RE: [CANSLIM] sweet chart

From: "Hill, Ernie" <Ernie.Hill@ElPaso.com>
Subject: RE: [CANSLIM] sweet chart
Date: Thu, 11 Jul 2002 10:14:20 -0500

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What you have described is similar to basic trend-line analysis. In basic
trend-line analysis you create a channel by drawing a trend-line across the
significant tops of the price structure, and a trend-line along the bottom
by connecting the significant bottoms. These lines would correspond to your
upper and lower control limits.

LLUR's tend to trade within the channel created by these trend-lines. When
the bottom trend-line is broken significantly this indeed represents a
significant breakdown much like your SQC. However, when the upper trend-line
is broken significantly particularly on heavy volume this often represents
exhaustion buying and is a good sell signal. When this happens some people
prefer to wait for the price to drop back below the upper trend-line as
their sell signal because they are hoping for a continued upside break-out,
but more often than not prices will usually fall back from these high volume
penetrations of the upper trend-lines.

E

 -----Original Message-----
From: 	Davellil5@aol.com [mailto:Davellil5@aol.com] 
Sent:	Thursday, July 11, 2002 9:49 AM
To:	canslim@lists.xmission.com
Subject:	Re: [CANSLIM] sweet chart

Ernie, the technique you describe is similar to the technique used in 
statistical quality control (SQC) of manufactured products.

In that technique, a central line is established (which for LLUR's would be
a 
rising line), and then upper and lower control limits, each a certain 
distance above and below the central line.  IN SQC, the distance is three 
sigmas (standard deviations).

Any move above the upper control limit would be an indication of a 
significant breakout.  Any move below the lower control limit would indicate

a significant breakdown.  Trading volume would also have to bve considered 
(same as with cups and handles).

A variation of that technique could be used on LLUR's.  Don't know whether 
anyone has tried it.  Bollinger does something like this, but not the same.

Regards, Dave

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