RE: [CANSLIM] M for Market

From: "Hill, Ernie" <Ernie.Hill@ElPaso.com>
Subject: RE: [CANSLIM] M for Market
Date: Tue, 9 Apr 2002 13:33:59 -0500

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Dave you are right, but!

Part of my recent research was to do just that, beat the market with those
very few companies that buck the trend. Here is the rub, at least what I
found with the samplings that I was working with. Even when you can get a
good entry point you can easily get whipsawed out of your position when the
market takes one of it's quick drops. The 8% stop loss rule is applicable to
CANSLIM when M is operating in uptrend mode.

Often the very stocks that buck M while it is on its way down are very
volatile because of the condition of M. Two bad days in a row for M and you
could easily be stopped out of your position only to see the market
stabilize and then see your prize stock take off without you. 

Unless you are a champion stock picker the odds are really stacked against
you. I of course am not that smart and too hardheaded to learn from others,
so instead I paid for my education. The main thing I learned from my
research of my investments over the past year and other stocks with CANSLIM
qualities during the same timeframe, is this; the stocks that made money did
so while the market was moving up, and the ones that lost money did so while
the market was moving down.

Granted some of these stocks when up while the market was resting or
dropping only a little, but invariably the market would have a one or two
day sharp drop and I would be stopped out.

That's when I became very focused on timing the short term (one week to two
month) moves of the market. I have found that you can beat the longer term
trend of the market with top quality stocks if you only hold them for a
short period of time while the market is moving up.

Of course timing the short term moves of the market is no easy task either.
Bottom line its easy to look at charts of stocks that have beaten the market
over the past two years, its another thing entirely to have been able to
enter those stocks and not have gotten stopped out unless you are willing to
use wider stop loss points, which can become very expensive when you are
wrong.

Caveat emptor.

E

E


 -----Original Message-----
From: 	Davellil5@aol.com [mailto:Davellil5@aol.com] 
Sent:	Tuesday, April 09, 2002 12:14 PM
To:	canslim@lists.xmission.com
Subject:	[CANSLIM] M for Market

Recent email in our group indicates that one should never, never,  buy a 
stock in a dead market.

This rule is based  on the unstated premise that no stock can ever buck the 
market -- or that there's no way to identify a stock that has a good chance 
of bucking the market.  So, in a dead market, one should always stay in
cash.

Yet we've all seen the charts of hundreds of stocks that could, and did,
buck 
the spooky market of the past two years.  Our problem, friends, is how to 
spot those stocks before they rise out of reach, not to moan about the lousy

market.   What should we be looking for?

One type of Company whose stock can buck this dead market -- I've observed
- -- 
is a Company in a niche business.  Usually, this kind of Company doesn't
even 
belong in its own industry group -- so it may buck its group as well as the 
market as a whole.   I look for those.

Purpose of this email is to pick y'all's brains.  What other types of 
Companies have any  of you noticed with a propensity for bucking a dead 
market.   This market may stay dead for awhile yet.  Let's pool, our brains 
on what to look for.  I hope I get avalanched on this one

Regards to all, Dave

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