Re: [CANSLIM] Canslim Evaluation Tool

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Canslim Evaluation Tool
Date: Wed, 3 Apr 2002 05:00:47 -0500
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Hi Mike,

I thought it interesting that both Tim and I saw, within seconds of each
other, exactly the same point: AHMH is over 30% below recent highs. Because
I screen only for stocks breaking new highs, I don't use the 50/200 DMA
lines as screening criteria, but from chart reading training, I do normally
want to see the 50 above the 200, as this shows that the short term trend is
up, not flat or down.  I have also noted many times in the past that a stock
I otherwise liked, but had the 50 still under the 200, would often show an
explosive growth starting when the 50 crossed the 200 upward.

I skimmed thru HTMMIS this morning without finding the references to moving
averages I was looking for. Will keep looking for this, but I know that when
WON's staffers trained me to read charts, these two averages were heavily
emphasized. I also note that at least the 50 DMA is included in every WON
chart.

I took a closer look at the chart tonight. Initially, all I saw was lower
highs and lower lows, which is why I was surprised at a rating of 10.
Examining the past week, I did see that intraday, it broke the last high of
14.90 several times, but failed to close there. At the moment, the latest
low around $13 appears to be holding. So this pattern may be reversing. But
I completely agree with Tim, so long as the 50 DMA is below the 200 DMA,
it's too early to be buying. Would I exclude a stock that is 30% or more
below its 12 month high? Absolutely not, for just that reason. But I
definitely would not want to be buying until it had not only based out, but
had begun to recover to a point where the 50 was trending up, and climbing
past the 200 DMA.

As to the rest of my criticisms:
Industry Group = D - as most know, I look for strong stocks, regardless of
industry. Not a good practice, also not correct per CANSLIM. Works for me,
but not something I advocate for most. And many / most in the group do pay
attention to the Industry strength. Some may be interested in a stock
performing well in a low rated industry, but usually only when the industry
group is moving up.

my comment on selling vs buying was only about insider activity, not overall
volume - in the past seven months, DGO shows 27 separate instances of
insider selling without a single insider buy. And during most of that time,
the stock was in a downtrend, so not a healthy signal.

cash flow: the most basic rule I observe is that you want cash flow to
exceed latest full year profits. Of course, games can be played with both
figures. You can get more specific on this, and others in the group have
more knowledge and experience in measuring cash flow and using it to
evaluate stocks, so I will let them comment further.

earnings forecast - 12%, even in a slow, or even shrinking, economy will not
attract me. I look for a minimum of 20% for current year. If late in the
year, I need to see at least 20% for the next year. If there are no
forecasts, then I need to see sequential earnings growth that convinces me
of a strong and continuing trend upward in earnings. Most stocks I actually
buy will have forecasts of 30-50% growth or more.

Hope this clarifies,

Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
- ----- Original Message -----
From: "Mike Gibbons" <mikegibbons@proactech.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, April 03, 2002 3:02 AM
Subject: RE: [CANSLIM] Canslim Evaluation Tool


To Tim,

I wonder if you would pour such similar scorn on other stocks that rate a 94
on Investors.com (with two best in groups!).

Yes it's 30% below it's high but does that disqualify it as a CANSLIM stock?
Also, as I understand CANSLIM, there is nothing in the definition that
speaks of 50 or 200dma's, although they may well be additional metrics to
add to the mix of decision making tools. If I'm wrong please correct me.

To Tom's more rational response, I would make the following comments and ask
for more commentary:

- - overhead resistance? when stocks start climbing the right side of the cup,
the overhead resistance is always there, but many overcome it. We try to
identify such potential candidates. Would a stock that's 30% off it's high
be automatically excluded from consideration.

- - industry is a D: yup, few stocks are perfect

- - no buying? As I see it, the stock experienced buying from 3/4 to 3/7 and
then formed a classic downward wedging handle. It then rose again and is
forming a second handle. Is there another source of information I'm missing
apart from what's in the chart?

- - cash flow: Not part of the CANSLIM definition as I understand it but maybe
I should incorporate it into the analysis. What should be the parameters?

- - earnings forecast of "only 12% growth": again not a formal CANSLIM
component, but I wonder what the average forecast is? 12% sounds pretty good
to me in an economy that may grow 3.5% if we're lucky. What would be the
standard that you would look for?

I have no interest in touting this stock, but it came on to my radar screen
and I shared it with you all as the best CWH and CANSLIM candidate I have
seen recently. This is the type of discussion I had hoped to generate so I
can improve the tool. Thank you for your input - I look forward to your
responses.

Aloha,

Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tim Fisher
Sent: Tuesday, April 02, 2002 4:19 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Canslim Evaluation Tool


A stock 30% below its 52 wk high and with the 50dma under the 200 gets a
10? Out of what, 100? Seriously, how is this a CANSLIM chart?

At 04:11 PM 4/2/2002 -1000, you wrote:
>Duke,
>
>(and others) here's one for you... AHMH ... a "10"  - lacking only industry
>ranking
>
>Aloha,
>
>Mike Gibbons
>Proactive Technologies, LLC
>http://www.proactech.com
>
>
>-----Original Message-----
>From: owner-canslim@lists.xmission.com
>[mailto:owner-canslim@lists.xmission.com]On Behalf Of Duke Miller
>Sent: Tuesday, April 02, 2002 9:09 AM
>To: canslim@lists.xmission.com
>Subject: RE: [CANSLIM] Canslim Evaluation Tool
>
>
>Bill,
>
>Great input here.  How about a show of hands of those who've been
>stopped out of A+ Stock Checkup stocks!
>
>And as always, thanks, Mike.  I'm one of the heavy users, and if it
>doesn't hit 6/11 or better, I'm onto the next one.
>
>Duke
>
>-----Original Message-----
>From: owner-canslim@lists.xmission.com
>[mailto:owner-canslim@lists.xmission.com] On Behalf Of Bill Triffet
>Sent: Monday, March 25, 2002 1:56 PM
>To: canslim@lists.xmission.com
>Subject: Re: [CANSLIM] Canslim Evaluation Tool
>
>
>Mike,
>
>First, I'd like to say thanks for the tool.
>
>I have yet to see anyone else - WON's products included - attempt to do
>something so basic as rate a stock directly to the c-a-n-s-l-i-m acronym
>attributes. Maybe because it's such a subjective thing that it's easier
>to dance around the numbers than really grade a stock based on canslim.
>The Stock Evaluator on the IBD site is pretty weak with in that regard.
>I guess if they actually graded a stock on ACTUAL IBD canslim data that
>would be construed as touting a stock. This is why most of us go to at
>least 3-5 different places to review a stock or use Daily Graphs where
>the data is all there but not exactly spelled out so as to not tout the
>issue.
>
>I think it's a great tool in addition to several others. Given it's
>price
>(g) I have no complaints and it comes close in some of the canslim
>criteria for me. Things like (M)arket direction and (N)ew can be very
>subjective and must be reviewed several ways. Come to think of it,
>lately when I see a high
>(L) rating it's usually extended as that is how it got there. I'm of the
>consensus of several others here that with data being so immediate, it's
>better to look for the gems in rising groups - not at the top.
>
>-Bill
>
>
>----- Original Message -----
>From: "Mike Gibbons" <mike@proactech.com>
>To: <canslim@lists.xmission.com>
>Sent: Monday, March 25, 2002 10:24 AM
>Subject: [CANSLIM] Canslim Evaluation Tool
>
>
> >
> > Since I released this tool to the group on 3/13, I (and my server)
> > have
>been
> > overwhelmed with the response. 182 of you have used the tool at least
> > once and several of you have accessed it frequently. Some of you are
> > using it extensively - the current record is 100 stocks analyzed by
> > one list subscriber in a single day!
> >
> > Apart from being pleasantly surprized at the use that many of you are
>making
> > of it, I'm also surprized that only one of you has questioned the
> > validity of the data, and the assumptions that go into the pass/fail
> > ranking. I was expecting a lively debate about the definitions of
> > CANSLIM and their applicability in the recent market conditions.
> >
> > For those of you who may have missed it, the link is
> > http://www.cwhcharts.com/canslim
> >
> > Aloha,
> >
> > Mike Gibbons
> > Proactive Technologies, LLC
> > http://www.proactech.com

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


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