Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] When to Buy
Date: Thu, 18 Apr 2002 10:44:48 -0500
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Hi jans,
Pullback to me simply means that it is moving down to the lower end of =
support within its current uptrend. I don't see the current action as a =
consolidation (base). It's a subtle difference, and sometimes hard to =
distinguish. Here's how I see the "normal" action you would expect in =
stocks:
Basing/consolidation-- happens after a *prior* uptrend (or downtrend), =
simply means the stock is pausing for a meaningful refresh before =
resuming or changing directions. Until the base/consolidation ends, you =
do not know which direction it will necessarily go. The move out of the =
consolidation tells you that and its why you don't want to enter =
*during* consolidation.
Uptrend-- stock has made a meaningful consolidation and has moved out of =
it. The uptrend can be more or less volatile, but can be defined with =
channel lines. Another way of saying, if I taped the chart on the wall =
and walked 6 feet back, which direction would I draw the big =
arrow...flat or up? If it's up, it's in an uptrend.
Pullback-- the big arrow is up, but if I stand 1 foot away from the =
chart, I can see that it is moving down toward the bottom of the =
uptrending channel. Far better if the down days are on low volume and/or =
there is plenty of volume at critical support (e.g. the 50dMA)
Failure--the stock has a big up arrow, but all of a sudden, signs of =
failure are showing up. Down days on big volume, a series of =
distribution days all at once, churning at the top (high volume and =
little/no progress for 2 or more days), high volume reversals (tails =
down), lack of support at the bottom of the upward channel, high volume =
down day that pushes the stock well below the 50dMA, gaps down on =
earnings announcements, breaking out of a too short base, climax runs, =
etc.
Tim Truebenbach once told me that pullbacks and bases often look =
similar, the only difference is that the pullback doesn't trigger any =
sell rules, while the base, which often is a more severe correction =
after the uptrend, will trigger sell rules. Nothing's to say you can't =
enter on a pullback in an uptrend, though as a percent of entries, I =
keep those fairly small and generally keep them on a tight rope. Another =
way of thinking of it is that entering on a pullback is a trader's =
tactic, entering on a clean break from a base is an investor's tactic. =
(Stan Weinstein uses that distinction in his book, Secrets to Profiting =
in Bull and Bear Markets.)
Katherine
PS I was avoiding any discussion of fundamentals out of respect for =
John's original message which was "assuming all other CANSLIM criteria =
is met."
----- Original Message -----=20
From: Spencer48@aol.com=20
To: canslim@lists.xmission.com=20
Sent: Thursday, April 18, 2002 10:21 AM
Subject: Re: [CANSLIM] When to Buy
Katherine:
Provocative chart and interesting comments. But why do you =
believe BMS=20
is in a pullback mode, and not beginning the end of a weakish uptrend?
Your comment: "Volume is the inverse of what you would see in a=20
basing..." is not how I view it. To me up volume seems to be =
overwhelming=20
down volume-except at that one area in the recent nadir. And notice =
that the=20
nadir came at the 50 support line-so I view it as institutions =
supporting the=20
stock. =20
However, I would agree that its uptrend is sickly and =
lackadaisical. =20
From a chart perspective only, I'd say it is building a cup. From a =
Canslim=20
perspective, I'd say it's a "no-go" (Not great earnings; negative =
sales=20
revenues; Cash-Flow is nearly twice 2001's earnings, which to me =
indicates=20
that the company is negligent in not investing their overflow of =
cash).
jans
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<DIV>Hi jans,</DIV>
<DIV> </DIV>
<DIV>Pullback to me simply means that it is moving down to the lower end =
of=20
support within its current uptrend. I don't see the current action as a=20
consolidation (base). It's a subtle difference, and sometimes hard to=20
distinguish. Here's how I see the "normal" action you would expect in=20
stocks:</DIV>
<DIV> </DIV>
<DIV>Basing/consolidation-- happens after a *prior* uptrend (or =
downtrend),=20
simply means the stock is pausing for a meaningful refresh before =
resuming or=20
changing directions. Until the base/consolidation ends, you do not know =
which=20
direction it will necessarily go. The move out of the consolidation =
tells you=20
that and its why you don't want to enter *during* =
consolidation.</DIV>
<DIV> </DIV>
<DIV>Uptrend-- stock has made a meaningful consolidation and has moved =
out of=20
it. The uptrend can be more or less volatile, but can be defined with =
channel=20
lines. Another way of saying, if I taped the chart on the wall and =
walked 6 feet=20
back, which direction would I draw the big arrow...flat or up? If it's =
up, it's=20
in an uptrend.</DIV>
<DIV> </DIV>
<DIV>Pullback-- the big arrow is up, but if I stand 1 foot away from the =
chart,=20
I can see that it is moving down toward the bottom of the uptrending =
channel.=20
Far better if the down days are on low volume and/or there is plenty of =
volume=20
at critical support (e.g. the 50dMA)</DIV>
<DIV> </DIV>
<DIV>Failure--the stock has a big up arrow, but all of a sudden, signs =
of=20
failure are showing up. Down days on big volume, a series of =
distribution days=20
all at once, churning at the top (high volume and little/no progress for =
2 or=20
more days), high volume reversals (tails down), lack of support at the =
bottom of=20
the upward channel, high volume down day that pushes the stock well =
below=20
the 50dMA, gaps down on earnings announcements, breaking out of a too =
short=20
base, climax runs, etc.</DIV>
<DIV> </DIV>
<DIV>Tim Truebenbach once told me that pullbacks and bases often look =
similar,=20
the only difference is that the pullback doesn't trigger any sell rules, =
while=20
the base, which often is a more severe correction after the uptrend, =
will=20
trigger sell rules. Nothing's to say you can't enter on a pullback in an =
uptrend, though as a percent of entries, I keep those fairly small and =
generally=20
keep them on a tight rope. Another way of thinking of it is that =
entering on a=20
pullback is a trader's tactic, entering on a clean break from a base is =
an=20
investor's tactic. (Stan Weinstein uses that distinction in his book, =
Secrets to=20
Profiting in Bull and Bear Markets.)</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>PS I was avoiding any discussion of fundamentals out of respect for =
John's=20
original message which was "assuming all other CANSLIM criteria is =
met."</DIV>
<BLOCKQUOTE=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=3DSpencer48@aol.com=20
href=3D"mailto:Spencer48@aol.com">Spencer48@aol.com</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> Thursday, April 18, 2002 =
10:21=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] When to =
Buy</DIV>
<DIV><BR></DIV>Katherine:<BR><BR> Provocative chart =
and=20
interesting comments. But why do you believe BMS <BR>is in a =
pullback=20
mode, and not beginning the end of a weakish=20
uptrend?<BR><BR> Your comment: "Volume is the =
inverse=20
of what you would see in a <BR>basing..." is not how I view =
it. To=20
me up volume seems to be overwhelming <BR>down volume-except at that =
one area=20
in the recent nadir. And notice that the <BR>nadir came at the =
50=20
support line-so I view it as institutions supporting the =
<BR>stock. =20
<BR><BR> However, I would agree that its =
uptrend is=20
sickly and lackadaisical. <BR>From a chart perspective only, I'd =
say it=20
is building a cup. From a Canslim <BR>perspective, I'd say it's =
a=20
"no-go" (Not great earnings; negative sales <BR>revenues; Cash-Flow is =
nearly=20
twice 2001's earnings, which to me indicates <BR>that the company is =
negligent=20
in not investing their overflow of=20
cash).<BR><BR>jans<BR></BLOCKQUOTE></BODY></HTML>
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