Go to Jeff Salisbury LWGate Home Page.From: "John Adair" <xjadair@brightok.net>
Subject: RE: [CANSLIM] Point of View: Why bother with fundamentals?
Date: Wed, 19 Dec 2001 19:14:30 -0600
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Hi Katherine,
I like your reply it shows a very disciplined approach to investing. How
long have you been at investing? I assume you are retired and fulltime
investing for the most part.
By the way thanks for suggesting Bulkowski.
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm
Sent: Wednesday, December 19, 2001 4:02 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Point of View: Why bother with fundamentals?
Hi John,
>>The last paragraph seems indicate you do use fundamentals and sector
rotation for your screening. Then you use total technical analysis from
that point including exits. Correct?<<
That is for the most part correct, though industry analysis (sector
rotation) enters in both screening and in buy/sell decisions. I look for
something with a fundamental story and if I like it, I watch it until the
industry and technical analysis stars align. As part of my buy review
process, I look at the action in all players in the industry. This will h=
elp
ensure that the industry is not topping out, even though the buy candidat=
e
looks technically sound. I also look at industry players to be sure that
moves off the bottom show that at least 2 strong stocks are moving. One
alone, and I wait. Once I own a stock, part of my sell rules include
continued review of other stocks in the industry. If they begin breaking
down, but my holding is strong, it goes on warning. If other technical
warning signs kick in, out it goes. My entries and exits are definitely
driven by technicals. There are times, however, where fundamentals do pla=
y a
hand in my sell rules:
(1) This is really a combined fundamental/technical sell rule: Sell if a
stock gaps down on earnings news. I don't have a perfect example of this
from my own recent sells, but one that is close. I owned IRF earlier in t=
he
year. In early June it started flashing all sorts of technical warnings. =
On
6/11 it gapped down with no explanation. That was enough for me, as I kne=
w
earnings were upcoming. I was out on the 12th. On 6/15 it gapped down on
earnings news. If I hadn't already sold, I would have within a day or two=
of
the gap. The day or two lag is only so that I can catch the last little
bounce before it gives up the ghost. There are plenty more examples bette=
r
than this one where the stock went on to drop into oblivion, but I can't
think of one off the top of my head.
(2) If fundamentals are deteriorating. This is a WON rule. That is, if th=
e
earnings growth begins decelerating 2 quarters in a row, something's up.
This is what prompted me to begin scaling out of DELL in early 99.
Technicals were also getting iffy, but the earnings news clinched it. I w=
as
out completely by Fall of 99. Absolutely everybody I knew thought I'd los=
t
it. That doesn't mean I don't think DELL's a great company. I do. It just
means my sell rules worked when it mattered.
(3) Financial shenanigans. There's just no way to know how things will lo=
ok
when the smoke clears. You can get an example like TYC where it turns out=
to
be ok. Then you can get a MSTR or ENE or LU. I just don't think the odds
favor these things working out for the best, so I'd rather watch the dust
clear from the sidelines. The latest is TTWO. I haven't ever owned it, bu=
t I
can't wait to see what happens.
>>If that=92s correct then would you begin to identify some of the patter=
ns in
the stocks you evaluate. I have purchased Bulkowski and trying to make se=
nse
out of it. The patterns never seem to match his diagrams.<<
I wrestle with technicals every day. I wouldn't say I'm the best person o=
n
the list to address this question, as there are so many others here who a=
re
very good technicians. I can identify the plain and simple, but if I can'=
t
read it I will rely on industry analysis, technicals in other players, or
will just write it off as "too hard to read--wait and see what happens."
This happened recently while I was watching JEC. I wasn't considering it =
for
a buy, but was watching it for other reasons. I just couldn't figure out =
the
chart and it' the reason why I posted the question to the list. Strangely
enough, JEC showed up in an Investor's Corner the other day. Imagine that.
Katherine
- ----- Original Message -----
From: John Adair <mailto:xjadair@brightok.net>
To: canslim@lists.xmission.com <mailto:canslim@lists.xmission.com>
Sent: Tuesday, December 18, 2001 7:35 PM
Subject: RE: [CANSLIM] Point of View: Why bother with fundamentals?
Hi Katherine
I read with interest your procedure The last paragraph seems indicate yo=
u
do use fundamentals and sector rotation for your screening. Then you use
total technical analysis from that point including exits. Correct?
If that=92s correct then would you begin to identify some of the patterns=
in
the stocks you evaluate. I have purchased Bulkowski and trying to make se=
nse
out of it. The patterns never seem to match his diagrams.
John A
- ----- Original Message -----
From: Katherine Malm <mailto:kmalm@earthlink.net>
<snip>
The point is, a company can have the potential to be a great company, but=
if
there is no demand for the stock, the price will not go up. Or, sometimes=
,
the price of a stock of a seeming worthless company will go up. Until it
doesn't. Every once in a while you will watch a very good company become =
a
great company and the stock will go up, and up, and up, and up. Until it
doesn't. All you need to know is market history to know that this is true.
You don't need exhaustive statistical studies. You can find example after
example. But can you find a good company that is underowned or undiscover=
ed
and has the potential to become a great company? Can you determine when
demand is beginning to overwhelm supply so that you can buy it at a good
price? Can you tell if there is continued demand for it that drives up th=
e
price? Can you determine when is becoming overowned and sell it for as mu=
ch
as possible? Can you make money on it? I believe you can. Fundamentals te=
ll
the story of a good company. Due diligence tells the story of potential.
Technicals tell the story of supply and demand. CANSLIM has all of these =
in
its toolbag. How you chose to use them is your choice.
Here is my answer to this question. As you can see, it is different than
everyone else's.
Narrowing down the universe of candidates based on excellent fundamentals
and company/industry potential allows me to ride price movement with a
bonus. If the market is healthy and this stock is not yet "discovered" an=
d
the company fulfills its potential, I may be able to ride it much longer
than the intermediate term. This stock could easily become the next DELL,
MSFT, INTC, CSCO, or HD. Fundamentals, well considered, put the odds for
selecting a "big winner" in my favor.
<snip>
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<div class=3DSection1>
<p class=3DMsoNormal><span class=3DEmailStyle21><font size=3D2 =
color=3D"#993366"
face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'><span style=3D"mso-spacerun: yes"> </span>Hi =
Katherine,<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle21><font size=3D2 =
color=3D"#993366"
face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'>I like your reply it shows a very disciplined approach to =
investing. How
long have you been at investing? I assume you are retired and fulltime
investing for the most part.<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle21><font size=3D2 =
color=3D"#993366"
face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'><span style=3D"mso-spacerun: yes"> </span>By the way thanks =
for
suggesting Bulkowski.<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle21><font size=3D2 =
color=3D"#993366"
face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'><![if =
!supportEmptyParas]> <![endif]><o:p></o:p></span></font></span></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma;color:black'>-----Original
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b>
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com]<b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Katherine Malm<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Wednesday, December =
19, 2001
4:02 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] =
Point of
View: Why bother with fundamentals?</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><![if =
!supportEmptyParas]> <![endif]><o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>Hi
John,</span></font><font color=3Dblack><span =
style=3D'color:black;mso-color-alt:
windowtext'><o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>>></span><=
/font><font
size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:navy'>The last paragraph seems<span style=3D"mso-spacerun: =
yes">
</span>indicate you do use fundamentals and sector rotation for your =
screening.
Then you<span style=3D"mso-spacerun: yes"> </span>use total =
technical
analysis from that point including exits. =
Correct?<<</span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>That is
for the most part correct, though industry analysis (sector
rotation) enters in both screening and in buy/sell decisions. I =
look for
something with a fundamental story and if I like it, I watch it until =
the
industry and technical analysis stars align. As part of my buy review =
process,
I look at the action in all players in the industry. This will help =
ensure that
the industry is not topping out, even though the buy candidate looks
technically sound. I also look at industry players to be sure that moves =
off
the bottom show that at least 2 strong stocks are moving. One alone, and =
I
wait. Once I own a stock, part of my sell rules include continued review =
of
other stocks in the industry. If they begin breaking down, but my =
holding is
strong, it goes on warning. If other technical warning signs kick in, =
out it goes. My
entries and exits are definitely driven by technicals. There =
are
times, however, where fundamentals do play a hand in my sell =
rules:</span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>(1)
This is really a combined fundamental/technical sell rule: Sell if a =
stock gaps
down on earnings news. I don't have a perfect example of this from my =
own
recent sells, but one that is close. I owned IRF earlier in the year. In =
early
June it started flashing all sorts of technical warnings. On 6/11 it =
gapped
down with no explanation. That was enough for me, as I knew =
earnings were
upcoming. I was out on the 12th. On 6/15 it gapped down on earnings =
news. If I
hadn't already sold, I would have within a day or two of the gap. =
The day
or two lag is only so that I can catch the last little bounce =
before it
gives up the ghost. There are plenty more examples better than this =
one
where the stock went on to drop into oblivion, but I can't think of one =
off the
top of my head.</span></font><font color=3Dblack><span =
style=3D'color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>(2) If
fundamentals are deteriorating. This is a WON rule. That is, if the =
earnings
growth begins decelerating 2 quarters in a row, something's up. This is =
what
prompted me to begin scaling out of DELL in early 99. Technicals were =
also
getting iffy, but the earnings news clinched it. I was out completely by =
Fall
of 99. Absolutely everybody I knew thought I'd lost it. That doesn't =
mean I
don't think DELL's a great company. I do. It just means my sell rules =
worked
when it mattered.</span></font><font color=3Dblack><span =
style=3D'color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>(3)
Financial shenanigans. There's just no way to know how things will look =
when
the smoke clears. You can get an example like TYC where it turns out to =
be ok.
Then you can get a MSTR or ENE or LU. I just don't think the odds favor =
these
things working out for the best, so I'd rather watch the dust clear from =
the
sidelines. The latest is TTWO. I haven't ever owned it, but I can't wait =
to see
what happens.</span></font><font color=3Dblack><span =
style=3D'color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>>></span><=
/font><span
class=3DEmailStyle18><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial'>If that’s =
correct then
would you begin to identify some of the patterns in the stocks you =
evaluate. I
have purchased Bulkowski and trying to make sense out of it. The =
patterns never
seem to match his diagrams.<<</span></font></span><font =
color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><span =
class=3DEmailStyle18><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:
12.0pt;font-family:Arial;color:black'>I wrestle with technicals every =
day. I
wouldn't say I'm the best person on the list to address this question, =
as there
are so many others here who are very good technicians. I can identify =
the plain
and simple, but if I can't read it I will rely on industry analysis, =
technicals
in other players, or will just write it off as "too hard to =
read--wait and
see what happens." This happened recently while I was watching JEC. =
I
wasn't considering it for a buy, but was watching it for other reasons. =
I just
couldn't figure out the chart and it' the reason why I posted the =
question to
the list. Strangely enough, JEC showed up in an Investor's Corner the =
other
day. Imagine that.</span></font></span><font color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><span =
class=3DEmailStyle18><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:
12.0pt;font-family:Arial;color:black'>Katherine</span></font></span><font=
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
color=3Dblack
face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'>-----
Original Message ----- </span></font><font color=3Dblack><span =
style=3D'color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in =
0in 4.0pt;
background:#E4E4E4'>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;border:none;mso-border-left-alt:solid black 1.5pt;
padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black;
font-weight:bold'>
<div style=3D'font-color:black'>From:</span></font></b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'> <a
href=3D"mailto:xjadair@brightok.net" title=3D"xjadair@brightok.net">John =
Adair</a> </span></font></div>
<font size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:
Arial;color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>=
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;background:white;mso-shading:transparent;border:none;=
mso-border-left-alt:solid black 1.5pt;padding:0in;mso-padding-alt:0in =
0in 0in 4.0pt'><b><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black;font-weight:bold'>To:</span></font></b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'> <a
href=3D"mailto:canslim@lists.xmission.com" =
title=3D"canslim@lists.xmission.com">canslim@lists.xmission.com</a>
</span></font><font size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial;color:black;mso-color-alt:windowtext'><o:p></o:p></span=
></font></p>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;background:white;mso-shading:transparent;border:none;=
mso-border-left-alt:solid black 1.5pt;padding:0in;mso-padding-alt:0in =
0in 0in 4.0pt'><b><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black;font-weight:bold'>Sent:</span></font></b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'>
Tuesday, December 18, 2001 7:35 PM</span></font><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;background:white;mso-shading:transparent;border:none;=
mso-border-left-alt:solid black 1.5pt;padding:0in;mso-padding-alt:0in =
0in 0in 4.0pt'><b><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black;font-weight:bold'>Subject:</span></font></b><font size=3D2
color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black'> RE: [CANSLIM] Point of View: Why bother with =
fundamentals?</span></font><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;background:white;mso-shading:transparent;border:none;=
mso-border-left-alt:solid black 1.5pt;padding:0in;mso-padding-alt:0in =
0in 0in 4.0pt'><font
size=3D3 color=3Dblack face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;
color:black'><![if =
!supportEmptyParas]> <![endif]></span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'margin-left:39.75pt;background:white;mso-shading:
transparent;border:none;mso-border-left-alt:solid black =
1.5pt;padding:0in;
mso-padding-alt:0in 0in 0in 4.0pt'><span class=3DEmailStyle18><font =
size=3D2
color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;
font-family:Arial'><span style=3D"mso-spacerun: yes"> </span>Hi =
Katherine<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal =
style=3D'margin-left:39.75pt;background:white;mso-shading:
transparent;border:none;mso-border-left-alt:solid black =
1.5pt;padding:0in;
mso-padding-alt:0in 0in 0in 4.0pt'><span class=3DEmailStyle18><font =
size=3D2
color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;
font-family:Arial'>I read with interest your procedure The last =
paragraph
seems<span style=3D"mso-spacerun: yes"> </span>indicate you do use
fundamentals and sector rotation for your screening. Then you<span
style=3D"mso-spacerun: yes"> </span>use total technical analysis =
from that
point including exits. Correct?<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal =
style=3D'margin-left:39.75pt;background:white;mso-shading:
transparent;border:none;mso-border-left-alt:solid black =
1.5pt;padding:0in;
mso-padding-alt:0in 0in 0in 4.0pt'><span class=3DEmailStyle18><font =
size=3D2
color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;
font-family:Arial'>If that’s correct then would you begin to =
identify some of
the patterns in the stocks you evaluate. I have purchased Bulkowski and =
trying
to make sense out of it. The patterns never seem to match his =
diagrams.<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal =
style=3D'margin-left:39.75pt;background:white;mso-shading:
transparent;border:none;mso-border-left-alt:solid black =
1.5pt;padding:0in;
mso-padding-alt:0in 0in 0in 4.0pt'><span class=3DEmailStyle18><font =
size=3D2
color=3Dnavy face=3DArial><span =
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;
font-family:Arial'>John A<o:p></o:p></span></font></span></p>
</div>
<div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in =
0in 4.0pt'>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D2
color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black'>----- Original Message ----- </span></font><font size=3D2
color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
</div>
<div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in =
0in 4.0pt'>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;border:none;mso-border-left-alt:solid black 1.5pt;
padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black;
font-weight:bold'>
<div style=3D'font-color:black'>From:</span></font></b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'> <a
href=3D"mailto:kmalm@earthlink.net" =
title=3D"kmalm@earthlink.net">Katherine Malm</a>
</span></font></div>
<font color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:39.75pt;border:none;mso-border-left-alt:solid black 1.5pt;
padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black'><![if =
!supportEmptyParas]> <![endif]></span></font><font
size=3D2 color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
</div>
<div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in =
0in 4.0pt'>
<p class=3DMsoNormal =
style=3D'mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;
margin-left:79.5pt;border:none;mso-border-left-alt:solid black 1.5pt;
padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><b><font size=3D2 =
color=3Dblack
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:black;
font-weight:bold'><snip></span></font></b><font =
color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
</div>
<div style=3D'border:none;border-left:solid black 1.5pt;padding:0in 0in =
0in 4.0pt'>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D2
color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black'>The point is, a company can have the potential to be a =
great
company, but if there is no demand for the stock, the price will not go =
up. Or,
sometimes, the price of a stock of a seeming worthless company will go =
up.
Until it doesn't. Every once in a while you will watch a very good =
company
become a great company and the stock will go up, and up, and up, and up. =
Until
it doesn't. All you need to know is market history to know that this is =
true.
You don't need exhaustive statistical studies. You can find example =
after
example. But can you find a good company that is underowned or
undiscovered and has the potential to become a great company? Can =
you
determine when demand is beginning to overwhelm supply so that you can =
buy it
at a good price? Can you tell if there is continued demand for it that =
drives
up the price? Can you determine when is becoming overowned and sell it =
for as
much as possible? Can you make money on it? I believe you can. =
Fundamentals
tell the story of a good company. Due diligence tells the story of =
potential.
Technicals tell the story of supply and demand. CANSLIM has =
<em><i>all</i></em>
of these in its toolbag. How you chose to use them is your =
choice.</span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D3
color=3Dblack face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D2
color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black'>Here is my answer to this question. As you can see, it is
different than everyone else's.</span></font><font color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D3
color=3Dblack face=3D"Times New Roman"><span =
style=3D'font-size:12.0pt;color:black'> </span></font><font
color=3Dblack><span =
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D2
color=3Dblack face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;
color:black'>Narrowing down the universe of candidates based on =
excellent
fundamentals and company/industry potential allows me to ride price =
movement
with a bonus. If the market is healthy and this stock is not yet
"discovered" and the company fulfills its potential, I may be =
able to
ride it much longer than the intermediate term. This stock could easily =
become
the next DELL, MSFT, INTC, CSCO, or HD. Fundamentals, well =
considered, put
the odds for selecting a "big winner" in my =
favor.</span></font><font
color=3Dblack><span style=3D'color:black'> </span></font><font =
color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
<p class=3DMsoNormal =
style=3D'margin-left:75.75pt;border:none;mso-border-left-alt:
solid black 1.5pt;padding:0in;mso-padding-alt:0in 0in 0in 4.0pt'><font =
size=3D3
color=3Dblack face=3DArial><span =
style=3D'font-size:12.0pt;font-family:Arial;
color:black'><snip></span></font><font color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></font><=
/p>
</div>
</div>
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