Re: [CANSLIM] Investor's Corner Puzzlement

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Investor's Corner Puzzlement
Date: Tue, 23 Apr 2002 21:26:54 -0500

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Absolutely. Every stock has its own rhythm during its rise. Once the =
stock has moved on and has staged a successful breakout and stayed above =
its pivot, an arbitrary 7 or 8 % trailing stop, mental or hard, is just =
asking to be kicked out of the trade. The same would be true of =
arbitrarily exiting if the stock were to pierce a 10 or 20 day moving =
average, for example. The idea is to interpret normal price/volume =
action during the uptrend. If the stock begins showing signs of wear in =
the uptrend, *then* it's time to raise the caution flags.

And as Dimitri pointed out, the 7-8% stop loss rule on breakout applies =
to the closing price, not an intraday price and it is for that reason =
that WON suggests not setting hard stops on entry.

Katherine
  ----- Original Message -----=20
  From: Harold Josephson=20
  To: canslim@lists.xmission.com=20
  Sent: Tuesday, April 23, 2002 9:09 PM
  Subject: RE: [CANSLIM] Investor's Corner Puzzlement


  Hi Katherine,

  =20

  Thanks for the prompt reply.

  =20

  So, would we then say that the 8% rule applies to the value at the =
time of the breakout, but should not be used to (mindlessly) trail a =
rapidly rising stock?

  =20

  Harold=20


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<DIV>Absolutely. Every stock has its own rhythm during its rise. Once =
the stock=20
has moved on and has staged a successful breakout and stayed above its =
pivot, an=20
arbitrary 7 or 8 % trailing stop, mental or hard, is just asking to be =
kicked=20
out of the trade. The same would be true of arbitrarily exiting if the =
stock=20
were to pierce a 10 or 20 day moving average, for example. The idea is =
to=20
interpret normal price/volume action during the uptrend. If the stock =
begins=20
showing signs of wear in the uptrend, *then* it's time to raise the =
caution=20
flags.</DIV>
<DIV>&nbsp;</DIV>
<DIV>And as Dimitri pointed out, the 7-8% stop loss rule on breakout =
applies to=20
the closing price, not an intraday price and it is for that reason that =
WON=20
suggests not setting hard stops on entry.</DIV>
<DIV>&nbsp;</DIV>
<DIV>Katherine</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=3Dhj@hjosephson.com href=3D"mailto:hj@hjosephson.com">Harold=20
  Josephson</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> Tuesday, April 23, 2002 =
9:09=20
  PM</DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> RE: [CANSLIM] =
Investor's Corner=20
  Puzzlement</DIV>
  <DIV><BR></DIV>
  <DIV class=3DSection1>
  <P class=3DMsoNormal><SPAN class=3DEmailStyle19><FONT face=3DArial =
color=3Dnavy=20
  size=3D2><SPAN=20
  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bidi-font-size: =
12.0pt">Hi=20
  Katherine,<o:p></o:p></SPAN></FONT></SPAN></P>
  <P class=3DMsoNormal><SPAN class=3DEmailStyle19><FONT face=3DArial =
color=3Dnavy=20
  size=3D2><SPAN=20
  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bidi-font-size: =
12.0pt"><![if =
!supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></FONT></SPAN></P>
  <P class=3DMsoNormal><SPAN class=3DEmailStyle19><FONT face=3DArial =
color=3Dnavy=20
  size=3D2><SPAN=20
  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bidi-font-size: =
12.0pt">Thanks=20
  for the prompt reply.<o:p></o:p></SPAN></FONT></SPAN></P>
  <P class=3DMsoNormal><SPAN class=3DEmailStyle19><FONT face=3DArial =
color=3Dnavy=20
  size=3D2><SPAN=20
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  <P class=3DMsoNormal><SPAN class=3DEmailStyle19><FONT face=3DArial =
color=3Dnavy=20
  size=3D2><SPAN=20
  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bidi-font-size: =
12.0pt">So,=20
  would we then say that the 8% rule applies to the value at the time of =
the=20
  breakout, but should not be used to (mindlessly) trail a rapidly =
rising=20
  stock?<o:p></o:p></SPAN></FONT></SPAN></P>
  <P class=3DMsoNormal><SPAN class=3DEmailStyle19><FONT face=3DArial =
color=3Dnavy=20
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  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bidi-font-size: =
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color=3Dnavy=20
  size=3D2><SPAN=20
  style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bidi-font-size: =
12.0pt">Harold</SPAN></FONT></SPAN><![if =
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style=3D"mso-spacerun: yes">&nbsp;</span>AUTOTEXTLIST \s &quot;E-mail=20
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f]--><!--[if supportFields]><span class=3DEmailStyle19><font=20
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style=3D'mso-element:field-begin'></span><span style=3D"mso-spacerun:=20
yes">&nbsp;</span>AUTOTEXTLIST \s &quot;E-mail Signature&quot; <span=20
style=3D'mso-element:field-separator'></span><![endif]--><!--[if =
supportFields]><span=20
style=3D'mso-element:field-end'></span><![endif]-->&nbsp;<o:p></o:p></P><=
/DIV></BLOCKQUOTE></BODY></HTML>

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