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

From: Spencer48@aol.com
Subject: Re: [CANSLIM] DFXI vs. JEC--Faulty handle?
Date: Fri, 25 Jan 2002 12:56:05 EST

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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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