Re: [CANSLIM] A short ride

From: "Tim Fisher" <Tim@orerockon.com>
Subject: Re: [CANSLIM] A short ride
Date: 8 Mar 2002 07:46:05 -0800

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I agree that it's hard to stay in a stock if you buy over 5% above the 
pivot and then set an 8% stop. You are going to limit your losses but also 
get stopped out of way too many stocks. If I catch the 5% I set an 8% stop; 
If I buy 10% above I just add the difference to the stop. In other words 
the stop is 8% below  5% over the pivot.

P.S. The preceding actually makes sense if you read it 2 or 3 times ;)

P.P.S. People, try to edit your replies so there aren't 15 previous 
messages and tag lines at the bottom! Before you start grexing I know I am 
guilty too!

At 09:18 AM 3/8/2002 -0600, you wrote:
>Hi Duke,
>
>Just a couple of misc. comments to add to your post:
>
>On gaps up---This is an excellent entry strategy when the stock gaps open 
>out of a base and on earnings news. The best way to catch them is to know 
>which stocks are basing, are due to announce earnings, then place a buy 
>stop-limit, or be ready to take action live on the B/O that morning. In 
>general, stocks that gap up on strong volume and earnings news will 
>continue that move, so I don't hesitate to take them even  if they are 
>beyond the 5% of pivot rule if the stock has all the right 
>characteristics. (I picked up this trick from a '96 IBD article on gaps, 
>later reinforced by Gary Kaltbaum's gap strategy)
>
>On WON's 4% losses--at both the IBD seminars I attended, I remember 
>comments from WON and his presenters in which they noted that they were 
>able to spot whether a breakout was going to work almost immediately. They 
>are so good at reading Price/Volume action that they can know whether they 
>are wrong about a breakout long before it hits the 8% rule. I've also 
>heard this same comment from other CANSLIM-style hedge fund managers such 
>as Greg Kuhn, Tim Truebenbach and Kevin Marder. The second thing they do 
>is to set a sell rule that will not allow them *any* loss once a stock has 
>successfully broken out. So, if the stock breaks out and then retraces on 
>light volume to the pivot, fine. But if the breakout succeeds and then 
>begins to fail on high volume, they are out long before it retraces and at 
>the very least, out at purchase price. I think these are subtleties lost 
>when CANSLIMers automatically assume that every purchase should be 
>protected with *exactly* an 8% loss. I think the sell rules are more 
>complex than that, but that doesn't mean they aren't consistent or repeatable.
>
>Katherine

Tim Fisher
Ore-ROCK-On Rockhounding Web Site
Owner, Fisher Fisheries, Ltd.
mailto:tim@OreRockOn.com
WWW http://OreRockOn.com


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