Re: [CANSLIM] M for Market

From: Ian <ianstm@shaw.ca>
Subject: Re: [CANSLIM] M for Market
Date: Tue, 09 Apr 2002 20:44:40 -0700

Previous Article (by Date): Re: [CANSLIM] MOVI John Lessnau
Top of Thread: RE: [CANSLIM] M for Market "Mona Guarino"
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"one should never, never,  buy a  stock in a dead market"

No way. IMHO, the sector is way more important the market. If you were a
DJIA or NYSE investor from Oct '98 to March '00, the 'market' would have
looked like a terrible bear. There were even some who refused to buy because
of 'M' in that period. Yet a monkey on 6 beers could have thrown darts at a
NAZ tech stock with any kind of revenue or EPS growth and made several
hundred percent returns (at a minimum).

Anybody in housing, financials, and medicals (through the first 6-8 months)
in 2001 felt like they were in a raging bull market.

I also agree with you that a niche company whose business is strong can
easily buck an index trend.

IMHO, it boils down to the current strength of the business (revenue and EPS
growth, and margin expansion) along with valuation. Valuation doesn't matter
much in a raging bull, but it does matter when the indexes are dropping. Any
stock with strong growth, in a friendly sector, with a modest valuation (and
by inference - room for multiple growth, which is where the big returns are
made), that experiences a sustained surge in volume out of a strong base can
easily buck index directions.

IMHO, a sustained surge in ADV, when there is room for multiples to double
or triple, is the #1 predictor of medium-term price appreciation - not the
market.

Have a look at 3-year weekly charts where the volume is shown below the
price, for the following stocks - TARO, MTON, DHI   WON gives a lot of
lip-service to the volume on the breakout days, but what's really important
is how well that increase in volume is sustained - you'll see it in these
charts.


Ian



- ----- Original Message -----
From: <Davellil5@aol.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, April 09, 2002 10:13 AM
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
>
> -
> -To subscribe/unsubscribe, email "majordomo@xmission.com"
> -In the email body, write "subscribe canslim" or
> -"unsubscribe canslim".  Do not use quotes in your email.


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Previous Article (by Date): Re: [CANSLIM] MOVI John Lessnau
Top of Thread: RE: [CANSLIM] M for Market "Mona Guarino"
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