Go to Jeff Salisbury LWGate Home Page.From: "William King" <wk11@adelphia.net>
Subject: Re: [CANSLIM] MWRK, microcaps, charts
Date: Fri, 3 May 2002 22:32:52 -0400
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Katherine,
I would like to reorganize my approach to watchlist management. I =
started with a notebook and the Investors.com watchlists (80 stocks max) =
then subscribed to DGO and have started to set up watchlists based on =
market cap ( don't really know why but it seemed like a good way to =
separate them). I still have scattered paper notes around also. Feels =
like I'm back at work and totally disorganized!! Any suggestions?
Thanks,
Bill King
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Friday, May 03, 2002 4:02 PM
Subject: Re: [CANSLIM] MWRK, microcaps, charts
Thanks, Ian. I'm relieved to hear that the parabolic rise from the =
base is an oddity and not the "norm" for most market conditions. Sure =
makes these mighty mites hard to catch unless you're on top of them =
prior to the breakout and ready to strike intraday. I'm still =
conditioned to play a conservative hand on breakouts....old habits die =
hard...
I completely understand what you mean about missing a good stock =
initially in your radar. Last Fall I completely overhauled my watchlist =
notation/management system for just that reason. Always drove me crazy =
to see something breakout that was in my sites and fell away through =
some unexplainable oversight.
Thanks again for the comprehensive reply,
Katherine
----- Original Message -----=20
From: Ian=20
To: canslim@lists.xmission.com=20
Sent: Friday, May 03, 2002 11:25 AM
Subject: Re: [CANSLIM] MWRK, microcaps, charts
Katherine:
In my experience, most strong microcaps come out of their slumber =
with the same chart patterns as their larger brethren. The biggest =
differences are:
1. The relative change in the ADV willl usually be at least 200-300% =
higher, and often 1000-2000% higher.
2. It is not uncommon for the initial gains, in the first few days =
of a breakout, to exceed 50%.
MTHR is a bit painful for me to look at, as it was a 'triple star' =
entry in my little notebook (those are quite rare) on January 22 at $12 =
- - and for the life of me, I cannot figure out why I never followed up on =
it and bought in :( The steady increase in volume following the March =
1 breakout was a classic 'strong buy' indicator in these kind of stocks =
- - offering a great entry in the $14 - $15 range. I should never have =
missed it - a major flaw or omission in my alert system.
Regarding the April strength, I would say that the strength of the =
run, from $16 to $32 is recent market anomaly, and not 'traditional' =
behaviour for microcaps. I believe it is a byproduct of two things:
1. The 'need' for $15+ stocks
2. The incredibly strong interest in microcaps right now
Since most microcaps are struggling under the comfort level of =
institutions (under $10), the rare ones that make it up to the $12-$14 =
range with strong bases can go parabolic in this market. MTEC is another =
great recent example. Both have in the neighbourhood of 4,000,000 shares =
outstanding. When you combine that low float with a 1000%+ change in =
ADV, like MWRK and MTEC saw, it often results in the chart you see.
One other thing to note is that from a valuation perspective, a $10 =
surge in price does not actually impact the P/S and P/B multiples too =
much. I remember being in awe at how Juniper could go up by a multiple =
of 10 times revenue in a day during the bubble.
Finally, I would agree that unlike their larger brethren, these runs =
to not immediately scream 'short'. I suspect that the main reason for =
this difference is valuation. Many of these stocks are coming off of =
extremely low valuations relative to other high-beta stocks. The =
traditional sell rules still apply though.
Ian
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Friday, May 03, 2002 7:54 AM
Subject: [CANSLIM] MWRK, microcaps, charts
Ian,
I'm addressing this to you primarily, as you are more familiar =
with microcap behavior, though others on the list may have a point of =
view on this as well... I tend to stick to stocks trading >=3D$10, but =
monitor lower priced stocks for the up and comers. Something I've =
observed that confuses me, however, are the chart patterns for these =
minis as they begin their charge ahead. A good recent example is MWRK =
(not a perfect example, because it traded around 6-12 for quite a while =
before breakout, but good enough for the chart example.)
The question is this....when I look at this chart, it looks like a =
classic parabolic climax run. Something I normally see after a stock has =
put in its 3rd or 4th stage base and is giving up the ghost. In those =
cases, I'm looking to run for cover or short. But what I've noticed =
lately is the tendency for microcaps to shoot into these patterns after =
breaking from their long flat slumbering bases, settle down, and then =
start a steady ascent. Is that a "normal" pattern that I'm seeing for =
the microcaps or is it an anomaly that you've noticed in the market over =
the last couple of years? Any and all thoughts on the subject would be =
most appreciated.
Katherine
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<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial size=3D2>Katherine,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>I would like to reorganize my approach =
to watchlist=20
management. I started with a notebook and the Investors.com =
watchlists=20
(80 stocks max) then subscribed to DGO and have started to set up =
watchlists=20
based on market cap ( don't really know why but it seemed like a good =
way to=20
separate them). I still have scattered paper notes around also. =
Feels like=20
I'm back at work and totally disorganized!! Any =
suggestions?</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Thanks,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Bill King</FONT></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=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</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> Friday, May 03, 2002 4:02 =
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] MWRK, =
microcaps,=20
charts</DIV>
<DIV><BR></DIV>
<DIV>Thanks, Ian. I'm relieved to hear that the parabolic rise from =
the base=20
is an oddity and not the "norm" for most market conditions. Sure makes =
these=20
mighty mites hard to catch unless you're on top of them prior to the =
breakout=20
and ready to strike intraday. I'm still conditioned to play a =
conservative=20
hand on breakouts....old habits die hard...</DIV>
<DIV> </DIV>
<DIV>I completely understand what you mean about missing a good stock=20
initially in your radar. Last Fall I completely overhauled my =
watchlist=20
notation/management system for just that reason. Always drove me crazy =
to see=20
something breakout that was in my sites and fell away through some=20
unexplainable oversight.</DIV>
<DIV> </DIV>
<DIV>Thanks again for the comprehensive reply,<BR>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=3Dianstm@shaw.ca href=3D"mailto:ianstm@shaw.ca">Ian</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>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Friday, May 03, 2002 =
11:25=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] MWRK, =
microcaps,=20
charts</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2>Katherine:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>In my experience, most strong microcaps come out =
of their=20
slumber with the same chart patterns as their larger brethren. The =
biggest=20
differences are:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>1. The relative change in the ADV willl usually =
be at=20
least 200-300% higher, and often 1000-2000% higher.</FONT></DIV>
<DIV><FONT size=3D2>2. It is not uncommon for the initial gains, in =
the first=20
few days of a breakout, to exceed 50%.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>MTHR is a bit painful for me to look at, as it =
was a=20
'triple star' entry in my little notebook (those are quite rare) on =
January=20
22 at $12 - and for the life of me, I cannot figure out why I never =
followed=20
up on it and bought in :( The steady increase in volume=20
following the March 1 breakout was a classic 'strong buy' indicator =
in these=20
kind of stocks - offering a great entry in the $14 - $15 range. I =
should=20
never have missed it - a major flaw or omission in my alert=20
system.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Regarding the April strength, I would say that =
the=20
strength of the run, from $16 to $32 is recent market anomaly, and =
not=20
'traditional' behaviour for microcaps. I believe it is a byproduct =
of two=20
things:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>1. The 'need' for $15+ stocks</FONT></DIV>
<DIV><FONT size=3D2>2. The incredibly strong interest in microcaps =
right=20
now</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Since most microcaps are struggling under the =
comfort=20
level of institutions (under $10), the rare ones that make it up to =
the=20
$12-$14 range with strong bases can go parabolic in this market. =
MTEC is=20
another great recent example. Both have in the neighbourhood of =
4,000,000=20
shares outstanding. When you combine that low float with a =
1000%+=20
change in ADV, like MWRK and MTEC saw, it often results in the chart =
you=20
see.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>One other thing to note is that from a valuation =
perspective, a $10 surge in price does not actually impact the P/S =
and P/B=20
multiples too much. I remember being in awe at how Juniper could go =
up by a=20
multiple of 10 times revenue in a day during the =
bubble.</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Finally, I would agree that unlike their larger =
brethren,=20
these runs to not immediately scream 'short'. I suspect that the =
main reason=20
for this difference is valuation. Many of these stocks are coming =
off of=20
extremely low valuations relative to other high-beta stocks. The =
traditional=20
sell rules still apply though.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Ian</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Friday, May 03, 2002 =
7:54=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] MWRK, =
microcaps,=20
charts</DIV>
<DIV><BR></DIV>
<DIV>Ian,</DIV>
<DIV> </DIV>
<DIV>I'm addressing this to you primarily, as you are more =
familiar with=20
microcap behavior, though others on the list may have a point of =
view on=20
this as well... I tend to stick to stocks trading >=3D$10, but =
monitor=20
lower priced stocks for the up and comers. Something I've observed =
that=20
confuses me, however, are the chart patterns for these minis as =
they begin=20
their charge ahead. A good recent example is MWRK (not a perfect =
example,=20
because it traded around 6-12 for quite a while before breakout, =
but good=20
enough for the chart example.)</DIV>
<DIV> </DIV>
<DIV>The question is this....when I look at this chart, it looks =
like a=20
classic parabolic climax run. Something I normally see after a =
stock has=20
put in its 3rd or 4th stage base and is giving up the ghost. In =
those=20
cases, I'm looking to run for cover or short. But what I've =
noticed lately=20
is the tendency for microcaps to shoot into these patterns after =
breaking=20
from their long flat slumbering bases, settle down, and then start =
a=20
steady ascent. Is that a "normal" pattern that I'm seeing for the=20
microcaps or is it an anomaly that you've noticed in the market =
over the=20
last couple of years? Any and all thoughts on the subject would be =
most=20
appreciated.</DIV>
<DIV> </DIV>
=
<DIV>Katherine</DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>=
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Next Article (by Subject): Re: [CANSLIM] SAH - now IBD "Bert Pesak"
Previous Article (by Subject): [CANSLIM] CANSLIm Evaluator Updates "Mike Gibbons"
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