Re: [CANSLIM] Bulkowski re: patterns besides C&H

From: Warren Keuffel <wkeuffel@xmission.com>
Subject: Re: [CANSLIM] Bulkowski re: patterns besides C&H
Date: Tue, 08 Jan 2002 12:25:32 -0700

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Katherine,

I am not an experienced or particularly successful CANSLIM investor, but 
am learning fast -- particularly due to this great list.  But with that 
caveat out of the way, here's my take on the matter.  Of necessity, 
CANSLIM has to be a fairly simple (ha!) system so that it can be applied 
by a wide range of IBD readers -- let's face it, IBD and CANSLIM need 
each other for both to prosper.  For more sophisticated investors, who 
understand what the rules are *before* they  consider breaking them, I 
suspect that the fundamental analysis aspects of CANSLIM *can* be 
applied successfully using other technical patterns besides the C&H. 
 WON can't do that because he needs to keep his system simple enough to 
explain in short newspaper articles.

Bottom line:  I am planning to look for opportunities to apply B's 
patterns but I am going to continue to make my focus the C&H pattern, at 
least until I understand the other patterns as well as I am beginning to 
understand the C&H.

Thanks for your observations.
Warren

Katherine Malm wrote:

> Well, Warren, you've managed the $1m question. So here's my current 
> "take" on it--During strongly trending Bulls where everything is 
> rising, buying stocks near their 52 wk highs coming out of C&H or flat 
> base consolidations is fine and dandy. This assumes that any 
> correction will be followed by more up-movement as the stock changes 
> hands. It also assumes that earnings will continue to be good and will 
> grow at current or higher rates.
>
>  
>
> Then there's the market coming off the bottom of an Ursa Major 
> correction. Earnings estimates and growth rates have been coming down, 
> prices have been coming down, every stock gets punished, most every 
> stock gets its outlook revised downward, all stocks in all "previously 
> overvalued" industries all get hit. But, there are plenty of stocks in 
> this shape that were hit too hard, their earnings outlook is now 
> improving, the economy appears to be turning around, and in certain 
> cases, these stocks have strong competitive advantage, strong 
> products/services, and more importantly strong balance sheets. This is 
> a long winded way to get here....but if the earnings growth estimates 
> have been slashed too low, then the prices have been slashed too low. 
> I'd say the next move for these kinds of stocks is up, and in some 
> cases, it will actually precede the earnings evidence. Wait for the 
> B/O of a C&H near the old highs and miss out on all the fun! er, profits!
>
>  
>
> This is definitely not "party line." But if I have a good quality 
> CANSLIM stock that fits all the requirements, where in CANSLIM does it 
> tell me I can't use other technical patterns? Without Bulkowski, I 
> wouldn't have figured that out, however. Now, don't you dare reveal 
> that I'm working on the edges of CANSLIM or I'll get kicked off the 
> list! Hah!
>
>  
>
> Tell me your thoughts on this...
>
>  
>
> Katherine
>
>     ----- Original Message -----
>
>     From: Warren Keuffel <mailto:wkeuffel@xmission.com>
>
>     To: canslim <mailto:canslim@lists.xmission.com>
>
>     Sent: Tuesday, January 08, 2002 11:38 AM
>
>     Subject: [CANSLIM] Bulkowski re: patterns besides C&H
>
>
>     Katherine,
>
>     My copy of Bulkowski arrived yesterday and (like others) I was
>     mightily
>     impressed.  I was particularly intrigued by his analysis of C&H
>     patterns, particularly in how O'Neill's example was not actually a
>     C&H!
>      But what I am writing you about specifically is to inquire
>     whether you
>     have applied B.'s pattern analysis to other patterns observed in
>     stocks
>     you trade?  Seems to me that, if B's research and analysis is
>     accurate,
>     that we would do well to have more arrows in our quivers than just
>     C&H.
>
>     Thanks,
>     Warren
>
>
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