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Subject: Re: [CANSLIM] breakouts - return to base
Date: Mon, 10 Dec 2001 20:51:42 -0600
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katherine, my point is, stocks now-with the 123 effect-go through their =
b/o with maybe a 10% increase-then they fall below their pivot point and =
one might take their WON loss of 7-8%. it seems to me its better to take =
that 5-10% profit instead of taking a 8% loss but hoping that maybe 1 =
out of 10 of your stocks might increase 50-300%. david
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 8:06 PM
Subject: Re: [CANSLIM] breakouts - return to base
David,
The number of stocks suggested depends on the amount of money you have =
in your CANSLIM account. I think WON has some guidelines on this, but I =
don't remember them off the top of my head. On the surface, it would =
seem to make sense to concentrate a big portion of the total money in a =
few stocks, each of which might get you 50-200%. But why not just buy =
*one* stock then? The main reason for keeping a certain number of stocks =
is to minimize the risk of loss on any one entry as a percent of your =
total portfolio. Say for example, you have 10 stocks. That means the =
maximum risk to your total portfolio on entry is 10%*(-8%) =3D 0.8%. =
Less than 1% of your total portfolio. Another thing to remember is that =
not every entry is a winning trade. You can stack the odds in your =
favor, but there is still always a risk of loss. In fact, it's common to =
have a series of very small losses, but the big winners over time far =
outweigh them in total profits. Its all about probabilities.
Katherine
----- Original Message -----=20
From: camelot.homes@charter.net=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 8:02 PM
Subject: Re: [CANSLIM] breakouts - return to base
katherine, of course as long as the 123 effect is in place the =
profits will probably be small. also, it seems like if a stock returns =
50-200% it seems like to me one should own 2-5 stocks at anytime instead =
of 6-10 stocks. david
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 7:00 PM
Subject: Re: [CANSLIM] breakouts - return to base
David,
I think it depends on your investment strategy. If you are =
intentionally playing a short term trend, small profits 5-20% might be =
ok. On the other hand, the goal of moving into the intermediate time =
frame is to find the right combination of fundamentals and technicals so =
the ride can be far greater. A good ride in a good market could easily =
get you far more than 5-20%. It's not uncommon to get nice 50-60% =
returns in a few months. That's why you want to really understand =
price/volume action so that you can determine if the stock remains =
healthy in its upward intermediate term advance. Small pullbacks here =
and there mean little over this time frame. It's repeated high volume =
pull backs (distribution) that are problematic. One of the things that =
always stuck with me from Nicholas Darvas' book "How I made $2 million =
in the Stock Market" was the simple phrase "I have no reason to sell a =
stock that's rising." In other words, skipping town too early could very =
well lower your overall investment return.
If your strategy is a swing strategy of 1-10 days or so, a =
consistent 5-10% return on each position would certainly garner a high =
return overall. But the entries are based on pricing patterns and the =
candidates mined from stocks with enough volatility to move swiftly in a =
few days. Very different strategy than CANSLIM.
Katherine
----- Original Message -----=20
From: camelot.homes@charter.net=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 6:24 PM
Subject: Re: [CANSLIM] breakouts - return to base
katherine and chris, sorry i have been away. i always wonder if =
the most likely breakout will rise 5 to 20%-is it better to take those =
small profits on alot of stocks, then wait longer for possible bigger =
profits? david
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 12:40 PM
Subject: Re: [CANSLIM] breakouts - return to base
Chris,
Just a clarification. The 75% return rate is a pullback within =
the first 12 days (this is the average for the study). Bulkowski states =
that none take longer than 30 days. After that, it goes beyond throwback =
and falls into "normal price action" territory.
With regard to the WON 20% rule and profit taking. Bulkowski =
gives some statistics that I think throw some light. He says that 47% of =
stocks reach a high after breakout in less than 3 months. 35% take =
longer than 6 months. Most likely rise? 10-20%. Average rise? 38%. His =
frequency distribution shows that the longer it takes to reach the peak, =
the larger the average gain.
So think about what that means in terms of WON sell =
guidelines.=20
(1) If the stock rises 20% in less than 8 weeks, suggests you =
hold on through the first correction
(2) Once it reaches 25% (and I'm assuming he then means, if it =
takes longer than 8 weeks to do that), THEN suggests taking some =
profits.
But I also look for accumulation/distribution during these =
rises to assess whether the uptrend is persistent enough to carry the =
stock further than the 25%.
In that context, makes a lot more sense!
Katherine
----- Original Message -----=20
From: Chris Dempsey=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 12:22 PM
Subject: RE: [CANSLIM] breakouts - return to base
Katherine, David, and All others interested
I remember reading that WON says 40% of breakouts return to =
the base. I believe it is more than that. I'm not sure that it is 75%, =
but it might be. For that reason WON states in his book you must take =
some profits when they hit 20%. On one of the IBD tapes they state to =
profits in 1/2 of positions reaching 25%. These are because of the high =
rate of pull backs. If you don't do this then you are forced to use the =
rule, don't let a winner turn into a loser.=20
SCUR appears to be an example of a stock returning/nearly =
returning to the base.
-----Original Message-----
From: owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]On Behalf Of =
camelot.homes@charter.net
Sent: Monday, December 10, 2001 9:49 AM
To: canslim@lists.xmission.com
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>katherine, my point is, stocks now-with =
the 123=20
effect-go through their b/o with maybe a 10% increase-then they fall =
below their=20
pivot point and one might take their WON loss of 7-8%. it seems to me =
its better=20
to take that 5-10% profit instead of taking a 8% loss but hoping =
that =20
maybe 1 out of 10 of your stocks might increase 50-300%. =
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>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 10, 2001 =
8:06=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
breakouts - return=20
to base</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>David,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>The number of stocks suggested =
depends on the=20
amount of money you have in your CANSLIM account. I think WON has some =
guidelines on this, but I don't remember them off the top of my head. =
On the=20
surface, it would seem to make sense to concentrate a big portion of =
the total=20
money in a few stocks, each of which might get you 50-200%. But why =
not just=20
buy *one* stock then? The main reason for keeping a certain =
number of=20
stocks is to minimize the risk of loss on any one entry as a percent =
of your=20
total portfolio. Say for example, you have 10 stocks. That means the =
maximum=20
risk to your total portfolio on entry is 10%*(-8%) =3D 0.8%. Less than =
1% of=20
your total portfolio. Another thing to remember is that not every =
entry is a=20
winning trade. You can stack the odds in your favor, but there is =
still always=20
a risk of loss. In fact, it's common to have a series of very small =
losses,=20
but the big winners over time far outweigh them in total profits. Its =
all=20
about probabilities.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></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>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 10, =
2001 8:02=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
breakouts -=20
return to base</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>katherine, of course as long as the =
123 effect=20
is in place the profits will probably be small. also, it seems like =
if a=20
stock returns 50-200% it seems like to me one should own 2-5 stocks =
at=20
anytime instead of 6-10 stocks. 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=20
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 7:00=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
breakouts -=20
return to base</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>David,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I think it depends on your =
investment=20
strategy. If you are intentionally playing a short term trend, =
small=20
profits 5-20% might be ok. On the other hand, the goal of moving =
into the=20
intermediate time frame is to find the right combination of =
fundamentals=20
and technicals so the ride can be far greater. A good ride in a =
good=20
market could easily get you far more than 5-20%. It's not uncommon =
to get=20
nice 50-60% returns in a few months. That's why you want to really =
understand price/volume action so that you can determine if the =
stock=20
remains healthy in its upward intermediate term advance. Small =
pullbacks=20
here and there mean little over this time frame. It's repeated =
high volume=20
pull backs (distribution) that are problematic. One of the things =
that=20
always stuck with me from Nicholas Darvas' book "How I made $2 =
million in=20
the Stock Market" was the simple phrase "I have no reason to sell =
a stock=20
that's rising." In other words, skipping town too early could very =
well=20
lower your overall investment return.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>If your strategy is a swing =
strategy of 1-10=20
days or so, a consistent 5-10% return on each position would =
certainly=20
garner a high return overall. But the entries are based on pricing =
patterns and the candidates mined from stocks with enough =
volatility to=20
move swiftly in a few days. Very different strategy than=20
CANSLIM.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></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>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
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=20
6:24 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
breakouts -=20
return to base</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>katherine and chris, sorry i =
have been=20
away. i always wonder if the most likely breakout will rise 5 to =
20%-is=20
it better to take those small profits on alot of stocks, =
then wait=20
longer for possible bigger profits? 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=20
href=3D"mailto:kmalm@earthlink.net">Katherine Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
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=20
12:40 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
breakouts=20
- return to base</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>Chris,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Just a clarification. The 75% =
return rate=20
is a pullback within the first 12 days (this is the average =
for the=20
study). Bulkowski states that none take longer than 30 =
days.=20
After that, it goes beyond throwback and falls into "normal =
price=20
action" territory.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>With regard to the WON 20% =
rule and=20
profit taking. Bulkowski gives some statistics that I think =
throw some=20
light. He says that 47% of stocks reach a high after breakout =
in less=20
than 3 months. 35% take longer than 6 months. Most likely =
rise?=20
10-20%. Average rise? 38%. His frequency distribution shows =
that the=20
longer it takes to reach the peak, the larger the average=20
gain.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>So think about what that =
means in terms=20
of WON sell guidelines. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>(1) If the stock rises 20% in =
less than 8=20
weeks, suggests you hold on through the first =
correction</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>(2) Once it reaches 25% (and =
I'm assuming=20
he then means, if it takes longer than 8 weeks to do that), =
THEN=20
suggests taking some profits.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>But I also look for=20
accumulation/distribution during these rises to assess whether =
the=20
uptrend is persistent enough to carry the stock further than =
the=20
25%.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>In that context, makes a lot =
more=20
sense!</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Katherine</FONT></DIV>
<DIV> </DIV>
<DIV> </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=3Dcdempsey@houston.oilfield.slb.com=20
href=3D"mailto:cdempsey@houston.oilfield.slb.com">Chris =
Dempsey</A>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
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=20
12:22 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> RE: =
[CANSLIM]=20
breakouts - return to base</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D619121018-10122001>Katherine, David, and All others=20
interested</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D619121018-10122001></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D619121018-10122001>I remember reading that WON says =
40% of=20
breakouts return to the base. I believe it is more than =
that. I'm=20
not sure that it is 75%, but it might be. For that reason =
WON states=20
in his book you must take some profits when they hit 20%. On =
one of=20
the IBD tapes they state to profits in 1/2 of positions =
reaching=20
25%. These are because of the high rate of pull backs. If =
you don't=20
do this then you are forced to use the rule, don't let a =
winner turn=20
into a loser. </SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D619121018-10122001></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN=20
class=3D619121018-10122001>SCUR appears to be an example of =
a stock=20
returning/nearly returning to the =
base.</SPAN></FONT></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr =
align=3Dleft><FONT=20
face=3DTahoma size=3D2>-----Original =
Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of=20
</B>camelot.homes@charter.net<BR><B>Sent:</B> Monday, =
December 10,=20
2001 9:49 AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> Re: =
[CANSLIM] low=20
volume breakouts<BR><BR></FONT></DIV>
<DIV><FONT face=3DArial size=3D2>hi katherine , thank you =
so much for=20
this very good information! when bulkowski states that =
stocks=20
retrace back to the b/o piont 75% of the time is he =
talking about=20
high or low volume breakouts? and where is the best place =
to get a=20
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 =
- -----=20
</DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; =
font-color: black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net=20
href=3D"mailto:kmalm@earthlink.net">Katherine Malm</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
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,=20
2001 5:10 AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: =
[CANSLIM] low=20
volume 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.=20
Demanding controlled study proof of a guideline like =
this is=20
important, as it makes an underlying assumption about =
technical=20
patterns which may or may not trigger a buy. I pulled =
out my=20
"Encyclopedia of Chart Patterns" by Thomas Bulkowski to =
answer=20
this question. In this book, the author does statistical =
studies=20
on chart formation and there is an entire chapter =
devoted to the=20
C&H. (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=20
conclusions, a general overview of WON's theory as to =
why volume=20
should be high on the breakout. That is, you are looking =
for the=20
point at which demand so outweighs supply that the price =
moves=20
up and onward. In my own personal experience, low volume =
breakouts seem to fall back more often than not. But =
these are=20
"odds" not specifics. SONC is a good example from =
recent=20
discussions on the list. Take a look at the daily chart =
from=20
10/3 to now. You can see that SONC tried very hard on =
several=20
days to break out of its consolidation, but fell back =
and=20
eventually gapped down. The low volume B/O's don't =
always mean=20
the stock will fail, just that it's not yet ready to =
move on. I=20
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=20
formation, the failure rate is 26%. If you wait for an =
upside=20
breakout, the failure rate falls to 10%. Stocks retrace =
back to=20
the B/O point 75% of the time (average time 12 days). =
Waiting=20
for the throwback increases the success rate another 1%. =
Typical=20
B/O volume is 180% above the prior day and stays high =
for the=20
following week. Interestingly, he says removing the high =
volume=20
B/O criteria does hurt performance, but only minimally. =
This is=20
an excellent chapter on C&H and, based on the =
statistical=20
evidence, the author makes other conclusions that =
lead to=20
particular trading tactics. There are several additional =
criteria that WON would require of a stock forming a =
C&H and=20
then breaking out, such as rising RS, high group RS, =
underlying=20
fundamental characteristics, etc. that are not included =
in the=20
author's study. My own conclusions, anecdotally, are =
that if=20
these other criteria are met AND you get a high volume =
B/O, the=20
odds are in your favor. (No statistical studies to back =
that up,=20
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=20
title=3Dcanslim@xmission.com=20
=
href=3D"mailto:canslim@xmission.com">canslim@xmission.com</A>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Sunday, =
December=20
09, 2001 5:44 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> =
[CANSLIM] low=20
volume breakouts</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>how often does a low =
volume=20
breakout succeed past the pivot point =
versus a=20
high volume breakout past the pivot point?=20
=
david</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></B=
LOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HT=
ML>
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