Go to Jeff Salisbury LWGate Home Page.From: "Boyd" <theboyd@tisd.net>
Subject: Re: [CANSLIM] Today's WebLink
Date: Thu, 30 May 2002 16:16:32 GMT
Previous Article (by Subject): RE: [CANSLIM] Online trading "Hill, Ernie"
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Katherine, I don't think you can use the term "pollywog" in an investment discussion <G> Even if it does accurately and vividly describe a phenomena. Norm Katherine Malm writes: > Sorry about the brief notes, Mike. I normally refer to the reversal day as a "tail". There's an official candlestick name for it, but I always forget it. > > The "tail down" (reversal day) looks like a pollywog swimming south. The stock has a big range for the day and then closes near the bottom of the range. Always ominous when accompanied by big volume. These are also yellow/red flags after a stock has had a good run and may be evidence of topping action. > > On the flip side, a "tail up" when a stock is finding support is an encouraging sign (especially around the 50dMA). It looks like a pollywog swimming north. A big range day with the close near the top of the day's range. > > Katherine > ----- Original Message ----- > From: michael_niemotka@baxter.com > To: canslim@lists.xmission.com > Sent: Thursday, May 30, 2002 11:07 AM > Subject: Re: [CANSLIM] Today's WebLink > > > > Katherine, > > Well put again! > > Can you explain a bit about what a reversal day is? Does that mean the > stock ends up closing lower than the day before, on about the same volume? > > 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 10:36 AM > Please respond to > canslim > > > > > > > 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 >=20%?, 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 ----- > From: michael_niemotka@baxter.com > To: canslim@lists.xmission.com > 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 > > > > "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 > > > > > > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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