Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] breakouts - return to base
Date: Mon, 10 Dec 2001 21:23:46 -0600
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Yes, Norm. It's my unfortunate vernacular, but it's a reversal day. I =
especially hate it near the highs, or soon after a B/O. One tail when =
the day's range isn't very large doesn't bother me, but a wide range day =
with a tail, or 2 - 3 one after the other has me running for the exits.
Katherine
----- Original Message -----=20
From: Norman=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 9:24 PM
Subject: Re: [CANSLIM] breakouts - return to base
Katherine,
I have seen you mention "tails" a few times now and want to be sure I =
understand you. Are these the daily charts where a stock closes in the =
bottom half of the days range but not at the very bottom?
Norm
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 9:07 PM
Subject: Re: [CANSLIM] breakouts - return to base
David,
I see what you're getting at. A stock like EPIQ really had other =
things going on that created failure. It wasn't the 123 effect in and of =
itself. On a pure technical basis, EPIQ flagged a sell before it would =
have ever reached a 7% loss. I saw 4 tails in short order after the B/O. =
Very bad pattern and reason enough to sell. Even if you waited until the =
huge drop on the 21st, the 2 low volume bounce days after that spelled =
"S-E-L-L."
I'd agree with you that there is seemingly a higher risk of B/O =
failures right now. But in truth, when there's a good strong uptrend, =
these things sort themselves out. I agree with statements made by WON =
and the IBD lately that in people's haste to "get in" they are often not =
doing their fundamental homework, buying into faulty (riskier) technical =
patterns, buying extended stocks, or failing to account for group =
action. Given that "M" is so unclear right now, I can understand why =
you'd want to take a few percentage points and run for cover. Over the =
long run, however, I'd argue that it's not the most profitable =
intermediate term/CANSLIM strategy.
Katherine
----- Original Message -----=20
From: camelot.homes@charter.net=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 8:51 PM
Subject: Re: [CANSLIM] breakouts - return to base
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>Yes, Norm. It's my unfortunate =
vernacular, but it's=20
a reversal day. I especially hate it near the highs, or soon after a =
B/O. One=20
tail when the day's range isn't very large doesn't bother me, but a wide =
range=20
day with a tail, or 2 - 3 one after the other has me =
running for=20
the exits.</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=3Dtheboyd@tisd.net =
href=3D"mailto:theboyd@tisd.net">Norman</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 =
9:24=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
breakouts - return=20
to base</DIV>
<DIV><BR></DIV>
<DIV>Katherine,</DIV>
<DIV> </DIV>
<DIV>I have seen you mention "tails" a few times now and want to be =
sure I=20
understand you. Are these the daily charts where a stock closes =
in the=20
bottom half of the days range but not at the very bottom?</DIV>
<DIV> </DIV>
<DIV>Norm</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 9:07=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 see what you're getting at. A =
stock like EPIQ=20
really had other things going on that created failure. It wasn't the =
123=20
effect in and of itself. On a pure technical basis, EPIQ flagged a =
sell=20
before it would have ever reached a 7% loss. I saw 4 tails in short =
order=20
after the B/O. Very bad pattern and reason enough to sell. Even if =
you=20
waited until the huge drop on the 21st, the 2 low volume bounce days =
after=20
that spelled "S-E-L-L."</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I'd agree with you that there is =
seemingly a=20
higher risk of B/O failures right now. But in truth, when there's a =
good=20
strong uptrend, these things sort themselves out. I agree with =
statements=20
made by WON and the IBD lately that in people's haste to "get in" =
they are=20
often not doing their fundamental homework, buying into faulty =
(riskier)=20
technical patterns, buying extended stocks, or failing to account =
for group=20
action. Given that "M" is so unclear right now, I can understand why =
you'd=20
want to take a few percentage points and run for cover. Over the =
long run,=20
however, I'd argue that it's not the most profitable intermediate=20
term/CANSLIM strategy.</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 8:51=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, my point is, stocks =
now-with the=20
123 effect-go through their b/o with maybe a 10% increase-then =
they fall=20
below their pivot point and one might take their WON loss of 7-8%. =
it=20
seems to me its better to take that 5-10% profit instead of taking =
a 8%=20
loss but hoping that maybe 1 out of 10 of your stocks might =
increase=20
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=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
8:06 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>The number of stocks suggested =
depends on=20
the amount of money you have in your CANSLIM account. I think =
WON has=20
some guidelines on this, but I don't remember them off the top =
of my=20
head. On the surface, it would seem to make sense to concentrate =
a big=20
portion of the total money in a few stocks, each of which might =
get you=20
50-200%. But why not just buy *one* stock then? The main =
reason for=20
keeping a certain number of stocks is to minimize the risk of =
loss on=20
any one entry as a percent of your total portfolio. Say for =
example, you=20
have 10 stocks. That means the maximum risk to your total =
portfolio on=20
entry is 10%*(-8%) =3D 0.8%. Less than 1% of your total =
portfolio. Another=20
thing to remember is that not every entry is a winning trade. =
You can=20
stack the odds in your favor, but there is still always a risk =
of loss.=20
In fact, it's common to have a series of very small losses, but =
the big=20
winners over time far outweigh them in total profits. Its all =
about=20
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>=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
8:02 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=20
effect is in place the profits will probably be small. also, =
it seems=20
like if a stock returns 50-200% it seems like to me one should =
own 2-5=20
stocks at 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=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
7:00 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 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=20
into the intermediate time frame is to find the right =
combination of=20
fundamentals and technicals so the ride can be far greater. =
A good=20
ride in a good market could easily get you far more than =
5-20%. It's=20
not uncommon to get nice 50-60% returns in a few months. =
That's why=20
you want to really understand price/volume action so that =
you can=20
determine if the stock remains healthy in its upward =
intermediate=20
term advance. Small pullbacks here and there mean little =
over this=20
time frame. It's repeated high volume pull backs =
(distribution) that=20
are problematic. One of the things that always stuck with me =
from=20
Nicholas Darvas' book "How I made $2 million in the Stock =
Market"=20
was the simple phrase "I have no reason to sell a stock =
that's=20
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=20
1-10 days or so, a consistent 5-10% return on each position =
would=20
certainly garner a high return overall. But the entries are =
based on=20
pricing patterns and the candidates mined from stocks with =
enough=20
volatility to move swiftly in a few days. Very different =
strategy=20
than 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,=20
2001 6:24 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 size=3D2>katherine and chris, =
sorry i have=20
been away. i always wonder if the most likely breakout =
will rise 5=20
to 20%-is it better to take those small profits on =
alot of=20
stocks, then wait longer for possible bigger profits?=20
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 12:40 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 size=3D2>Chris,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Just a clarification. =
The 75%=20
return rate is a pullback within the first 12 days (this =
is the=20
average for the study). Bulkowski states that none =
take=20
longer than 30 days. After that, it goes beyond =
throwback and=20
falls into "normal price 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=20
throw some light. He says that 47% of stocks reach a =
high after=20
breakout in less than 3 months. 35% take longer than 6 =
months.=20
Most likely rise? 10-20%. Average rise? 38%. His =
frequency=20
distribution shows that the longer it takes to reach the =
peak,=20
the larger the average gain.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>So think about what =
that means in=20
terms 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=20
than 8 weeks, suggests you hold on through the first=20
correction</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>(2) Once it reaches 25% =
(and I'm=20
assuming he then means, if it takes longer than 8 weeks =
to do=20
that), THEN 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=20
the uptrend is persistent enough to carry the stock =
further than=20
the 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=20
Dempsey</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=20
10, 2001 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 =
class=3D619121018-10122001>Katherine, David, and All =
others=20
interested</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D619121018-10122001></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D619121018-10122001>I remember reading that WON =
says 40%=20
of breakouts return to the base. I believe it is more =
than=20
that. I'm not sure that it is 75%, but it might be. =
For that=20
reason WON states in his book you must take some =
profits when=20
they hit 20%. On one of the IBD tapes they state to =
profits in=20
1/2 of positions reaching 25%. These are because of =
the high=20
rate of pull backs. If you don't do this then you are =
forced=20
to use the rule, don't let a winner turn into a loser. =
</SPAN></FONT></DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D619121018-10122001></SPAN></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff size=3D2><SPAN =
class=3D619121018-10122001>SCUR appears to be an =
example of a=20
stock returning/nearly returning to the=20
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=20
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,=20
December 10, 2001 9:49 AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> Re: =
[CANSLIM]=20
low volume breakouts<BR><BR></FONT></DIV>
<DIV><FONT face=3DArial size=3D2>hi katherine , =
thank you so=20
much for this very good information! when bulkowski =
states=20
that stocks retrace back to the b/o piont 75% of the =
time is=20
he talking about high or low volume breakouts? and =
where is=20
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 -----=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>=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,=20
December 10, 2001 5:10 AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> =
Re:=20
[CANSLIM] low 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=20
good one. Demanding controlled study proof of a =
guideline=20
like this is important, as it makes an underlying=20
assumption about technical patterns which may or =
may not=20
trigger a buy. I pulled out my "Encyclopedia of =
Chart=20
Patterns" by Thomas Bulkowski to answer this =
question. In=20
this book, the author does statistical studies on =
chart=20
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=20
volume should be high on the breakout. That is, =
you are=20
looking for the point at which demand so outweighs =
supply=20
that the price moves up and onward. In my own =
personal=20
experience, low volume breakouts seem to fall back =
more=20
often than not. But these are "odds" not =
specifics. SONC=20
is a good example from recent discussions on =
the=20
list. Take a look at the daily chart from 10/3 to =
now. You=20
can see that SONC tried very hard on several days =
to break=20
out of its consolidation, but fell back and =
eventually=20
gapped down. The low volume B/O's don't always =
mean the=20
stock will fail, just that it's not yet ready to =
move on.=20
I like to have the odds in my favor, so I'm always =
willing=20
to wait 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=20
C&H formation, the failure rate is 26%. If you =
wait=20
for an upside breakout, the failure rate falls to =
10%.=20
Stocks retrace back to the B/O point 75% of the =
time=20
(average time 12 days). Waiting for the throwback=20
increases the success rate another 1%. Typical B/O =
volume=20
is 180% above the prior day and stays high for the =
following week. Interestingly, he says removing =
the high=20
volume B/O criteria does hurt performance, but =
only=20
minimally. This is an excellent chapter on C&H =
and,=20
based on the statistical evidence, the =
author makes=20
other conclusions that lead to particular trading =
tactics.=20
There are several additional criteria that WON =
would=20
require of a stock forming a C&H and then =
breaking=20
out, such as rising RS, high group RS, underlying=20
fundamental characteristics, etc. that are not =
included in=20
the author's study. My own conclusions, =
anecdotally, are=20
that if these other criteria are met AND you get a =
high=20
volume B/O, the odds are in your favor. (No =
statistical=20
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=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,=20
December 09, 2001 5:44 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> =
[CANSLIM]=20
low 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 =20
a high volume breakout past the pivot point?=20
=
david</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></B=
LOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOT=
E></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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