings over the Christmas quarter. Still, this may not be that unusual for the business they are in, i.e. retailing. = I think the real issue here is whether you believe that a traditional ret= ailer can be successful selling books through the internet. And if they are succes= sful online, will they take customers away from AMZN or from their own retail = operation ? I really don't know, one way or the other. On a more positive note, my non-Canslim Triple Screen (Elder) gave a very= strong buy signal on June 16th, and again on June 26th. It is still giving a weak = buy, but is approaching over-bought territory. Happy trading, Walter Stock (yes, that really is my last name) Oakville, ONT - Canada e-mail: wstock@globalserve.net - ---------- > Barnes & Noble (BKS), may be a competetor to amzon.com seems to be brea= king > out. If AMZN can shoot up from about $8 to $125 in one year, BKS may = become as > famous as AMZN and shoot up. Looks much better comapred to AMZN and is = in a > similar bussiness. > > BKS: 68m shares outstanding, 48m float. > > RS: 92 > EPS rank: 77 (could be better) > Institutions: 30% > Management:30% > > Surindra > > - > > - - ------------------------------ Date: Mon, 06 Jul 98 12:13:54 PDT From: "Walter Stock" Subject: Re: [CANSLIM] Johan's Portfolio and a Canslim Puzzle Db, I haven't been able to justify buying Daily Graphs up to now because of the cost, so I have been relying on IBD for my Canslim numbers= . Sifting through this newspaper for data by hand seems inefficient and ant= iquated, when I have been using computers since the days of card readers. That is why the "Your Weekend Review" section seemed (at first glance) to be a nice short cut. To alleviate the frustration, I may have to spend= some money on DGO, or a surrogate system. Walter - ---------- > It's common for people who approach IBD after having read HTMMIS to do > so under the impression that O'N put IBD together for the use of CSers > alone, but this is nowhere near the case. In fact, I suspect that > many people who use IBD have never even heard of CS, which is probably > why O'N is beginning a series of editorials on the subject next week. > > As I've said before, not every stock that goes up is going to be a CS > stock and not every CS stock is going to go up. The stocks which are > highlighted in IBD fit the criteria that IBD says they do, but those > criteria are only some of what's necessary to define a CS stock. > Therefore, some of them are going to be CS stocks and some aren't. To > determine which are which, you have to go further than the sketchy > details provided by the Weekend Review (or whatever). > > --Db - - ------------------------------ Date: Mon, 6 Jul 1998 13:42:08 -0400 From: olafur.josefsson@analog.com (Oli Josefsson) Subject: [CANSLIM] ANF + more Greetings. One of the companies on my watchlist is ANF - it is one of the retail = stocks. I do not have the canslim stats handy at my current location (work) but = they=20 should be good - otherwise the stock would not have been on my = watchlist. The stock appears to be breaking out of a base that is started in = march-april, however the volume is lacking - at least compared to the average volume as published by yahoo. The volume picked up quite abrubtly in mid may but the stock has been on a downward trend since then until the last few = days. Any thoughts on this pattern ? It certainly does not seem to fit the ideal pattern of volume drying up in the low part of the base.... I am hesitating to enter because of the lack of increased volume = accompanying the price increase. From a sector standpoint, the dury may still be = out on whether the sector has topped, but look at PSUN for example, it seems = to be going very strong... too bad I missed that one. Thanks, Oli. P.S. I agree with suggestions that people take their sniping and "mine is bigger than yours=A8 discussions off line. =20 We can, however, be a little more forceful than just hope that the = culprits=20 step back in line. If each of us (supposedly 800 or so) were to send the offending party (or parties, note NOT the LIST) a=20 one liner with something like "please take your personal zyx discussion off line ..." when they engage in the kind of personal attacks or commentary that 99% of us just simply have no interest in reading, I = bet they would quickly put a stop to that.... The risk of having your = email box fill up with hundreds of messages would, I am sure, make people think = twice about sending out the kind trash we have been subjected to recently. It goes without saying that people that want to engage in these kinds of discussions are free to do so, but should not copy the rest of us on those discussions. If you want to get personal, simply send your = mail directly to the person you want to attack, not the list ... - - ------------------------------ Date: Mon, 6 Jul 1998 11:24:23 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] ANF + more <> If you'll go back to the middle of March, you'll see that the stock began trading in a range from 47.5 to 39.5, though the pattern wasn't as dependable from a trading standpoint as many are. That is, it sometimes failed to rally all the way to the top or fail all the way to the bottom. Earlier in June, for example, it's attempt to reach the top was aborted at 45. However, it did not breach the 39.5 level on the way down, so the range held. This level was tested a few days later and held yet again, and we are now trying to get back up to that goal of 47.5. This is not a base in the strict sense of the term because it is just too wide. In fact, you can't even be sure that the stock has altered its direction until it breaks through 47.5 (if it doesn't, it could base there in preparation for another attempt or fall all the way back to 39.5 again). Even if it does break through 47.5, it wouldn't be a surprise to see it retest that point from the upside as support. This is a good example of where drawing horizontal lines of support and resistance can come in very handy. The stock does look as though it had been descending, but 39.5 held, so it in fact had just been moving sideways, as it has been since the middle of March. It is good news, by the way, that it got past the immediately preceding high of 45. If it had not, it's unlikely that 39.5 would have continued to hold on the downside. If you wanted to take a shorter-term view, you could start looking at descending right triangles yada yada, but that's way beyond the boundaries of CANSLIM. And in any case, that pattern has been broken to the upside. Good for ANF. Incidentally, volume has been anything but quiet the past couple of months. From a CS viewpoint, the best thing that could happen here would be that the stock base somewhere between here and 47.5 with substantially calmer volume. I wouldn't hold my breath, but stranger things have happened. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Mon, 6 Jul 1998 11:51:06 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Your Weekend Review <> Way back when IBD first announced this venture, my friends and I got all excited about it. We thought that it would take full advantage of both computers and online accessibility to provide full scanning and screening capabilities. Can you imagine how much simpler life would be if one could choose one's own criteria for all those columns which IBD provides in its tables during the week and just push a button to find all the stocks which fit those criteria? Instead, all they did was put the printed page (DG, not IBD) on a computer screen, though one can download the DG index (2600 stocks rah) to Excel and sort for RS, EPS, A/D and Timeliness. But there are several places you can get the latter for nothing. I'm still waiting for the IBD tables to go online. Now THAT'S something I'd pay for. And if they really want to beat the pants off the WSJ, I can't imagine a better way of doing it. If nothing else, they'd beat the WSJ into the home by a good twelve hours. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Mon, 6 Jul 1998 13:24:11 -0700 (PDT) From: Tannis Malone Subject: Re: [CANSLIM] Leaders leaving the station before the 06/23 follow-through day About the discussion of S. WON mentioned at the satelite conference that there has been a change in S (larger than ever) that they are finding works. It goes something like this: the funds buying patterns are what actually dive the volume that we look for. The funds of today are much larger than in the past and their buying habits have an influence on stocks with greater capitalization than was thought possible. With more buying power, they can drive biggers S's. Another note: Someone also asked about Yahoo. He said yes, they did buy it, irregardless of the earnings. He said he was writing checks to them for ads and "knew" they had to be taking in alot of $$. - ---"Frank V. Wolynski" wrote: > > At 17:18 7/4/98 +0200, you wrote: > >Does anyone else find it frustrating that a lot of the leaders already left > >the station before the 06/23 follow-through day? (With the benefit of > >hind-sight, the 06/16 NASDAQ reversal day was the start signal for a lot of > >stocks.) > > > >Personally, I'm glad I now have software (QPv2) to scan the entire stock > >market for new highs etc., so that during next correction, I'll be able to > >watch the potential new leaders shaping up. Because that is IMO an > >important part of 'watching for the market turn'. > > > >I'd like to know how other members approach(ed) this challenge. And I'd > >also like to know who owns what they think are currently 'leaders' and > >when/why they bought them. > > > > So I said to > >myself: "Why take the risk at THIS moment in time (the 2 or 3 days after > >the follow-through day)?" > > > >I am however actively looking for CANSLIM-type stocks and will be adding > >them to my portfolio as the opportunities come along. > > > >Johan Van Houtven / CLICK! N.V. > > > > I have found through observation that the "W" is usually formed from the > new leadership breaking out, rebounding or otherwise advancing early. I > have been content to watch them run and turn my attention to what I call > secondaries. These are usually 'lower-cap' issues, but have all or at least > most of the CANSLIM elements in their favor. Sometimes they are not the > secondaries. The secondaries don't budge. Sometimes it's a different group > of stocks completely. > > During the January breakout, many groups/stocks did not move right away. > Commercial-Servs-Staffing didn't break out until mid February. During the > correction we have recently been enjoying, Retail-Apparel/Shoes did not > correct at all, but appear to be topping out only now. (And the Jury is > still out on whether that is actually occurring.) > > With so much coverage and emphasis on "The Dow", The "S&P 500", the "Rut", > it is hard to focus on what is meaningful in determining when to buy. If > the early breakout of the "new leaders" causes the middle part of the "W", > then the right side is either continuation or additional stocks joining the > party. After a day or two, you get the 1% with expanding volume > confirmation. Does the word "confirmation" imply action that has already > taken place being confirmed? > That a bottom has formed and a rally is in place? > > This is an indication that the tide has turned and now money is pouring > into rather than out of the market. Based on the principles, it isn't over! > It has just begun. There will be, more often than not, continuation and > additional stocks that join the party. > > There will also be stocks/groups that have performed admirably during the > correction. During Oct-Jan, if you had waited for the confirmation in > January you would have missed some great opportunities in Banking & > Airlines. Had you sat on the sidelines waiting for the 'confirmation' > signal in June then the April-May runs in Rtl/Apparel/Shoe, Internet, > Comp/Servs would have been missed. > > There are always pockets of performance in the markets. Finding them isn't > easy when distractions and opinions are running in every direction. If it > was, then we would all buy on the only day that was prudent and given 'the > signal' and then we'd all sell on the exact day it was over with! > 'Ronco' could put together a 'Pocket Stock Fisherman' and sell it for > $19.95 in an exclusive 'TV Only' offer. > > The signal isn't followed by all. There are earlier arrivals and late > comers. I'm certain you've pressed a Yellow lighted intersection before! > And you don't blindly go when the light turns green. You look, cast a wary > eye! > > Even though they call it the 'Stock Market', remember it is a Market of > Stocks! > There are groups/sectors in Bear markets right now. There are others in > raging Bull Markets. Even more in between. Always is, always was, always > will be. > > Best Regards and good hunting! > Frank Wolynski > > > - > > _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Mon, 06 Jul 98 14:47:48 PDT From: "Walter Stock" Subject: [CANSLIM] Triple Screen Demo using BKS > < very strong buy signal on June 16th, and again on June 26th. It is sti= ll giving a weak > buy, but is approaching over-bought territory.>> To those who have contacted me privately regarding Triple Screen for BKS, and for anyone else who is interested: ******* Triple Screen One ******* Elder gives you several choices for his first screen: the Directional System (of ADX fame), an EMA system, or his original MACD with HISTOGRAM. I use MACD-HISTOGRAM. Elder's Triple Screen can be used for long-term trading, medium-term position trading (what I attempt to do), or for short-term day-trading. Let's go through a demo for position trading. Bring up BKS on Bigcharts (BC): BC Time setting: 1-year. BC Frequency setting: Weekly. BC Lower Indicator: MACD. Set other indicator fields to "None" for clarity. Now when the display comes up on BC, ignore the colored MACD lines that cross over each other. They are too slow. Instead, focus on the vertical Histogram bars below. When going long you are looking for upward movement in the vertical bars (an uptick). The STRONGER buy signals are upticks that occur BELOW the zero line. The WEAKER buy signals are upticks that occur ABOVE the zero line. Let's check BKS in June for buy signals. Note that we are only dealing with the last five vertical bars. Notice that the bar for the third week of June is shorter than the bar for the second week. Similarly, the bar for the fourth week is shorter than the bar for the third week. These are the upticks we are looking for and so now we have two solid buy signals from Triple Screen number one, the first from June/week-three and the second from June/week-four. But what about that partial last week in June you ask? The histogram continues its upward movement.... Well, yes it does, but the key here is that the bar has now risen ABOVE the zero line, making for a WEAKER buy signal. ******* Triple Screen Two ******* So let's take these buy signals and go to Triple Screen Two: BC Time setting: 5 days. BC Frequency setting: Hourly. BC Lower Indicator: Slow Stochastics. Other indicators to "None" for clarity. What we are looking for here, when going long, is an OVERSOLD (!) indicator to get a good entry point on a purchase of a stock that is moving higher. So we look for days that both the fast %K and slow %D lines went below the 30% area, indicating oversold. Note that on Bigcharts, the line is set at 20% not 30%. For the current five days, the stochastics indicate overbought. This means that you should only continue with screen three if you think that BKS is on a clear breakout from its trading range. Otherwise stand aside. If Bigcharts could give you the " 5-day period/hourly frequency " displays for periods other than the current week, you would still be able to see the third and fourth week of June results, where the two signal lines dip down into oversold territory on June 16th and June 26th. Because I have been tracking AMZN, BKS, and BGP quite closely, I had made a note of these signals, but did NOT buy BKS for the reasons outlined in my post to Surindra. Too bad. *******Screen Three******* This is simply a matter of placing a trailing buy-stop. Find the high of the previous day, and place a buy order one tick above. If the stock rallies, you are stopped in. Otherwise you are intact. *******Final Comment******* I keep only two books on my nightstand : HTTMIS and "Trading For A Living" by Elder. Yes, I need therapy. I try to re-read parts of one or the other every night. Yes, I am not a well man. Still, they have helped me with investment survival more than all the others. In this post I have only scratched the surface of what is in Elder's book (and Study Guide). I hope this helps the group. Walter Stock Oakville, ONT - Canada - - ------------------------------ Date: Mon, 06 Jul 1998 16:23:02 -0600 From: Dan Sutton Subject: Re: [CANSLIM] Triple Screen Demo using BKS Walter: I appreciate your posts, I always gain some insight from them. I have looked at Elder's book several times in the bookstore but as of yet haven't purchased it. I try and buy an investment book at least once a month..mainly just to gain a new perspective and to see if there are any ideas that correlate with what I already believe to be proper investing techniques. Concerning the MACD-Histogram screen. What settings are you using? In TELESCAN , there is a choice of 3 or 4 and although I don't recall exactly I think one of them is something like 4/10/21. Is there a particular MACD you find more useful? Just so I understand, you are looking for the histogram to be below 0 but higher than yesterday (or last week depending on if you are looking at daily or weekly MACD)? Same question on Stochastics, is there a particular setting you find most useful? And again just so I understand, you are looking for both the fast and slow to be below 20? Thanks - - ------------------------------ Date: Mon, 6 Jul 1998 15:40:44 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Triple Screen Demo using BKS Walter, Without quoting your entire post, I'd like to know how you reconcile O'N's preferred chart patterns with Elder's "stronger" and "weaker" buy signals. It seems that the strongest MACD histogram buy signal would be most likely to occur as the stock's arc has just begun to turn positive from negative or flat. O'N, on the other hand, would have us wait for one thing or another. I realize that Elder is a trader and CS is not a trading approach, but since you use the two (I presume together), am curious as to how you, as I said, reconcile them. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Mon, 6 Jul 1998 15:57:33 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Triple Screen Demo using BKS <> Looks like you struck a chord, Walter. Center stage, please :) I asked Walter pretty much these same questions in a private e-mail. There are a variety of settings one can use for both MACD and stochastics. According to what I've read, commodities traders use certain sets, equity traders use others, and intermediate to longer-term investors use still others. Some people use one set of numbers for the buy side and another for the sell side. Ditto with the stochastic. It commonly uses 20, whereas RSI uses 30, but theoretically one could use whatever he likes, just as he can run the stochastics many different ways to be as fast or slow as he likes. I have no idea what BC is using for its settings but can probably figure it out. In the meantime, it would be helpful to know if there are any settings that Elder prefers. The obvious response here, of course, is go out and buy the book. But monsoon season arrived with a thud yesterday and I don't feel like going outside until September. So I'm going to take advantage of Walter's good nature (and I hope he won't be sorry he ever brought it up). - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Mon, 6 Jul 1998 16:17:13 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Triple Screen Demo using BKS - MACD and Stochastic FWIW, I fiddled with BC during my download and learned that they use 9/12/26 for the MACD. This is what they say they use on the chart. The slow stochastic uses the "simple" formula with a %K of 5 and a %D of 3. This is NOT what they say they use on the chart. They say they use 5 for both. But my program matches their plot only when using 5 and 3. If anybody else wants to mess with this, let me know what you discover. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: 7 Jul 98 11:26:47 From: Dean Edwards Subject: [CANSLIM] NON CANSLIM - US/Global Economy I believe the US economy will continue to prosper - based on the US dolla= r=20 progressively getting stronger. My impression was that the US economy was= like=20 a car driving on fumes. But after Tom's insightful analysis, I believe it= still=20 has plenty of gas in the tank and the US bull market will continue ever=20 upwards. In an expansionary phase, recessions are induced by the monetary= =20 authorities in their attempt to cool off an overheated economy. This hasn= 't=20 occurred yet. The renown global trader George Soros, has made some remark= able=20 predictions: That there would be global deflation. If you look at two=20 commodities in particular gold and oil, it is unprecedented that you coul= d have=20 two commodities at historical lows. Combining interest rates, currencies,= and=20 the market direction, you want long rates to be going down, not up. Decli= ning=20 long rates are positive for stocks and the reverse is true. Therefore if = the US=20 dollar is progressively getting stronger against the worlds=01, major cur= rencies,=20 US interest rates should remain at low levels. Inflation has been curbed = in the=20 bud. A weak US dollar is bad for Europe. What occurred in the early 1980=01= ,s was=20 a great US dollar currency bull market combined with a US stock market bo= om=20 from 1982-1987. There is a tendency for currencies to move over cycles fr= om=20 being overvalued to being undervalued (and vice versa) against their benc= hmarks. If you study the series of articles below you can determine that Britain = has a=20 major problem. The British currency is overvalued. Britain requires a low= er=20 currency for its exports. Most of the global currencies Japan, Oceania, A= sia=20 and China have been forced to surrender. Britain is another major economy= on=20 the brink of recession along with Japan and the presumed slow down in Asi= a.=20 There has already been global devaluation of currencies. People are still= =20 concerned that China will devalue again, setting off another global chain= =20 reaction. They have hinted that if the Japanese yen drops too low, they = will=20 carry out their threat to devalue again. The reason why the US is trying = to=20 prop up the Japanese Yen in my opinion. Japan has an estimated US $700 bi= llion=20 of liabilities of bad bank loans that may have to be written off. Japan= =20 doesn't want to spark a melt down in their economy. They want a gradual=20 recession. The estimated time frame is 3-5 years for them to carry out th= eir=20 reforms. It will interesting to watch how Britain will cope.=20 Monday 6 Jul 1998 23:38 AEST =20 Soros says Asian crisis far from over =20 =20 Fund manager George Soros says the Asian financial = crisis=20 is far from over and that the regions economies will experience 18 months= =20 minimum of recession or depression. However, he told a news conference at the World Econo= mic=20 Forum in Davos, Switzerland, that further after-shocks from the turmoil w= ill be=20 limited if the Hong Kong dollar keeps its peg to the US dollar and the Ja= panese=20 government implements measures to stimulate domestic demand. Soros said that although the IMF-led Asian austerity=20 packages were the only possible response during the crisis, in retrospect= it is=20 clear that the problem was more complex than international authorities=20 previously thought. Rescue measures should have addressed the structural=20 problem of overly leveraged private conglomerates, rather than just tryin= g to=20 stem capital outflows by large interest rate hikes. You can=01,t really stabilise the exchange rate until= you=20 have relieved this pressure on the private sector of the economy, Soros s= aid. On Russia, Soros said the country is in a very precar= ious=20 position because the international financial conditions have changed and = there=20 has been a political change in the wrong direction. He said certain industrial conglomerates have gained = a=20 =93dominant position within the Russian cabinet, in an apparent reference= to the=20 strengthening of Prime Minister Viktor Chernomyrdin=01,s allies at the ex= pense of=20 Deputy Prime Ministers Anatoly Chubais and Boris Nemtsov. Soros said this development negatively impacted the=20 stability of the rouble, and of the bond and stock markets. He said: The only hope for Russia is to create condit= ions=20 which are favourable to investment: you can=01,t always live on borrowed = money. International organisations need to supervise off-bal= ance=20 sheet positions because of the increased use of derivatives in internatio= nal=20 financial markets. If off-balance sheet liabilities become too lopsided t= hey=20 could pose a serious threat to the stability of global financial institut= ions,=20 Soros said.=20 George Soros was born in Hungary, emigrated to England in 1947 and gradua= ted=20 from the London School of Economics in 1952. In 1956, he moved to the Uni= ted=20 States and began his career as a fund manager and currency investor. He i= s now=20 president of Soros Fund Management and Chief Investment Advisor to the Qu= antum=20 Fund NV -- a $12bn international investment fund which is generally recog= nised=20 as having had the best performance record in the world during its 28-year= =20 history.=20 Investors who put $1,000 into the fund at its launch in 1969 had $1.3m by= =20 spring 1994. Governments have fared less well. Soros' currency speculatio= n=20 contributed to sterling's devaluation and exit from the Exchange Rate Mec= hanism=20 (ERM) in 1992 and Malaysia's recent economic crises.=20 Soros claims his investment strategy is related to his philosophical beli= efs.=20 He says he believes in 'imperfect understanding' and 'reflexivity'. As an= =20 example of reflexivity, and the investment opportunity it can present, he= cites=20 the example of the ERM and how it was thrown into dynamic disequilibrium = when=20 the Bundesbank raised interest rates in 1992. With the UK still in recess= ion,=20 sterling came under pressure. Most institutional investors expected sterl= ing to=20 be defended and kept within the ERM. But Soros saw a major undercurrent o= f=20 change and leveraged himself to the brink to sell sterling. And he made=20 millions.=20 The Guardian Newspaper Wednesday May 13, 1998 Soros bets $8bn on fall of pound=20 Financier launches new attack on sterling=20 By Alex Brummer and Jill Treanor=20 George Soros, the international financier dubbed "the man who broke the B= ank of=20 England", could make an estimated $2 billion ($1.25 billion) from a new b= et=20 against the pound, according to sources in the City.=20 Mr Soros, whose Soros Fund Management firm is based in New York, is thoug= ht to=20 be betting on sterling re-joining the exchange rate mechanism, as a prelu= de to=20 joining the 11 countries which have adopted the euro. The trader and fund manager is understood to have taken his sterling posi= tion=20 on March 31, the day the pound reached its peak against the German mark,=20 hitting 3.1090 - the highest level in 8 1/2 years. Since Mr Soros placed his $6-$8 billion bet against sterling rising any f= urther=20 it has tumbled 7 per cent on the foreign exchanges, with much of the fall= =20 coming after the May Day weekend when the decision on the euro was taken = by the=20 European Union countries. The pound's sharp and disorderly fall, somewhat too rapid for the comfort= of=20 the authorities, comes none to soon for the Chancellor Gordon Brown who h= as=20 been besieged since his March budget with complaints that his economic po= licies=20 of high interest rates and a tight fiscal stance have contributed to ster= ling's=20 surge since Labour took office. Derivatives brokers estimated last night that Mr Soros's funds may make a= s much=20 as $2 billion as a result of a recent strategy which involved buying the = pound=20 close to its recent highs against the German mark and then instigating a = series=20 of trades using options. These complex financial instruments - widely used by sophisticated invest= ors -=20 allow him to sell at a lower level in three and six months time. According to the Wall Street Journal Europe, Soros Fund Management recent= ly=20 bought put options which give the right but not the obligation to sell st= erling=20 and buy German marks at DM2.65 and DM2.70. Derivatives brokers say these options trades make money as sterling falls. This is particularly the case if reports are confirmed that Soros was the= =20 unidentified US investment institution which was active in the foreign ex= change=20 markets when sterling hit its peak at the end of March. Since then, sterling has fallen to last night's level of DM2.89. "You'd be buying puts if you'd bought sterling at a higher level," one Ci= ty=20 analyst said yesterday "You could then sell it a cheaper level, making a profit." A derivatives broker said that if Mr Soros is punting on sterling trading= at=20 DM2.65-DM2.70 marks in coming months, he may be part of the school of tho= ught -=20 shared by many in the City - that sterling will rejoin the exchange rate=20 mechanism at DM2.70 ahead of participating in the single European currenc= y in=20 2002. In the forward sterling market, sterling five years ahead is already sell= ing at=20 DM2.70, the rate which many City experts believe might be the correct one= for=20 the UK to join the single currency. However, the presence of Mr Soros in the market may, ironically, mean tha= t=20 sterling could reach this level much more quickly, putting pressure on th= e=20 Government to consider an earlier entry to the European single currency. The fall in the pound since the start of May reflects the market's belief= that=20 interest rates in Britain have peaked at 7.25 per cent and could soon be = on=20 their way down. Further evidence on the trend in interest rates will be disclosed later t= oday=20 when the Bank of England releases its latest Inflation Report - which wil= l give=20 the bank's judgment on future interest rates. The fall in UK rates comes as there is a growing expectation that the=20 Bundesbank in Germany may start to gradually tighten German rates, as par= t of=20 the effort to bolster the reputation of the euro following the debacle ov= er the=20 selection of the European central bank chief. George Soros came to prominence as an extraordinarily skilful currency op= erator=20 in September 1992 when he successfully anticipated the large-scale devalu= ation=20 of the pound which bounced it out of the exchange rate mechanism along wi= th the=20 Italian lira and the Spanish peseta. The Hungarian-born Mr Soros, who is a generous philanthropist in Eastern=20 Europe, is known to have made at least $1 billion on his 1992 bears sales= of=20 sterling. His actions contributed to the break-up of the exchange rate mechanism an= d=20 destroyed the Conservatives' reputation for sound economic management. Manufacturing slumps hints at U.K. recession=20 Copyright 1998 Reuters News Service=20 LONDON (July 6, 1998 07:33 a.m. EDT http://www.nandotimes.com) - British=20 manufacturing output fell a much steeper-than-expected 0.4 percent in May= ,=20 pointing to a third consecutive quarter of industrial recession, official= data=20 showed on Monday.=20 As the opposition Conservatives criticized the governments handling of th= e=20 economy, the pound tumbled to 2.968 marks -- more than three pfennigs dow= n=20 against the German currency from Friday's close.=20 Gilts and interest rate futures rose on the perception that the Bank of E= ngland=20 would leave interest rates steady when it meets this week.=20 The latest data from the Office for National Statistics comes on top of a= rush=20 of survey evidence that manufacturing output is slumping.=20 Employers' group the Institute of Directors said in its quarterly busines= s=20 survey that confidence had suffered a "dramatic collapse" with orders and= =20 capacity utilization tumbling and output growth slumping.=20 And the Center of Economics and Business Research warned of a return of t= he=20 ugly 1970s phenomenon of "stagflation" -- stagnating output with rising=20 inflation.=20 John Redwood, Conservative shadow Trade and Industry Secretary said growt= h was=20 stagnant, jobs were being lost and manufacturing was in crisis.=20 "Yet the government's economic mismanagement is making things worse. Brit= ain's=20 exporters and manufacturers face a dispiriting and depressing year ahead.= =20 Labour is bad for business," he said.=20 The main culprit for manufacturers' travails is the strength of the pound= over=20 the last two years. It has gained more than a quarter against major Europ= ean=20 currencies, throttling exports and forcing industry into recession.=20 The ONS said manufacturing output in May had not risen at all from its ye= ar-ago=20 level. It also revised down April's 0.1 percent rise to a 0.2 percent fal= l.=20 There would now have to be a fairly dramatic recovery in June to prevent=20 manufacturing output contracting again in the second quarter, as it did i= n the=20 first.=20 The Statistics Office said the underlying growth trend for manufacturing = was=20 negative -- at minus 0.5 percent -- for the first time since 1992.=20 "The manufacturing data were not only disappointing in May but included a= =20 significant downward reduction to the April data," said David Coleman,=20 economist at CIBC Wood Gundy.=20 "This puts the manufacturing sector on course for a third consecutive qua= rter=20 of negative growth," he added.=20 Manufacturing slid into recession with March data showing contraction in = the=20 first quarter followed an output drop in the fourth quarter of 1997, meet= ing=20 the official definition.=20 The ONS said May industrial output, a broader measure that also includes = the=20 energy sector, shrank 1.2 percent from April and was just 0.8 percent hig= her=20 than in May 1997, partly due to milder weather hitting demand for gas and= =20 electricity.=20 Economists said the data provided further evidence that the strength of=20 sterling, high interest rates and weakening demand from Asia were taking = a=20 heavy toll on British manufacturers.=20 "This is even worse than the market was expecting. The manufacturing sect= or=20 really is in deep trouble. Surveys are pointing to even more weakness in = the=20 months to come," James Stewart, an economist with R.J. O'Brien, said.=20 The booming service sector has been keeping the broader economy afloat in= the=20 teeth of manufacturing weakness, but Adrian Schmidt of Chase Investment B= ank=20 said this might not be enough to stave off an outright recession for much= =20 longer.=20 "The industrial production was also weaker and suggests that not only=20 manufacturing might be in recession, we may even see GDP in recession bef= ore=20 too long."=20 The Bank of England, however, is still worried about runaway private sect= or=20 earnings growth and its impact on inflation. It was this which provoked i= ts key=20 repo rate hike last month to 7.50 percent from 7.25 percent. - - ------------------------------ End of canslim-digest V2 #317 ***************************** 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.