RE: [CANSLIM] DFXI vs. JEC--Faulty handle?

From: "Mike Gibbons" <mikegibbons@proactech.com>
Subject: RE: [CANSLIM] DFXI vs. JEC--Faulty handle?
Date: Fri, 25 Jan 2002 08:25:59 -1000

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I was a little critical of DFXI's handle when Dave brought it to our
attention on 1/8, but appropriately contrite when it surged the following
day.

For an example of a more classic cwh chart, have a look at JBHT. This stock
has shown 4 stages now of advancing on high volume and then pulling back on
reducing volume before surging again. It may be forming another cup
yesterday and today. (yesterday's reversal was a bit disconcerting but there
is a subtlety in this kind of a reversal that diminishes its significance:
If you think of yesterday and the breakout day before as one long day, i.e.
put the two days atop each other, then the stock closed in the top third of
its (2-day)range on massive volume.  That is positive.  And all of
yesterday's volume was above the prior high.  That was also positive.  So
although technically yesterday was a reversal, it was not a sell signal.

We had this on our "low" handle list (based on Weinstein) when it formed
it's first cup in November and it reappeared on our lists at each subsequent
cup formation. The fundamentals were never sufficiently strong to make it a
CANSLIM stock but as an example of a cup and handle, I think it's a good
one. I'm pleased to be holding it for a nice gain.

Aloha,

Mike Gibbons

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Spencer48@aol.com
Sent: Friday, January 25, 2002 7:56 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] DFXI vs. JEC--Faulty handle?

Katherine:

     To me DFXI does not look even like a nice Cup (much less a cup with a
zig/zag handle.  However, I realize analyzing is all in perspective (like
beauty, it's in the eye of the beholder, I guess).  Anyway, there was an on
point (at least I think so) article today in IBD.  You might find it useful.
It concerns wide and loose bases:

"Investor's Corner
Friday, January 25, 2002

Base Can Be Tight And Loose
BY MONIKA TJIA

INVESTOR'S BUSINESS DAILY

Stocks form a variety of bases. Whether the base is a cup-with-handle or a
double-bottom, in most cases you'll find at least a week or two of wild
price
action.

That's OK. After all, investors' emotions fuel stock movements. Fear drives
prices sharply down, and greed yanks them back up.

But if you see this erratic buying and selling throughout the base, watch
out. An excessive number of dizzying price swings indicates institutions are
moving in and out with ease. For every eager buyer, count an anxious seller.

An occasional shakeout is fine. But you want a base to also have at least
several weeks of tight, quiet price action. This indicates solid support
throughout a base.

Tight action means small price gaps from a stock's weekly high to its weekly
low. Often you'll see a stock close the week virtually unchanged for several
weeks in a row. This implies a lack of speculators and a load of steady
long-term shareholders.

>From its October 1998 low to its April 16, 1999, high, Techne (TECH) ran up
150%. At its April peak (see point 1 in accompanying image), the
fast-growing
maker of cytokine test kits used to find new drugs formed a new base,
correcting 24% from its high.

As Techne formed its cup-with-handle base, it moved up and down in tiny
steps. At the end of each week in May, the stock finished very close to its
prior weekly close (point 2).

In the week ended May 21, the stock swung as much as 12%. But it had a
positive reversal. For the week, it finished up 0.13 point vs. the prior
week
(point 3). This price action is exactly what you want to see, because
institutions raced in to support the stock.

As Techne etched the right side of its base, the weekly spreads grew wider.
But weeks of quiet action far outnumbered its weeks of wild price swings.

On Aug. 25, 1999, Techne broke out of its 19-week base on triple average
trade (point 4).

After breaking out, Techne moved sideways for a few weeks. It held above its
50-day moving average. When the market finally took off in late October, so
did Techne.

>From its breakout to its July 2000 peak, Techne gained 416%. It then began
to
carve a new three-month base. But in terms of complexion, this one was the
exact opposite of its previous base.

Instead of making slight price moves, it made extreme ones virtually every
week. The price swings ranged as much as 26%. Techne failed to finish its
base. It's now 56% off its all-time high."

jans

In a message dated 1/25/2002 9:30:10 AM Eastern Standard Time,
kmalm@earthlink.net writes:

<< Hi stockoper8or,

 When I wrote my note mid-day, DFXI had a tail. Looks like it ended midrange
after dropping a bit more after my note. Interesting action. I suspect in a
stronger market it would have been up and out of here by now. I wonder if
the
zig zag handle that started it all was a sign of market iffiness or a sign
of
stock iffiness. Just one for the "I wonder" pile of thoughts!
  >>

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