RE: [CANSLIM] Industry group movements.

From: "Fred Richards" <adrich@gte.net>
Subject: RE: [CANSLIM] Industry group movements.
Date: Sun, 17 Feb 2002 08:08:34 -0600

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For many years, I have disagreed with WON on whether industry group ratings
are important.

I believe that before any industry group moves become significant, there are
one or two companies in that group that make significant moves and then the
others follow along albeit often not as spectacularly.

The trick to real profits is not to be a lemming like the group industry
players but to be the pied piper that finds those one or two companies that
lead the charge.



- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Gary A. Snyder
Sent: Sunday, February 17, 2002 7:30 AM
To: canslim@lists.xmission.com
Subject: [CANSLIM] Industry group movements.






I am fascinated by industry group movement but can't figure out what move
groups up and down. For example: EPIQ is for sure a fine investment and I
have owned it but the last big move it made from about 13 to 25 the industry
group moved from at least the lower B group to 30-32. If the industry group
had not moved EPIQ would still be building a base. In the same group BARZ
went from 35 to 55, ADVS 29 to 51, FIC 39 to 63, BSYS 44 to 63. Even thought
these companies offer completely different software to the financial
industry. A few months ago IBD used GNSS, a semi manufacture, as an example
of a successful cup and handle but failed the mention that the industry
group started up from a e rating and worked its way up to at least the mid b
rating, against WON rule look in the top sixty groups.  Not just GNSS, all
the semi manufacturing stocks were going up even if they were over bought by
as much as 50%. You may think that you are picking good companies and you
are but they are not going anywhere until the industrial group is going up.
So what moves these industry groups? Some are easy to figure: defense
stocks- government spending to increase dramatically per purposed budget.
Safety and security- the terrorist effect. Any computer group a month ago- I
don't have a clue. You don't want to know how poorly some of these security
companies were rated when they started moving up and they are not
fundamentally good companies but that doesn't matter if the market perceives
future growth. Some of these security companies have very poor fundamentals
but that does not stop them from going through the roof if the industry
group is on the rise. The rating on some of these companies look great
now(after the fact). Lower oil prices helped the success of
transportation/trucking even in a bad economy but if the price of oil goes
up for any of a number of reasons, number one being Iraq targeted as the
next enemy on the war on terrorism transportation/trucking will go down so
fast only bested by oil&gas/any company with proved oil reserves going up.
You don't have to pick the best company in the group. Throw a dart at any
company on the list for success. Home builders: low interest rates,
increased new home sales, increased building permits but let the interest
rates go up a little and home builders start correcting along with home
mortgage businesses and banks living on refinancing income. In fact let an
influential analysis say interest rates have bottomed and all these groups
start down no proof needed.Good companies along with bad. I'm confused and
bloodied but feel one key is tracking industry groups. I ask for comment
and/or instruction. gas175k



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