Re: [CANSLIM] Whither EPIQ?

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Whither EPIQ?
Date: Mon, 10 Dec 2001 12:59:17 -0600
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I have one more theory I might throw out here and, once again, EPIQ is an
example. In general, I think of this as the "too many eyes on a few stocks
theory." But I have actually named it the "123 Effect."

The general set up is this: The market has been in a very long Bear. During
that time, there have been many bear market rallies in which you were able
to make money on the long side, but your finger had to be fast on the sell
trigger when the stock's run was over. This creates a bit of "fast
fingeritis" for each subsequent rally. At some point, the market started
finding its bottom. Stocks like EPIQ happened to have been setting up for
breakout during this timeframe. The problem is, relative to the universe of
stocks, the number of CANSLIM setups have been somewhat paltry. This has
changed in the last couple of weeks, but compare the number of typical
setups to what we normally expect in a bull market. Under those conditions,
on any given day, you might have 10 or 20 stocks setting up and breaking
out. That's quite a few more than 10 or 20 in 1 or 2 months! So, many, many
eyes on very few stocks mean lots of retail activity around predefined buy
points.

Now add to that a new stock service that many of you may have seen in the
IBD called "123Breakouts." Imagine that you have a bunch of new CANSLIMers
reading the IBD over the last year. Add to that the busy or lazy CANSLIMers
and all of a sudden, you have a bunch of eyes on a few stock picks from 123.
Sorry, but EPIQ was one of the picks. The failure around the breakout point
and the high level of retail activity around that breakout point lead me to
believe that there was a definable "123 Effect." A friend happened to be
taking this service and forwarded a copy at the beginning of November. I
asked that he discontinue sending it, as it is my rule to make my own list
of candidates. But later, I wondered if there might be some correlation. I
then asked him to send me the picks from the last couple of months. I took a
sample, not scientific by any means, mainly just selected some stocks such
as EPIQ and DYII that had lots of play time on the CANSLIM list. Sure
enough, the time and sales analysis of the trades around the B/O price
showed a high level of retail activity. Again, for those who would argue
against the theory because my sample was not random or that the study was
not comprehensive, I'd agree that you can probably blow holes in my
conclusions.

The main thing that I took from that, however, is that when there are
services such as 123Breakouts combined with an iffy market, these effects
can be substantial. If you are trying to position into a good stock and it
also coincides with one of their picks, I think the volatility around the
B/O is going to pick up. Once the market gets legs, I think the "123 Effect"
will diminish in importance.

Katherine


- ----- Original Message -----
From: "Kent Norman" <kent_norman@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Monday, December 10, 2001 12:35 PM
Subject: Re: [CANSLIM] Whither EPIQ?


> I think it is and has been done. I feel this is why so
> many of our picks fail and it is related to the IBD
> curse. I think some big dogs watch IBD and this group
> to go counter to our trend.
>
> Kent Norman
>
> --- Warren Keuffel <wkeuffel@xmission.com> wrote:
> > Thanks, Katherine.  Fleecing the sheep, eh?  Makes
> > sense.
> >
> > Another scenario that I have constructed -- a
> > general scenario, not an
> > EPIQ-specific one -- suggests that there is money to
> > be made investing
> > in an anti-CANSLIM mode.  i.e., follow CANSLIM to
> > figure out what all
> > the IBD subscribers are doing and then go long or
> > short in the exact
> > opposite direction.  What do you (and all) think?
> >
> > Warren
> <snip>
>
> =====
> Opportunities always look bigger going than coming.
>
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