Re: [CANSLIM] Industry analysis technique/tools? Was: Point of View: Why bother with fundamentals?

From: Warren Keuffel <wkeuffel@xmission.com>
Subject: Re: [CANSLIM] Industry analysis technique/tools? Was: Point of View: Why bother with fundamentals?
Date: Thu, 20 Dec 2001 11:15:46 -0700

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Katharine,

I gather that when you see an interesting stock you then examine the
industry to see if the other players are coming along also (as described
below).  My question to you is, do you do any kind of industry analysis
where you find promising industries and then look for candidate stocks
within that industry?  I would call this a bottom-up approach.

The primary reason I raise this question is that I am trying to figure
out how best to use the daily IBD industry ranking table.  I know there
are a few WON comments on investors.com about this, but the big question
for me is whether it would be worthwhile for me to invest time and
energy into tracking the daily or weekly movement of those 197 groups to
see patterns (if any) developing.  This would be what I would call a
top-down approach.

Thanks,
Warren

Katherine Malm wrote:

> Hi John, >>The last paragraph seems indicate you do use fundamentals
> and sector rotation for your screening. Then youuse 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 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:

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