AW: [CANSLIM] PECS vs MCAF Post Analysis

From: Andreas Himmelreich <judgejimmy@web.de>
Subject: AW: [CANSLIM] PECS vs MCAF Post Analysis
Date: Fri, 18 Jan 2002 02:40:39 +0100
Next Article (by Date): Re: [CANSLIM] Nasdaq Future.... INS - Not Canslim "Dan Forant"
Previous Article (by Date): Re: [CANSLIM] MCAF Post Analysis "Tom Worley"
Articles sorted by: [Date] [Author] [Subject]
Hi Katherine,

That is excellent. I have a folder in Outlook that is called "Strategy". 
Every posting that will influence my strategy in a way, I store there.
There is a lot of stuff in there from you.

THANK YOU !!!

Andreas

> -----Ursprungliche Nachricht-----
> Von:	Katherine Malm [SMTP:kmalm@earthlink.net]
> Gesendet am:	Thursday, January 17, 2002 11:55 PM
> An:	canslim@lists.xmission.com
> Betreff:	[CANSLIM] PECS vs MCAF Post Analysis
>
> Post analysis of 2 recent trades, warts and all:
>
> Most important lesson learned: Never lose focus--even a day can make the 
difference between excellent vs decent gains.
>
> PECS-Good buy, Decent Sell
> -Macrotheme: Good quality services companies do not have excess 
capacity/inventory to bog them down during economic recovery. "New" names 
during early bull are most likely to do better than "old favorites"
> -Due diligence highlights: Company competes with ACN and CSC for 
government contracts. Small & nimble. Successful. Developing JABS-joint 
automated booking system for tracking criminals across agencies. Long 
history of contract wins.
> -Stalked the trade for: 1 month
> -Purchased: 11/14 on breakout @ $27.50
> During the trade and Exit:
>    --11/20/01--Stock reverses and closes below low of previous day on 
high volume. Red Flag.
>    --11/27-11/28/01--2 days of high volume without further price 
progress. 2nd Red Flag. Depending on market strength I will sometimes take 
a little off the table. I give this one a chance, but it's up to 2 red 
flags so is now on high alert.
>    --12/5/01--You may remember that shortly after this I posted the 
"Rubberband Sell Rule" (RSR) spreadsheet and calculations to the list. You 
can see why it was on my mind. I did the calculation intraday on 12/5 and 
it flashed a sell warning. Tail down on close. 3rd red flag. Market is 
starting to show signs of stress. I am already taking profits on other 
positions and moving to cash. I give this stock one last chance to see what 
it will do. I have the sell order ready.
>    --12/6-12/8/01--3 down days. Final red flag. I wait to sell into the 
next bounce.
>    --12/9/01--Sell at avg price $34.93. Gain: 27%.
> Lessons learned: 3 red warning flags = sell. Good focus got me out 
reasonably close to the top.
>
>
> MCAF-Great buy, Lousy Sell
> Macrotheme: Good quality services companies do not have excess 
capacity/inventory to bog them down during economic recovery. "New" names 
during early bull are most likely to do better than "old favorites" 
Personal data security in interconnected world.
> Due diligence highlights: Tie in to Windows XP release. Subscription 
based revenue stream with auto renewal option. 2 quarters of newly positive 
EPS numbers. High growth. New IPO--spinoff from NETA.
> Stalked the trade for: 5 months
> Purchased: 10/11/01 on gap open breakout on earnings news. Offered up a 
$0.21 sacrifice to the gap gods to get in.
> During the trade & Exit(s):
>    --10/30/01--posted 2 days of little/no movement on high volume. Market 
still getting its legs after 9/28 FTD. Took 20% off the table at $22.16 
(Gain: 22.4%)
>    --11/16 & 11/17/01--new highs on low volume. Red flag.
>    --12/5/01--breaks out of consolidation zone on high volume. Good sign.
>    --12/18-12/19/01--new highs on so-so volume. High alert. RSR calc 
shows it's extended and could correct 15-25%. That would put it at 50dMA 
and intermediate term support. Hold.
>    --12/31/01--reversal day with a tail on so-so volume. Red flag.
>    --1/9/02--reversal day with tail on high volume. Counts as 
distribution day. RSR calc flashing screaming red signals. I get busy and 
forget to look at end of day charts for a couple of days. Lost focus.
>    --1/11/02--another tail on high volume. Normally with this many red 
flags, I would take another 50% off the table. Was busy and didn't check 
charts end of day.
>    --1/14/02--gap down. I know earnings announcement is just around the 
corner. This is a BIG RED FLAG and I normally sell into a bounce after this 
happens. Was still distracted on other things and wasn't paying attention.
>    --1/15/02--one more bounce day available. I have a lengthy 
conversation with a friend about MCAF. He reminds me of my gap down on 
impending earnings news sell rule. I take note and decide to give it a 
chance to show support at 50dMA. Read---I am breaking my sell rules here.
>    --1/16/02--Market posts 4th distribution day in 2 weeks. I always take 
money off the table when this happens, regardless of technical condition of 
my holdings. I make the decision to close out my remaining MCAF position 
the next morning.
>    --1/16/02--MCAF announces earnings after hours. Beats estimates and 
guides future estimates higher. Stock is up in after hours trade. I like to 
sell into strength, so am glad that I will have a bounce to sell into the 
next morning.
>    --1/17/02--I am watching MCAF. Gap up on open. Price starts to fade, I 
get ready to hit the sell button...Honest to goodness truth...the phone 
rings. During the conversation I am distracted (no focus again) and we 
begin to talk about other things. I get a cup of coffee. I come back to my 
desk ready to place the sell order and....yes....the stock has plunged into 
oblivion...I wait a bit to see if I can get one last bounce which never 
comes....I sell at $24.45. Gain: 35.1%. Opportunity cost: $12.23/share if 
I'd sold on the last BIG RED FLAG. Possible gain on last part of position 
would have been: 102.7%.
>
> Lesson learned--There is NEVER an excuse for losing focus. If Jeff calls 
when I've got my finger on the sell button, ask him to hold on a minute.
>
> Note--some of you have asked why I don't use a trailing stop. I just 
don't like to use hard trailing stops, a personal preference. I use my sell 
rules to get me out of a stock (of course, when I'm paying attention!) When 
the stock is showing red flags I will set a "catastrophic" stop loss. This 
is set just below the low of the last area of consolidation. MCAF was set 
at 19.87.
>
> Charts will be posted soon at:
> http://WallStreet-LLC.com/pub/MCAF-PostAnal011702.jpg
> http://WallStreet-LLC.com/pub/PECS-PostAnal011702.jpg
>
>
> Katherine
>
>
>  << Datei: ATT00017.htm >> 

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.
Go to Jeff Salisbury LWGate Home Page.