Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] When to Buy
Date: Thu, 18 Apr 2002 00:29:57 -0500
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Hi John,
Though the more common volume pattern is a dry up at the bottom of the =
base, there are other ways the stock will behave that do involve some =
"spikey" high volume which shows support at that bottom. At the end of =
this email is a recent "Ask Bill" that describes that action. There are =
a couple of points worth noting however.
First, on the examples from HTMMIS. Take a look at the Control Data =
chart again and notice the volume at the beginning of the cup. It's high =
and then decreases as the cup gets to the bottom. It then rises until =
the pivot point, then falls away as the handle forms. The chart is flea =
sized, so its darned hard to see. Levitz? That's a goofy chart, but the =
one thing you'll notice is that the C&H is very lengthy (7 months), so =
the volume pattern is more likely to have some serious volume spikes in =
it and less likely to trace a smooth and more "normal" volume pattern as =
a result. Think about it, why would a base take 7 months to form? The =
stock is struggling to find footing and will have a lot of false starts =
along the way.
If you look at BMS, try stepping back from the chart and putting it into =
context. The area you are identifying as a C&H is a pause in an uptrend. =
Right now, it appears to be pulling back within that uptrending channel. =
Here's another way to "see" what BMS is doing. Look at the charts for =
PTV and OI which are also in the same container group. Notice what they =
are doing. The only difference between those charts and BMS is that BMS =
is more volatile. So, if you "play" a stock in an uptrend like that, =
rather than buying after a valid consolidating base and breakout, you =
have to buy when it pulls back in the trend and then you have to set =
your exit accordingly, because you're out of the safe zone for entry =
under those conditions. When JohnC said the time to buy was on the left =
side of the chart, I read it as "the time to buy was back when it came =
out of its double bottom or when it broke out of the post-9-11 =
consolidation on volume."
http://WallStreet-LLC.com/canslim/PTV041702.jpg
http://WallStreet-LLC.com/canslim/OI041702.jpg
- --Katherine
Ask Bill O'Neil Archives
Wednesday, April 10, 2002=20
=20
"Regarding a cup-with-handle base, do you want to see volume dry =
up at the bottom of the cup or do you want to see high volume, which may =
signal institutions are stepping in to support the stock?"=20
- Submitted from Saratoga, Calif.=20
=20
At the bottom of a cup-with-handle base, it is preferable to see =
signs of supporting action or accumulation. This can be seen in a number =
of ways, including tight areas of the base where the stock trades within =
a very tight price range for a number of successive weeks; high-volume =
weeks in which the stock closes up for the week; and high-volume =
shakeouts, where the stock sells off badly, but closes in the upper =
portion of the range. These are all signs of accumulation, and as such, =
are positive features of a healthy base.=20
=20
----- Original Message -----=20
From: John Lessnau=20
To: canslim@lists.xmission.com=20
Sent: Wednesday, April 17, 2002 10:26 PM
Subject: Re: [CANSLIM] When to Buy
Thanks for the info Katherine... I gather from your chart mark ups, it =
seems one should look for increased volume on the right side of the cup =
then a drop off in volume on the handle. I just checked some of the =
example cup & handles of the "great winners" in How to Make Money in =
Stocks and most of the examples do not seem to exactly follow this rule. =
See Control Data pg 146 and Levitz furniture pg 147. Both of these =
stocks had huge run ups on less perfect Cup & Handles that BMS is =
currently in. I'll continue to keep an eye on it...
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<DIV>Hi John,</DIV>
<DIV> </DIV>
<DIV>Though the more common volume pattern is a dry up at the =
bottom of the=20
base, there are other ways the stock will behave that do involve some =
"spikey"=20
high volume which shows support at that bottom. At the end of =
this=20
email is a recent "Ask Bill" that describes that action. There are =
a couple=20
of points worth noting however.</DIV>
<DIV> </DIV>
<DIV>First, on the examples from HTMMIS. Take a look at the Control Data =
chart=20
again and notice the volume at the beginning of the cup. It's high and =
then=20
decreases as the cup gets to the bottom. It then rises until the pivot =
point,=20
then falls away as the handle forms. The chart is flea sized, so its =
darned hard=20
to see. Levitz? That's a goofy chart, but the one thing you'll notice is =
that=20
the C&H is very lengthy (7 months), so the volume pattern is more =
likely to=20
have some serious volume spikes in it and less likely to trace a smooth =
and more=20
"normal" volume pattern as a result. Think about it, why would a base =
take 7=20
months to form? The stock is struggling to find footing and will have a =
lot of=20
false starts along the way.</DIV>
<DIV> </DIV>
<DIV>If you look at BMS, try stepping back from the chart and putting it =
into=20
context. The area you are identifying as a C&H is a pause in an =
uptrend.=20
Right now, it appears to be pulling back within that uptrending channel. =
Here's=20
another way to "see" what BMS is doing. Look at the charts for PTV and =
OI which=20
are also in the same container group. Notice what they are doing. The =
only=20
difference between those charts and BMS is that BMS is more volatile. =
So, if you=20
"play" a stock in an uptrend like that, rather than buying after a valid =
consolidating base and breakout, you have to buy when it pulls back in =
the trend=20
and then you have to set your exit accordingly, because you're out of =
the safe=20
zone for entry under those conditions. When JohnC said the time to buy =
was on=20
the left side of the chart, I read it as "the time to buy was back when =
it came=20
out of its double bottom or when it broke out of the post-9-11 =
consolidation on=20
volume."</DIV>
<DIV> </DIV>
<DIV><A=20
href=3D"http://WallStreet-LLC.com/canslim/PTV041702.jpg">http://WallStree=
t-LLC.com/canslim/PTV041702.jpg</A></DIV>
<DIV><A=20
href=3D"http://WallStreet-LLC.com/canslim/OI041702.jpg">http://WallStreet=
- -LLC.com/canslim/OI041702.jpg</A></DIV>
<DIV> </DIV>
<DIV>--Katherine</DIV>
<DIV> </DIV>
<DIV>
<TABLE cellSpacing=3D0 cellPadding=3D0 width=3D"80%" border=3D0>
<TBODY>
<TR>
<TD vAlign=3Dtop><FONT size=3D2>
<H2 class=3Dtxthead>Ask Bill O'Neil Archives</H2><SPAN =
class=3Dtxtsub><!--, , -->Wednesday, April 10, 2002=20
</SPAN><BR> </FONT></TD></TR>
<TR>
<TD class=3Dcopy vAlign=3Dtop><FONT size=3D2><IMG height=3D25=20
src=3D"http://www.investors.com/images/staQ.gif" width=3D38 =
align=3Dleft=20
border=3D0> "Regarding a cup-with-handle base, do you want to see =
volume dry=20
up at the bottom of the cup or do you want to see high volume, =
which may=20
signal institutions are stepping in to support the =
stock?"</FONT></TD></TR>
<TR>
<TD class=3Dcopy vAlign=3Dbottom align=3Dright><FONT=20
size=3D2><B><I>- Submitted from Saratoga,=20
Calif.</B></I></FONT></TD></TR>
<TR>
<TD class=3Dcopy vAlign=3Dtop><FONT size=3D2> <BR><IMG =
height=3D25=20
src=3D"http://www.investors.com/images/staA.gif" width=3D38 =
align=3Dleft=20
border=3D0>
<SCRIPT language=3DJavaScript>
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OAS_AD('www.investors.com/AskBill250', 'x17');
//-->
</SCRIPT>
<SCRIPT language=3DJavaScript1.1=20
=
src=3D"http://oascentral.investors.com/RealMedia/ads/adstream_jx.ads/www.=
investors.com/AskBill250/1778905591@x17?_RM_HTML_TARGET_=3D_blank"></SCRI=
PT>
<A=20
=
href=3D"http://oas-central.realmedia.com/RealMedia/ads/click_lx.ads/www.i=
nvestors.com/AskBill250/837643288/x17/default/empty.gif/34323230333035613=
363363331613030"=20
target=3D_blank><IMG height=3D2 alt=3D""=20
=
src=3D"http://realmedia-a800.d4p.net/6/800/1129/0005/oas-central.realmedi=
a.com/RealMedia/ads/Creatives/default/empty.gif"=20
width=3D2 border=3D0></A> At the bottom of a cup-with-handle base, =
it is=20
preferable to see signs of supporting action or accumulation. This =
can be=20
seen in a number of ways, including tight areas of the base where =
the=20
stock trades within a very tight price range for a number of =
successive=20
weeks; high-volume weeks in which the stock closes up for the =
week; and=20
high-volume shakeouts, where the stock sells off badly, but closes =
in the=20
upper portion of the range. These are all signs of accumulation, =
and as=20
such, are positive features of a healthy base.=20
</FONT><BR></TD></TR></TBODY></TABLE></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Djl@lessnau.com href=3D"mailto:jl@lessnau.com">John =
Lessnau</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Wednesday, April 17, 2002 =
10:26=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] When to =
Buy</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2>Thanks for the info Katherine... I gather =
from your=20
chart mark ups, it seems one should look for increased volume on the =
right=20
side of the cup then a drop off in volume on the handle. I just =
checked=20
some of the example cup & handles of the "great winners" in <U>How =
to Make=20
Money in Stocks</U> and most of the examples do not seem to=20
exactly follow this rule. See Control Data pg 146 and =
Levitz=20
furniture pg 147. Both of these stocks had huge run ups on less =
perfect=20
Cup & Handles that BMS is currently in. I'll continue to =
keep an eye=20
on it...</FONT><FONT size=3D2></FONT></DIV>
<DIV><FONT size=3D2></FONT> </DIV>
<DIV><FONT size=3D2></FONT> </DIV></BLOCKQUOTE></BODY></HTML>
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