Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@netside.net>
Subject: Re: [CANSLIM] breakouts - return to base
Date: Tue, 11 Dec 2001 00:01:53 -0500
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Thanks, John, Katherine has been a great addition to this group, and is =
both teaching me new stuff, as well as reminding me of many things I had =
forgotten along the way.
I hope she keeps us all sharp for many more years to come. It's nice to =
be a part of, and able to contribute to, a board selected a few years =
back as one of the best five on the entire internet. I think it still =
ranks in the top five.
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----=20
From: John Adair=20
To: canslim@lists.xmission.com=20
Sent: Monday, December 10, 2001 9:33 PM
Subject: RE: [CANSLIM] breakouts - return to base
Thanks to Katherine and Tom for their unbelievable effort to help the =
rest of us. You two make this board one of the best and worth all the =
time I spend reading it.
=20
-----Original Message-----
From: owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Chris Dempsey
Sent: Monday, December 10, 2001 12:22 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] breakouts - return to base
=20
Katherine, David, and All others interested
=20
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
=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
=20
Hi David,
=20
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).
=20
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.
=20
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!)
=20
Katherine
=20
=20
----- 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
=20
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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.5in" vLink=3Dblue>
<DIV><FONT size=3D2>Thanks, John, Katherine has been a great =
addition to this=20
group, and is both teaching me new stuff, as well as reminding me of =
many things=20
I had forgotten along the way.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>I hope she keeps us all sharp for many more years to =
come.=20
It's nice to be a part of, and able to contribute to, a board selected=20
a few years back as one of the best five on the entire =
internet. I=20
think it still ranks in the top five.</FONT></DIV>
<DIV> </DIV>
<DIV>Tom Worley<BR><A=20
href=3D"mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:=20
TexWorley<BR></DIV>
<BLOCKQUOTE=20
style=3D"BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: =
0px; PADDING-LEFT: 5px; PADDING-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 href=3D"mailto:xjadair@brightok.net" =
title=3Dxjadair@brightok.net>John=20
Adair</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
href=3D"mailto:canslim@lists.xmission.com"=20
title=3Dcanslim@lists.xmission.com>canslim@lists.xmission.com</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, December 10, 2001 =
9:33=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> RE: [CANSLIM] =
breakouts - return=20
to base</DIV>
<DIV><BR></DIV>
<DIV class=3DSection1>
<P class=3DMsoNormal><SPAN class=3DEmailStyle17><FONT color=3Dnavy =
face=3DArial=20
size=3D2><SPAN=20
style=3D"FONT-FAMILY: Arial; FONT-SIZE: 10pt; mso-bidi-font-size: =
12.0pt">Thanks=20
to Katherine and Tom for their unbelievable effort to help the rest of =
us.<SPAN style=3D"mso-spacerun: yes"> </SPAN>You two make this =
board one=20
of the best and worth all the time I spend<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>reading=20
it.<o:p></o:p></SPAN></FONT></SPAN></P>
<P class=3DMsoNormal><SPAN class=3DEmailStyle17><FONT color=3Dnavy =
face=3DArial=20
size=3D2><SPAN=20
style=3D"FONT-FAMILY: Arial; FONT-SIZE: 10pt; mso-bidi-font-size: =
12.0pt"><![if =
!supportEmptyParas]> <![endif]><o:p></o:p></SPAN></FONT></SPAN></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT color=3Dblack =
face=3DTahoma=20
size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Tahoma; FONT-SIZE: =
10pt">-----Original=20
Message-----<BR><B><SPAN style=3D"FONT-WEIGHT: bold">From:</SPAN></B> =
<A=20
=
href=3D"mailto:owner-canslim@lists.xmission.com">owner-canslim@lists.xmis=
sion.com</A>=20
[<A=20
=
href=3D"mailto:owner-canslim@lists.xmission.com">mailto:owner-canslim@lis=
ts.xmission.com</A>]<B><SPAN=20
style=3D"FONT-WEIGHT: bold">On Behalf Of </SPAN></B>Chris =
Dempsey<BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">Sent:</SPAN></B> Monday, December 10, 2001 =
12:22=20
PM<BR><B><SPAN style=3D"FONT-WEIGHT: bold">To:</SPAN></B>=20
canslim@lists.xmission.com<BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">Subject:</SPAN></B> RE: [CANSLIM] =
breakouts - return=20
to base</SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT face=3D"Times =
New Roman"=20
size=3D3><SPAN style=3D"FONT-SIZE: 12pt"><![if =
!supportEmptyParas]> <![endif]><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT color=3Dblue =
face=3DArial=20
size=3D2><SPAN=20
style=3D"COLOR: blue; FONT-FAMILY: Arial; FONT-SIZE: 10pt">Katherine, =
David, and=20
All others interested</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT color=3Dblack=20
face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT color=3Dblue =
face=3DArial=20
size=3D2><SPAN style=3D"COLOR: blue; FONT-FAMILY: Arial; FONT-SIZE: =
10pt">I=20
remember reading that WON says 40% of breakouts return to the base. I =
believe=20
it is more than 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 they hit =
20%. On=20
one of the IBD tapes they state to profits in 1/2 of positions =
reaching 25%.=20
These are because of the high rate of pull backs. If you don't do this =
then=20
you are forced to use the rule, don't let a winner turn into a loser.=20
</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT color=3Dblack=20
face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal style=3D"MARGIN-LEFT: 0.5in"><FONT color=3Dblue =
face=3DArial=20
size=3D2><SPAN style=3D"COLOR: blue; FONT-FAMILY: Arial; FONT-SIZE: =
10pt">SCUR=20
appears to be an example of a stock returning/nearly returning to =
the=20
base.</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"MARGIN-BOTTOM: 12pt; MARGIN-LEFT: 1in; mso-margin-top-alt: =
auto"><FONT=20
color=3Dblack face=3DTahoma size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Tahoma; FONT-SIZE: =
10pt">-----Original=20
Message-----<BR><B><SPAN style=3D"FONT-WEIGHT: bold">From:</SPAN></B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B><SPAN =
style=3D"FONT-WEIGHT: bold">On=20
Behalf Of </SPAN></B>camelot.homes@charter.net<BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">Sent:</SPAN></B> Monday, December 10, 2001 =
9:49=20
AM<BR><B><SPAN style=3D"FONT-WEIGHT: bold">To:</SPAN></B>=20
canslim@lists.xmission.com<BR><B><SPAN=20
style=3D"FONT-WEIGHT: bold">Subject:</SPAN></B> Re: [CANSLIM] low =
volume=20
breakouts</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"MARGIN-LEFT: 1in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">hi =
katherine , thank=20
you so much for 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 high =
or low=20
volume breakouts? and where is the best place to get a copy of his =
book?=20
david</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<DIV=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: black 1.5pt solid; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; PADDING-BOTTOM: 0in; =
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<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">----- =
Original=20
Message ----- </SPAN></FONT><FONT color=3Dblack face=3DArial =
size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BACKGROUND: #e4e4e4; BORDER-BOTTOM: medium none; BORDER-LEFT: =
medium none; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
MARGIN-LEFT: 75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; =
PADDING-RIGHT: 0in; PADDING-TOP: 0in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto; mso-border-left-alt: solid black 1.5pt; =
mso-padding-alt: 0in 0in 0in 4.0pt"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">
<DIV style=3D"font-color: black">From:</SPAN></FONT></B><FONT =
color=3Dblack=20
face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> <A=20
href=3D"mailto:kmalm@earthlink.net" =
title=3Dkmalm@earthlink.net>Katherine Malm</A>=20
</SPAN></FONT></DIV><FONT color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT>
<P></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">To:</SPAN></FONT></B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> <A=20
href=3D"mailto:canslim@lists.xmission.com"=20
title=3Dcanslim@lists.xmission.com>canslim@lists.xmission.com</A>=20
</SPAN></FONT><FONT color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">Sent:</SPAN></FONT></B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> Monday, =
December=20
10, 2001 5:10 AM</SPAN></FONT><FONT color=3Dblack face=3DArial =
size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">Subject:</SPAN></FONT></B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> Re: =
[CANSLIM] low=20
volume breakouts</SPAN></FONT><FONT color=3Dblack face=3DArial =
size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"><![if =
!supportEmptyParas]> <![endif]></SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">Hi=20
David,</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">The =
question you ask=20
is a good one. Demanding controlled study proof of a guideline like =
this is=20
important, as it makes an underlying assumption about technical =
patterns which=20
may or may not trigger a buy. I pulled out my "Encyclopedia of Chart =
Patterns"=20
by Thomas Bulkowski to answer this question. In this book, the author =
does=20
statistical studies on chart formation and there is an entire chapter =
devoted=20
to the C&H. (pp.135-152).</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">Before I =
state the=20
author's 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 point =
at=20
which demand so outweighs supply that the price moves up and onward. =
In my own=20
personal experience, low volume breakouts seem to fall back more often =
than=20
not. But these are "odds" not specifics. SONC is a good example =
from=20
recent discussions on the list. Take a look at the daily chart from =
10/3 to=20
now. 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 B/O's=20
don't always mean the stock will fail, just that it's not yet ready to =
move=20
on. I like to have the odds in my favor, so I'm always willing to wait =
until=20
there's proof of the pudding.</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">Back to =
Bulkowski.=20
In the C&H formation, the failure rate is 26%. If you wait for an =
upside=20
breakout, the failure rate falls to 10%. Stocks retrace back to the =
B/O point=20
75% of the time (average time 12 days). Waiting for the throwback =
increases=20
the success rate another 1%. Typical B/O volume is 180% above the =
prior day=20
and stays high for the following week. Interestingly, he says removing =
the=20
high volume B/O criteria does hurt performance, but only minimally. =
This is an=20
excellent chapter on C&H and, based on the statistical evidence, =
the=20
author makes other conclusions that lead to particular trading =
tactics. There=20
are 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 study.=20
My own conclusions, anecdotally, are that if these other criteria are =
met AND=20
you get a high volume B/O, the odds are in your favor. (No statistical =
studies=20
to back that up, however!)</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: =
10pt">Katherine</SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"> </SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: =
75.75pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; =
PADDING-TOP: 0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt">----- Original Message -----=20
</SPAN></FONT><FONT color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P></DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; BORDER-BOTTOM: medium none; BORDER-LEFT: =
black 1.5pt solid; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
PADDING-BOTTOM: 0in; PADDING-LEFT: 4pt; PADDING-RIGHT: 0in; PADDING-TOP: =
0in">
<P class=3DMsoNormal=20
style=3D"BORDER-BOTTOM: medium none; BORDER-LEFT: medium none; =
BORDER-RIGHT: medium none; BORDER-TOP: medium none; MARGIN-LEFT: 79.5pt; =
PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: =
0in; mso-margin-top-alt: auto; mso-margin-bottom-alt: auto; =
mso-border-left-alt: solid black 1.5pt; mso-padding-alt: 0in 0in 0in =
4.0pt"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">
<DIV style=3D"font-color: black">From:</SPAN></FONT></B><FONT =
color=3Dblack=20
face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> <A=20
href=3D"mailto:camelot.homes@charter.net"=20
title=3Dcamelot.homes@charter.net>camelot.homes@charter.net</A>=20
</SPAN></FONT></DIV><FONT color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT>
<P></P>
<P class=3DMsoNormal=20
style=3D"BACKGROUND: white; BORDER-BOTTOM: medium none; BORDER-LEFT: =
medium none; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
MARGIN-LEFT: 79.5pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; =
PADDING-RIGHT: 0in; PADDING-TOP: 0in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto; mso-border-left-alt: solid black 1.5pt; =
mso-padding-alt: 0in 0in 0in 4.0pt; mso-shading: transparent"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">To:</SPAN></FONT></B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> <A=20
href=3D"mailto:canslim@xmission.com"=20
title=3Dcanslim@xmission.com>canslim@xmission.com</A> =
</SPAN></FONT><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BACKGROUND: white; BORDER-BOTTOM: medium none; BORDER-LEFT: =
medium none; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
MARGIN-LEFT: 79.5pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; =
PADDING-RIGHT: 0in; PADDING-TOP: 0in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto; mso-border-left-alt: solid black 1.5pt; =
mso-padding-alt: 0in 0in 0in 4.0pt; mso-shading: transparent"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">Sent:</SPAN></FONT></B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> Sunday, =
December=20
09, 2001 5:44 PM</SPAN></FONT><FONT color=3Dblack face=3DArial =
size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BACKGROUND: white; BORDER-BOTTOM: medium none; BORDER-LEFT: =
medium none; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
MARGIN-LEFT: 79.5pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; =
PADDING-RIGHT: 0in; PADDING-TOP: 0in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto; mso-border-left-alt: solid black 1.5pt; =
mso-padding-alt: 0in 0in 0in 4.0pt; mso-shading: transparent"><B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
FONT-WEIGHT: bold">Subject:</SPAN></FONT></B><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt"> [CANSLIM] =
low=20
volume breakouts</SPAN></FONT><FONT color=3Dblack face=3DArial =
size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt; =
mso-color-alt: windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BACKGROUND: white; BORDER-BOTTOM: medium none; BORDER-LEFT: =
medium none; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
MARGIN-LEFT: 79.5pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; =
PADDING-RIGHT: 0in; PADDING-TOP: 0in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto; mso-border-left-alt: solid black 1.5pt; =
mso-padding-alt: 0in 0in 0in 4.0pt; mso-shading: transparent"><FONT=20
color=3Dblack face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"COLOR: black; FONT-SIZE: 12pt"><![if =
!supportEmptyParas]> <![endif]></SPAN></FONT><FONT=20
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal=20
style=3D"BACKGROUND: white; BORDER-BOTTOM: medium none; BORDER-LEFT: =
medium none; BORDER-RIGHT: medium none; BORDER-TOP: medium none; =
MARGIN-LEFT: 79.5pt; PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; =
PADDING-RIGHT: 0in; PADDING-TOP: 0in; mso-margin-top-alt: auto; =
mso-margin-bottom-alt: auto; mso-border-left-alt: solid black 1.5pt; =
mso-padding-alt: 0in 0in 0in 4.0pt; mso-shading: transparent"><FONT=20
color=3Dblack face=3DArial size=3D2><SPAN=20
style=3D"COLOR: black; FONT-FAMILY: Arial; FONT-SIZE: 10pt">how often =
does a low=20
volume breakout succeed past the pivot point versus a high =
volume=20
breakout past the pivot point? david</SPAN></FONT><FONT =
color=3Dblack><SPAN=20
style=3D"COLOR: black; mso-color-alt: =
windowtext"><o:p></o:p></SPAN></FONT></P></DIV></DIV></BLOCKQUOTE></BODY>=
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