Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Today's WebLink
Date: Thu, 30 May 2002 10:36:44 -0500
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Thanks, Mike.
I separate my sell rules into the following broad categories:
- -At the breakout--B/O on low vol, short base, etc. (that's actually a =
sell avoid), reversal day w. tail on B/O day
- -Immediately following the B/O (1st wk or so)--7-8% rule, reversal day =
on volume within a couple of days of B/O, fall and close below pivot on =
volume
Assuming it starts moving up and doesn't hit sell stop rule:
- -1st 8 weeks--too many up days on low volume, down days on high volume; =
RSLine begins to turn down when most everything else is moving up, =
etc.-sell
- -8 wk mark >=3D20%?, one set of sell rules kicks in that gives a bit =
more leeway to the stock
- -8 wk mark <20%?, if the rest of the market is healthy and this one =
hasn't moved with it, it's a laggard, sell. If the market is choppy =
and/or downtrending, but this remains healthy with support at key MA's =
and trend lines, then it wouldn't be an outright sell simply because it =
hasn't moved 20%+ in 8 wks.
Key is market backdrop and industry condition more than anything. =
Pullbacks are normal in an uptrend, the question is whether the stock is =
showing a "normal/healthy" pullback or showing signs of wear. Also =
critical would be the behavior of competitors and/or industry brethren. =
If the stock is still healthy in its uptrend but darn near every other =
industry brethren is breaking down, sell rules are more stringent. If =
the stock is leading the pack on the way up, then sell rules are more =
liberal.
Katherine
----- Original Message -----=20
From: michael_niemotka@baxter.com=20
To: canslim@lists.xmission.com=20
Sent: Thursday, May 30, 2002 10:21 AM
Subject: Re: [CANSLIM] Today's WebLink
Katherine,
VERY well put.
I would ask this question to the group: How much time do you give a =
new
position to grow, assuming that you bought it at a breakout point. I =
guess
another way to phase the question is: how long after an breakout =
attempt do
you wait before backing out of the position (minus commisions of =
course) to
get the capital back for entry into another possible winner?
Do any of you have any "rules" like: Need to see an X% gain within the
first 4 weeks
Other than the 7-8% loss rule I wonder if other get out sooner if it =
looks
like the breakout failed, or do you hold on for a few weeks.
Thanks
Mike Niemotka , PE
Sr. Principal Engineer
Baxter Healthcare Corporation
Route 120 & Wilson Road
Round Lake, IL 60073
Tel (847) 270-4075
Fax (847) 270-4525
michael_niemotka@baxter.com
=
=20
"Katherine Malm" =
=20
<kmalm@earthlink.net> To: =
canslim@lists.xmission.com =20
Sent by: cc: =
=20
owner-canslim@lists.xm Subject: Re: =
[CANSLIM] Today's WebLink =20
ission.com =
=20
=
=20
=
=20
05/30/2002 09:33 AM =
=20
Please respond to =
=20
canslim =
=20
=
=20
=
=20
Hi Duke,
Churning is a well documented sign of distribution at the top and =
isn't
something pulled out of the air by the author. Below I've sited some
resources from TradingMarkets.com (Loren F. used to write for the IBD) =
and
from Investors.com.
With respect to HOV in general, just goes to show that sell rules =
aren't
all that cut and dried. Most of the sell "rules are actually =
guidelines and
are used to "stack up" the evidence so to speak.
With HOV, I would go through a what-if similar to this:
-Breakout from sound base? Yes 2/26, approx. $22.40
-Run up of >=3D20% in less than 8 wks? Yes. By 4/19 was up 38%
-At this point, a subset of sell rules start to kick in: That is, if =
the
stocks runs up >=3D20% in 8 wks, you "may" want to sit through the =
first
correction. (from HTMMIS, paraphrased)
-May comes along and HOV gets its first bout of churning and =
distribution
( 5/6 heavy dist., 5/7 churning, 5/8 heavy dist.)
-What to do?
-Step 1: stack up the evidence
pro: leading group, high RS and rising, market had FTD
con: group has been on a long run since early 2000, =
may be
finished, many stocks breaking down
Choice 1: Weigh in, make a descision to hold on based on the =
>=3D20%
in 8 wks guideline. Evidence you'll be looking for thereafter--support =
at
50dMA, action of other stocks, etc. (similar to the Weblink article)
-Choice 2: 2 days of heaving distribution + 1 churning =3D heavy
evidence of unloading in 5 short days. Sell.
As far as I've been able to figure out, sell rules are *not* cut and =
dried.
The individual's interpretation of the evidence, their tolerance for =
pain,
their profit goals in entering the position, the length of time =
they've
held the stock and current gains will weigh in to the decision. So, =
two
people decide completely differently given the same chart AND the same =
set
of WON/CANSLIM sell rules. Darn, wish it were more clear. I'd love to =
do a
calculation and punch a button in/out. Now wouldn't *that* be keen?
-Katherine
Here are a few articles I've uploaded on the subject:
http://WallStreet-LLC.com/canslim/NewHighLightVol011901.JPG
http://WallStreet-LLC.com/canslim/NewHighsWeakVol060600.JPG
http://WallStreet-LLC.com/canslim/BuySellTipsVol102301.JPG
http://WallStreet-LLC.com/canslim/StickWithLeaders101000.JPG
=3D=3D=3D=3D=3D=3D=3D=3D=3D
Q: Eric S. Hill: How is it that a stock can trade many times its =
average
volume on a given day with hardly any price hange? Is this to be =
considered
bullish or bearish?
Loren Fleckenstein:
A: Eric: You cannot apply a mechanical rule that applies to all
siutations. However, generally speaking, what you're describing is =
called
"churning." Churning after a stock has made an extended advance could =
be
bearish and a tip-off of a major price decline to come. Churning after =
a
stock has suffered a major downturn could be bullish and signal that =
the
stock is near a bottom.
=3D=3D=3D=3D=3D=3D
Question (Ask Bill O'Neil):
How do I know when to sell a well-performing stock to protect my =
gains?
Answer:
Many investors don't pay much attention to sell rules. But they are =
just as
important as buy rules. After a stock has had a significant run-up, =
look
for signs of fatigue.
One is what we call "churning." That's when the stock trades on
comparatively heavy volume but can't manage to make meaningful price =
gains.
Another red flag is when the stock makes a new price high on low =
volume.
Also troubling is when the stock repeatedly falls as volume increases.
Some stocks that double or go even higher over several months will =
peak in
a "climax top" characterized by a couple of weeks in which the price =
bursts
up 25% to 50% or more on heavy volume. Also watch for weakness in the
stock's industry group, as well as the general market.
----- Original Message -----
From: Tom Worley
To: canslim@lists.xmission.com
Sent: Thursday, May 30, 2002 8:43 AM
Subject: Re: [CANSLIM] Today's WebLink
Duke, I would be a lot more impressed with IBD if they had reported =
that
potential sell signal just a day or two later, rather than weeks =
later.
On the other hand, I would disagree that selling the next day was
necessarily the right action. We see many signals, both buy and sell, =
as
well as hold. It is the collective accumulation of those signals that
should trigger an action, in most cases (the 8% stop loss rule being =
one
of the few that stands on its own).
I realize that IBD is not being paid for specific investment advice, =
and
likely would not want to precipitate a correction by reporting every =
sell
signal immediately. But I do agree, all these new rules they seem to =
be
coming up with, are they their interpretation of CANSLIM, or is this
actually coming from WON?
----- Original Message -----
From: Duke Miller
To: CANSLIM
Sent: Thursday, May 30, 2002 9:02 AM
Subject: [CANSLIM] Today's WebLink
Bulletin: Here we go again with some new CANSLIM tactics springing =
from
WON's perfect hindsight in today's WebLink on HOV. I quote:
But on May 8, the stock notched a new intraday high on quiet trade =
and
finished lower that day (Point 4). New highs on low volume are one =
sign
that demand is waning and pose as a key sell signal. However, given =
that
the stock was only in the 10th week of its advance, it can be worth
waiting to see if a rally still has juice. Over the next week and a =
half,
Hovnanian fell hard and clipped its 50-day line on heavy trade (Point =
5).
On May 16, the stock closed below its 50-day for the first time since
November. But from the next day, it began clawing its way back above =
the
key intermediate trend line.
The first new lesson (to me, anyway) is couched in the statement, =
"But
(operative word) on May 8...a new intraday high on quiet trade...a =
key
sell signal." When I look at the chart on May 8, I see something
different: It tells me the stock closed down that day on low volume. =
I
thought this was a good sign. But now its a bad sign, because it =
reached
a new "intraday" high on light volume. Maybe I was in the men's room
during the advanced seminar when they covered this. :)
My point is, if you new about the "intraday high on low volume sell =
rule,"
wouldn't you have SOLD the next morning at the open? (If you didn't, =
then
today's Investor's Corner is for naught.)
But wait a minute, lo and behold, yet another new rule surfaces:
"However, given that the stock was only in the 10th week of its =
advance,
it can be worth waiting to see if the rally still has juice." Where =
in
the 24 Rules is that hidden? I searched the whole Investors.com for
"rally juice" and nada.
In hindsight, the fact remains, if you held HOV, you would be wise to =
have
sold on the new intraday high on low volume. That is, if you knew =
about
that rule.
I guess we learn something new every day, don't we? Where oh where =
did I
put that darn time machine!
Duke
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<DIV>Thanks, Mike.</DIV>
<DIV> </DIV>
<DIV>I separate my sell rules into the following broad categories:</DIV>
<DIV> </DIV>
<DIV>-At the breakout--B/O on low vol, short base, etc. (that's actually =
a sell=20
avoid), reversal day w. tail on B/O day</DIV>
<DIV>-Immediately following the B/O (1st wk or so)--7-8% rule, reversal =
day on=20
volume within a couple of days of B/O, fall and close below pivot on=20
volume</DIV>
<DIV> </DIV>
<DIV>Assuming it starts moving up and doesn't hit sell stop rule:</DIV>
<DIV>-1st 8 weeks--too many up days on low volume, down days on high =
volume;=20
RSLine begins to turn down when most everything else is moving up,=20
etc.-sell</DIV>
<DIV>-8 wk mark >=3D20%?, one set of sell rules kicks in that gives a =
bit more=20
leeway to the stock</DIV>
<DIV>-8 wk mark <20%?, if the rest of the market is healthy and this =
one=20
hasn't moved with it, it's a laggard, sell. If the market is choppy =
and/or=20
downtrending, but this remains healthy with support at key MA's and =
trend lines,=20
then it wouldn't be an outright sell simply because it hasn't moved 20%+ =
in 8=20
wks.</DIV>
<DIV> </DIV>
<DIV>Key is market backdrop and industry condition more than anything. =
Pullbacks=20
are normal in an uptrend, the question is whether the stock is showing a =
"normal/healthy" pullback or showing signs of wear. Also critical would =
be the=20
behavior of competitors and/or industry brethren. If the stock is still =
healthy=20
in its uptrend but darn near every other industry brethren is breaking =
down,=20
sell rules are more stringent. If the stock is leading the pack on the =
way up,=20
then sell rules are more liberal.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </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=3Dmichael_niemotka@baxter.com=20
=
href=3D"mailto:michael_niemotka@baxter.com">michael_niemotka@baxter.com</=
A>=20
</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, May 30, 2002 =
10:21=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Today's=20
WebLink</DIV>
<DIV><BR></DIV><BR>Katherine,<BR><BR>VERY well put.<BR><BR>I would ask =
this=20
question to the group: How much time do you give a =
new<BR>position to=20
grow, assuming that you bought it at a breakout point. I=20
guess<BR>another way to phase the question is: how long after an =
breakout=20
attempt do<BR>you wait before backing out of the position (minus =
commisions of=20
course) to<BR>get the capital back for entry into another possible=20
winner?<BR><BR>Do any of you have any "rules" like: Need to see an X% =
gain=20
within the<BR>first 4 weeks<BR><BR>Other than the 7-8% loss rule =
I=20
wonder if other get out sooner if it looks<BR>like the breakout =
failed, or do=20
you hold on for a few weeks.<BR><BR>Thanks<BR><BR>Mike Niemotka , =
PE<BR>Sr.=20
Principal Engineer<BR>Baxter Healthcare Corporation<BR>Route 120 & =
Wilson=20
Road<BR>Round Lake, IL 60073<BR>Tel (847) 270-4075<BR>Fax (847) =
270-4525<BR><A=20
=
href=3D"mailto:michael_niemotka@baxter.com">michael_niemotka@baxter.com</=
A><BR><BR><BR>  =
; =
&=
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bsp; &nb=
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<BR> &nb=
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"Katherine=20
=
Malm" &n=
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<BR> &nb=
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=
href=3D"mailto:kmalm@earthlink.net">kmalm@earthlink.net</A>> &nbs=
p; =20
To: <A=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
&=
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<A=20
=
href=3D"mailto:owner-canslim@lists.xm">owner-canslim@lists.xm</A> &n=
bsp; =20
Subject: Re: [CANSLIM] Today's=20
=
WebLink =
&=
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<BR> &nb=
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=
ission.com &nb=
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Please respond=20
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canslim =
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=20
<BR><BR><BR><BR><BR>Hi Duke,<BR><BR>Churning is a well documented sign =
of=20
distribution at the top and isn't<BR>something pulled out of the air =
by the=20
author. Below I've sited some<BR>resources from TradingMarkets.com =
(Loren F.=20
used to write for the IBD) and<BR>from Investors.com.<BR><BR>With =
respect to=20
HOV in general, just goes to show that sell rules aren't<BR>all that =
cut and=20
dried. Most of the sell "rules are actually guidelines and<BR>are used =
to=20
"stack up" the evidence so to speak.<BR><BR>With HOV, I would go =
through a=20
what-if similar to this:<BR>-Breakout from sound base? Yes 2/26, =
approx.=20
$22.40<BR>-Run up of >=3D20% in less than 8 wks? Yes. By 4/19 was =
up=20
38%<BR>-At this point, a subset of sell rules start to kick in: That =
is, if=20
the<BR>stocks runs up >=3D20% in 8 wks, you "may" want to sit =
through the=20
first<BR>correction. (from HTMMIS, paraphrased)<BR>-May comes along =
and HOV=20
gets its first bout of churning and distribution<BR>( 5/6 heavy dist., =
5/7=20
churning, 5/8 heavy dist.)<BR>-What to =
do?<BR> =20
-Step 1: stack up the=20
=
evidence<BR> &=
nbsp; =20
pro: leading group, high RS and rising, market had=20
=
FTD<BR> =
=20
con: group has been on a long run since early 2000, may =
be<BR>finished, many=20
stocks breaking =
down<BR> =20
Choice 1: Weigh in, make a descision to hold on based on the =
>=3D20%<BR>in 8=20
wks guideline. Evidence you'll be looking for thereafter--support =
at<BR>50dMA,=20
action of other stocks, etc. (similar to the Weblink=20
article)<BR> -Choice 2: 2 days of =
heaving=20
distribution + 1 churning =3D heavy<BR>evidence of unloading in 5 =
short days.=20
Sell.<BR><BR>As far as I've been able to figure out, sell rules are =
*not* cut=20
and dried.<BR>The individual's interpretation of the evidence, their =
tolerance=20
for pain,<BR>their profit goals in entering the position, the length =
of time=20
they've<BR>held the stock and current gains will weigh in to the =
decision. So,=20
two<BR>people decide completely differently given the same chart AND =
the same=20
set<BR>of WON/CANSLIM sell rules. Darn, wish it were more clear. I'd =
love to=20
do a<BR>calculation and punch a button in/out. Now wouldn't *that* be=20
keen?<BR><BR>-Katherine<BR><BR>Here are a few articles I've uploaded =
on the=20
subject:<BR><BR><A=20
=
href=3D"http://WallStreet-LLC.com/canslim/NewHighLightVol011901.JPG">http=
://WallStreet-LLC.com/canslim/NewHighLightVol011901.JPG</A><BR><BR><A=20
=
href=3D"http://WallStreet-LLC.com/canslim/NewHighsWeakVol060600.JPG">http=
://WallStreet-LLC.com/canslim/NewHighsWeakVol060600.JPG</A><BR><BR><A=20
=
href=3D"http://WallStreet-LLC.com/canslim/BuySellTipsVol102301.JPG">http:=
//WallStreet-LLC.com/canslim/BuySellTipsVol102301.JPG</A><BR><BR><A=20
=
href=3D"http://WallStreet-LLC.com/canslim/StickWithLeaders101000.JPG">htt=
p://WallStreet-LLC.com/canslim/StickWithLeaders101000.JPG</A><BR><BR><BR>=
<BR>=3D=3D=3D=3D=3D=3D=3D=3D=3D<BR>Q: =20
Eric S. Hill: How is it that a stock can trade many times its=20
average<BR>volume on a given day with hardly any price hange? Is this =
to be=20
considered<BR>bullish or bearish?<BR><BR>Loren=20
Fleckenstein:<BR><BR>A: Eric: You cannot apply a =
mechanical rule=20
that applies to all<BR>siutations. However, generally speaking, what =
you're=20
describing is called<BR>"churning." Churning after a stock has made an =
extended advance could be<BR>bearish and a tip-off of a major price =
decline to=20
come. Churning after a<BR>stock has suffered a major downturn could be =
bullish=20
and signal that the<BR>stock is near a =
bottom.<BR><BR>=3D=3D=3D=3D=3D=3D<BR>Question (Ask=20
Bill O'Neil):<BR>How do I know when to sell a well-performing stock to =
protect=20
my gains?<BR><BR>Answer:<BR>Many investors don't pay much attention to =
sell=20
rules. But they are just as<BR>important as buy rules. After a stock =
has had a=20
significant run-up, look<BR>for signs of fatigue.<BR><BR>One is what =
we call=20
"churning." That's when the stock trades on<BR>comparatively heavy =
volume but=20
can't manage to make meaningful price gains.<BR><BR><BR>Another red =
flag is=20
when the stock makes a new price high on low volume.<BR>Also troubling =
is when=20
the stock repeatedly falls as volume increases.<BR><BR>Some stocks =
that double=20
or go even higher over several months will peak in<BR>a "climax top"=20
characterized by a couple of weeks in which the price bursts<BR>up 25% =
to 50%=20
or more on heavy volume. Also watch for weakness in the<BR>stock's =
industry=20
group, as well as the general market.<BR> ----- Original Message=20
-----<BR> From: Tom Worley<BR> To: <A=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
<BR> Sent:=20
Thursday, May 30, 2002 8:43 AM<BR> Subject: Re: [CANSLIM] Today's =
WebLink<BR><BR> Duke, I would be a lot more impressed with IBD if =
they=20
had reported that<BR> potential sell signal just a day or two =
later,=20
rather than weeks later.<BR><BR> On the other hand, I would =
disagree that=20
selling the next day was<BR> necessarily the right action. We see =
many=20
signals, both buy and sell, as<BR> well as hold. It is the =
collective=20
accumulation of those signals that<BR> should trigger an action, =
in most=20
cases (the 8% stop loss rule being one<BR> of the few that stands =
on its=20
own).<BR><BR> I realize that IBD is not being paid for specific=20
investment advice, and<BR> likely would not want to precipitate a =
correction by reporting every sell<BR> signal immediately. But I =
do=20
agree, all these new rules they seem to be<BR> coming up with, =
are they=20
their interpretation of CANSLIM, or is this<BR> actually coming =
from=20
WON?<BR><BR> ----- Original Message -----<BR> From: Duke=20
Miller<BR> To: CANSLIM<BR> Sent: Thursday, May 30, 2002 9:02 =
AM<BR> Subject: [CANSLIM] Today's =
WebLink<BR><BR> Bulletin: =20
Here we go again with some new CANSLIM tactics springing =
from<BR> WON's=20
perfect hindsight in today's WebLink on HOV. I =
quote:<BR><BR> But=20
on May 8, the stock notched a new intraday high on quiet trade=20
and<BR> finished lower that day (Point 4). New highs on low =
volume are=20
one sign<BR> that demand is waning and pose as a key sell signal. =
However, given that<BR> the stock was only in the 10th week of =
its=20
advance, it can be worth<BR> waiting to see if a rally still has =
juice.=20
Over the next week and a half,<BR> Hovnanian fell hard and =
clipped its=20
50-day line on heavy trade (Point 5).<BR> On May 16, the stock =
closed=20
below its 50-day for the first time since<BR> November. But from =
the next=20
day, it began clawing its way back above the<BR> key intermediate =
trend=20
line.<BR><BR> The first new lesson (to me, anyway) is couched in =
the=20
statement, "But<BR> (operative word) on May 8...a new intraday =
high on=20
quiet trade...a key<BR> sell signal." When I look at the =
chart on=20
May 8, I see something<BR> different: It tells me the stock =
closed=20
down that day on low volume. I<BR> thought this was a good=20
sign. But now its a bad sign, because it reached<BR> a new=20
"intraday" high on light volume. Maybe I was in the men's=20
room<BR> during the advanced seminar when they covered =
this. =20
:)<BR><BR> My point is, if you new about the "intraday high on =
low volume=20
sell rule,"<BR> wouldn't you have SOLD the next morning at the=20
open? (If you didn't, then<BR> today's Investor's Corner is =
for=20
naught.)<BR><BR> But wait a minute, lo and behold, yet another =
new rule=20
surfaces:<BR> "However, given that the stock was only in the 10th =
week of=20
its advance,<BR> it can be worth waiting to see if the rally =
still has=20
juice." Where in<BR> the 24 Rules is that hidden? I =
searched=20
the whole Investors.com for<BR> "rally juice" and =
nada.<BR><BR> In=20
hindsight, the fact remains, if you held HOV, you would be wise to=20
have<BR> sold on the new intraday high on low volume. That is, if =
you=20
knew about<BR> that rule.<BR><BR> I guess we learn something =
new=20
every day, don't we? Where oh where did I<BR> put that darn =
time=20
=
machine!<BR><BR><BR> Duke<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>-<B=
R>-To=20
subscribe/unsubscribe, email "<A=20
=
href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In=
the=20
email body, write "subscribe canslim" or<BR>-"unsubscribe =
canslim". Do=20
not use quotes in your email.<BR></BLOCKQUOTE></BODY></HTML>
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