Go to Jeff Salisbury LWGate Home Page.From: "Cefaloni, John L Jr. [AMSTA-AR-WEA]" <john.cefaloni@us.army.mil>
Subject: RE: MILSNAC ( formerly: [CANSLIM] M - How low will it go - revers e CANSLIM.)
Date: Mon, 22 Jul 2002 13:30:36 -0400
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With a name like "MILSNAC", I thought you might pay homage to SPAM (the kind you eat), which I understand is celebrating an anniversary of some sort, and first became widely known as a food ration for allied soldiers in WWII. - -----Original Message----- From: Duke Miller [mailto:dukemill@tampabay.rr.com] Sent: Monday, July 22, 2002 1:12 PM To: canslim@lists.xmission.com Subject: RE: MILSNAC ( formerly: [CANSLIM] M - How low will it go - reverse CANSLIM.) Dear friends, how obvious? MILSNAC. M- Market: crashing below 200DMA, especially if DJIA is lead story on any local newscasts I- Institutions: Doesn't matter, but the more the merrier L- Leading Stock in strong group: RS<=50; Group Rank between 150 and 197 S- Shares outstanding: Doesn't matter, just greater than average volume on down days (lots of tall red lines on chart, as high as possible) N- New: Lows (not highs); old products; old, ousted, or jailed top management; decline in industry conditions; (bonus: '.com' is/was in corporate name!) A- Annual Earnings: 5 year growth rate -25% or lower C- Company: minimal, if any, increases in current quarterly earnings per share; the higher the deceleration of earnings & sales the better. From Investors Corner comes this example of the MILSNAC rating score in action: Symbol: BEAR (Formerly Bear.com, Inc.) M- -220 (20% below 200DMA) I- -100 (100 Institutions own it) L- -180 (Industry Group 180) S- -900 (100 x number of days in past month stock down on greater than average volume, in this case 9) N- -500 (100 for today's new low; 100 CEO subpoenaed to Senate; 100, former .com; 200 bonus pts, Arthur Anderson former auditor.) A- -300 (100 x five year growth rate -30%) C- +200 (100 x Current quarterly earnings, up 20%...as a result of Arthur Anderson Audit! BEAR's rating is -2000. Just be sure to short at the right time, based on the chart action: No less than 5% below the breakdown pivot point!! As you can plainly see, while the market is away, Duke will play. Have a nice "short" day, ya'll! Duke - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of David Taggart Sent: Monday, July 22, 2002 8:42 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] M - How low will it go - reverse CANSLIM. Mark Boucher who was mentioned in the article has a good book out Hedge Fund Edge that goes over shorting and he does pretty much turn CANSLIM upside down with some of his own changes. He looks for high debt levels 50% or more, very high institutional sponsorship, and other stuff. He is very risk adverse and goes over a ton of stuff to cut risk while maximizing returns. For me Hedge Fund Edge picks up where HTMMIS ends. Hes a smart guy and I have learned a lot and have done pretty good shorting. David Taggart - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of vchang@win-invest.com Sent: Sunday, July 21, 2002 4:45 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] M - How low will it go - reverse CANSLIM. First I want to say that this is one of the best lists I have ever joined in terms of the signal to noise ratio and general quality of contribution. <SNIP> Maybe what we need is a kind of reverse CANSLIM to help us take advantage of the bear markets. Some basic principals to identify falling stocks - both fundamentally and technically as CANSLIM does so well with rising stocks. <SNIP> Sorry about such a long post due to the included article from IBD. :-) I was intrigued by Ira's idea of turning CANSLIM on its head (Counter-CANSLIM or ANTI-CANSLIM?), and found that real life hedge fund managers are indeed doing this for real. (See IBD ARticle attached below). WON did not have a lot of good things to say about shorting stocks, I do wonder if anyone on this list has been successful shorting. One shorting idea I am trying out is to take a small (less that 20% of the portfolio's value) portfolio of shorts in QQQ, SPY, DIA and an ISHARE of the UK market index. Besides trying to make a little money, the big idea being doing this is that if I have a real short position in the major market indices then I will be highly focused and motivated in monitoring them and the relevent charts - hopefully improving the chance of judging M correctly as well as noticing divergence between major indices etc. I also feel safer shorting ETFs as opposed to individual stocks. Regards Victor Chang (vchang@win-invest.com) www.win-invest.com ============= FROM IBD ============================= General News Monday, July 22, 2002 Looking for a recent story in IBD? Visit the IBD Archives. Printer-Ready Version E-mail this Article to a Friend Who Can Crow In This Market? Short-Selling Pros Sitting Pretty BY KEN HOOVER INVESTOR'S BUSINESS DAILY Short sellers are in hog heaven. And shorting is getting more popular as the bear market grinds on. New York Stock Exchange short interest released after Friday's close was a record 7.6 billion shares. The short interest ratio was 4.3, down from recent highs due to heavy volume. Most investors watch their stakes decline. Others content themselves with money-market rates while waiting for a new bull market. Short sellers profit by selling borrowed stock and buying it back later at a lower price. Indeed, the short sellers are raking it in. The short-biased component of the CSFB/Tremont Hedge Fund Index gained 7.6% in June and is up 9.3% year to date. The highly dangerous Rydex Venture 100 Fund, which shorts the Nasdaq 100 index, leveraged by a factor of two, is up 95% for the year. Short selling is tricky. Even professionals confess it's harder to find the right entry point than it is when going long with a stock. Bear markets and falling stocks have fierce whipsaws, sometimes crashing down one day and rocketing up the next as short sellers close out their positions by buying back shares, or covering, as it's called. Image: Shortage Of Fear? Robert Maltbie's Millennium Asset Management in Nipomo, Calif., runs $20 million going both long and short. He thinks the market now is ruled by hedge funds that are aggressively shorting. Spectacular Reversals He says that's why we're seeing huge reversals, such as last Monday's snapback from a 400-point Dow deficit and the 324-point, post-holiday July 5 rally. Those rallies are being driven by hedge funds covering, he thinks. It may be good for the bulls that so many investors are shorting. When everybody is so pessimistic, maybe a new bull market is right around the corner. The short-interest ratio is one way to measure the popularity of short selling. Since May 1931, NYSE members have reported their and their customers' short positions to the exchange as of the 15th of each month. The exchange releases the number four days later. Because trades settle in three days, the release is a snapshot of short selling on the 12th, assuming it's a business day. The ratio is calculated by dividing the total number of shares held short by the average daily volume for the past month. A short interest ratio of 4.3 means it takes 4.3 days of average volume to cover all those shares held short. IBD charts the short-interest ratio daily on the General Markets Page, B2 in the print edition. Rather than use the past month's volume as of the 15th, though, IBD calculates the ratio with volume from the prior month as of the day before publication. For decades, the short-interest ratio was one of the market's best contrary psychological indicators. "Readings over 1.75 are followed by rising prices between 94% and 98% of the time, about as close to perfect as one can expect in the stock market," wrote Norman Fosback in his '75 classic, "Stock Market Logic." But in the late '70s, the ratio started rising due to professional hedging and arbitrage strategies. In June '97, the ratio hit an all-time high of 7.34, a level Fosback never dreamed of. But it still has value. It dropped to 3.70 in January '01, when investors were greedy, and has been rising since then as fear built. Some analysts track its variance from a 12- or 16-month moving average. Since December '86, the Nasdaq has released a short-interest report eight business days after the 15th of each month. It breaks down short interest between big and small caps. Nasdaq stocks are less likely to be part of an arbitrage strategy. So it's no surprise the Nasdaq small-cap short-interest ratio has been a somewhat better sentiment barometer. It hit an all-time low of 0.36 as the market peaked in March '00. It hit an all-time high of 3.07 as the market sold off in September '01. June's reading was 1.56, showing above-average bearishness. Among the hedge funds that have benefited from short selling is Maltbie's Argonaut Fund, which goes long and short. It's up 11.5% year to date. That's driven by a 23% profit in his short positions. "Part of our strength is that we are short selling on a daily basis in good times and bad," Maltbie said. Dianon Systems (DIAN) is one of his recent short-side successes. He shorted as it broke down early this month on an earnings warning. He covered quickly because he wanted to lock in profits before other short sellers lock in theirs. "You don't know when they're going to cover or why, but you know they are, so you better cover before they do," he said. Maltbie uses the CAN SLIM system to buy stocks. He turns the system upside down for shorting, buying stocks that break down, showing declining relative strength and often buying as a stock breaks below a key support level, like the 50-day or 200-day moving average. "Old support becomes new resistance," he said. Mark Boucher, who runs money from his Investment Research Associates in Menlo Park, Calif., also likes to take profits quickly when he successfully shorts a stock. He takes partial profits when he's ahead 40%, then uses trailing stops to take the rest unless he covers into a selling climax or a big rally on volume. "A bear market rally can erase six months of profits in two days," he said. He also uses some IBD techniques in reverse. He looks for short-sell candidates on the new low list and among stocks with declining earnings growth, declining institutional sponsorship and high debt. He likes to short when a stock breaks down after a four-week consolidation. Thanks to short selling, he's up 10% this year. He says 2000 was his best year. He was up 70%. Many stocks, he says, were declining even as the tech and growth stocks were still advancing. - - - -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. - - - -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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