Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] low volume breakouts
Date: Mon, 10 Dec 2001 10:25:43 -0600
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David,
>>when bulkowski states that stocks retrace back to the b/o piont 75% of =
the time is he talking about high or low volume breakouts?=20
He doesn't distinguish between high and low volume B/O's when he makes =
this assessment. When I first read this, I was actually quite surprised =
at the frequency with which pullbacks to the pivot occurred. It =
certainly makes the case for waiting if there is any question about =
volume on the initial B/O, doesn't it?
>>and where is the best place to get a copy of his book?=20
At the place of where I practice my vice second only to Starbucks, of =
course!
http://www.amazon.com/exec/obidos/ASIN/0471295256/qid=3D1008001201/sr=3D8=
- -1/ref=3Dsr_8_3_1/104-6796348-6536711
Glad you found the info useful,
Katherine
----- Original Message -----=20
From: camelot.homes@charter.net=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 9:48 AM
Subject: Re: [CANSLIM] low volume breakouts
hi katherine , thank you so much for this very good information! when =
bulkowski states that stocks retrace back to the b/o piont 75% of the =
time is he talking about high or low volume breakouts? and where is the =
best place to get a copy of his book? david
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 5:10 AM
Subject: Re: [CANSLIM] low volume breakouts
Hi David,
The question you ask is a good one. Demanding controlled study proof =
of a guideline like this is important, as it makes an underlying =
assumption about technical patterns which may or may not trigger a buy. =
I pulled out my "Encyclopedia of Chart Patterns" by Thomas Bulkowski to =
answer this question. In this book, the author does statistical studies =
on chart formation and there is an entire chapter devoted to the C&H. =
(pp.135-152).
Before I state the author's conclusions, a general overview of WON's =
theory as to why volume should be high on the breakout. That is, you are =
looking for the point at which demand so outweighs supply that the price =
moves up and onward. In my own personal experience, low volume breakouts =
seem to fall back more often than not. But these are "odds" not =
specifics. SONC is a good example from recent discussions on the list. =
Take a look at the daily chart from 10/3 to now. You can see that SONC =
tried very hard on several days to break out of its consolidation, but =
fell back and eventually gapped down. The low volume B/O's don't always =
mean the stock will fail, just that it's not yet ready to move on. I =
like to have the odds in my favor, so I'm always willing to wait until =
there's proof of the pudding.
Back to Bulkowski. In the C&H formation, the failure rate is 26%. If =
you wait for an upside breakout, the failure rate falls to 10%. Stocks =
retrace back to the B/O point 75% of the time (average time 12 days). =
Waiting for the throwback increases the success rate another 1%. Typical =
B/O volume is 180% above the prior day and stays high for the following =
week. Interestingly, he says removing the high volume B/O criteria does =
hurt performance, but only minimally. This is an excellent chapter on =
C&H and, based on the statistical evidence, the author makes other =
conclusions that lead to particular trading tactics. There are several =
additional criteria that WON would require of a stock forming a C&H and =
then breaking out, such as rising RS, high group RS, underlying =
fundamental characteristics, etc. that are not included in the author's =
study. My own conclusions, anecdotally, are that if these other criteria =
are met AND you get a high volume B/O, the odds are in your favor. (No =
statistical studies to back that up, however!)
Katherine
----- Original Message -----=20
From: camelot.homes@charter.net=20
To: canslim@xmission.com=20
Sent: Sunday, December 09, 2001 5:44 PM
Subject: [CANSLIM] low volume breakouts
how often does a low volume breakout succeed past the pivot point =
versus a high volume breakout past the pivot point? david
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<DIV><FONT face=3DArial size=3D2>David,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>>>when bulkowski states that =
stocks retrace=20
back to the b/o piont 75% of the time is he talking about high or low =
volume=20
breakouts? </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>He doesn't distinguish between high and =
low volume=20
B/O's when he makes this assessment. When I first read this, I was =
actually=20
quite surprised at the frequency with which pullbacks to the pivot =
occurred. It=20
certainly makes the case for waiting if there is any question about =
volume on=20
the initial B/O, doesn't it?</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>>>and where is the best place to =
get a copy=20
of his book? </FONT></DIV>
<DIV><FONT face=3DArial size=3D2>At the place of where I practice my =
vice second=20
only to Starbucks, of course!</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2><A=20
href=3D"http://www.amazon.com/exec/obidos/ASIN/0471295256/qid=3D100800120=
1/sr=3D8-1/ref=3Dsr_8_3_1/104-6796348-6536711">http://www.amazon.com/exec=
/obidos/ASIN/0471295256/qid=3D1008001201/sr=3D8-1/ref=3Dsr_8_3_1/104-6796=
348-6536711</A></FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Glad you found the info =
useful,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Katherine</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dcamelot.homes@charter.net=20
=
href=3D"mailto:camelot.homes@charter.net">camelot.homes@charter.net</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 10, 2001 =
9:48=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] low =
volume=20
breakouts</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>hi katherine , thank you so much for =
this very=20
good information! when bulkowski states that stocks retrace back to =
the b/o=20
piont 75% of the time is he talking about high or low volume =
breakouts? and=20
where is the best place to get a copy of his book? david</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 10, =
2001 5:10=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] low =
volume=20
breakouts</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>Hi David,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>The question you ask is a good one. =
Demanding=20
controlled study proof of a guideline like this is important, as it =
makes an=20
underlying assumption about technical patterns which may or may not =
trigger=20
a buy. I pulled out my "Encyclopedia of Chart Patterns" by Thomas =
Bulkowski=20
to answer this question. In this book, the author does statistical =
studies=20
on chart formation and there is an entire chapter devoted to the =
C&H.=20
(pp.135-152).</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Before I state the author's =
conclusions, a=20
general overview of WON's theory as to why volume should be high on =
the=20
breakout. That is, you are looking for the point at which demand so=20
outweighs supply that the price moves up and onward. In my own =
personal=20
experience, low volume breakouts seem to fall back more often than =
not. But=20
these are "odds" not specifics. SONC is a good example from =
recent=20
discussions on the list. Take a look at the daily chart from 10/3 to =
now.=20
You can see that SONC tried very hard on several days to break out =
of its=20
consolidation, but fell back and eventually gapped down. The low =
volume=20
B/O's don't always mean the stock will fail, just that it's not yet =
ready to=20
move on. I like to have the odds in my favor, so I'm always willing =
to wait=20
until there's proof of the pudding.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Back to Bulkowski. In the C&H =
formation,=20
the failure rate is 26%. If you wait for an upside breakout, the =
failure=20
rate falls to 10%. Stocks retrace back to the B/O point 75% of the =
time=20
(average time 12 days). Waiting for the throwback increases the =
success rate=20
another 1%. Typical B/O volume is 180% above the prior day and stays =
high=20
for the following week. Interestingly, he says removing the high =
volume B/O=20
criteria does hurt performance, but only minimally. This is an =
excellent=20
chapter on C&H and, based on the statistical evidence, the =
author=20
makes other conclusions that lead to particular trading tactics. =
There are=20
several additional criteria that WON would require of a stock =
forming a=20
C&H and then breaking out, such as rising RS, high group RS, =
underlying=20
fundamental characteristics, etc. that are not included in the =
author's=20
study. My own conclusions, anecdotally, are that if these other =
criteria are=20
met AND you get a high volume B/O, the odds are in your favor. (No=20
statistical studies to back that up, however!)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Katherine</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dcamelot.homes@charter.net=20
=
href=3D"mailto:camelot.homes@charter.net">camelot.homes@charter.net</A>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@xmission.com=20
href=3D"mailto:canslim@xmission.com">canslim@xmission.com</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Sunday, December 09, =
2001 5:44=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] low =
volume=20
breakouts</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>how often does a low volume =
breakout=20
succeed past the pivot point versus a high volume =
breakout=20
past the pivot point?=20
david</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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Next Article (by Author): Re: [CANSLIM] low volume breakouts "Katherine Malm"
Previous Article (by Author): Re: [CANSLIM] Thanks for the feedback Jerry Weiss
Top of Thread: Re: [CANSLIM] low volume breakouts Spencer48@aol.com
Next in Thread: Re: [CANSLIM] low volume breakouts "Katherine Malm"
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