RE: [CANSLIM] Today's WebLink

From: "David Taggart" <dctag@mavericktrading.com>
Subject: RE: [CANSLIM] Today's WebLink
Date: Thu, 30 May 2002 09:37:44 -0600
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I use time stops extensively.  If the stock hasnt done anything at all
whithin a few days to a week or so then I usually get out of at least half
if not more.  Once I have a profit of a point or more then usually I will
give it a lot more time because many times it needs some time for 2-5 day
consolidations before resuming its rise.  But if I have no profit then it
shouldnt need more breathing room so I will kill the trade.

David Taggart

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of
michael_niemotka@baxter.com
Sent: Thursday, May 30, 2002 9:21 AM
To: canslim@lists.xmission.com
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



                    "Katherine Malm"
                    <kmalm@earthlink.net>         To:
canslim@lists.xmission.com
                    Sent by:                      cc:
                    owner-canslim@lists.xm        Subject:     Re: [CANSLIM]
Today's WebLink
                    ission.com


                    05/30/2002 09:33 AM
                    Please respond to
                    canslim






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 >=20% 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 >=20% 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 >=20%
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 = 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



=========
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.

======
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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