Re: [CANSLIM] Health of the small cap growth sector

From: "Donald Wallker" <dougald@dmv.com>
Subject: Re: [CANSLIM] Health of the small cap growth sector
Date: Sun, 28 Jul 2002 12:32:36 -0400

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Tom ---I hope your projection about reching the bottom of the downturn comes
to pass in the near future.  I personally believe that the market is caught
in a viscious downturn cycle. And that one of the big drivers is frightened
investors withdrawing their money from Mutual Funds.  Since  such
withdrawals are forcing the Mutual Funds to sell out of their positions in
order to cover their redemption payment needs, they  , paint an very
untruthful picture of the health of the individual stocks.  Moreover,since
the redemption needs of the Funds are massive, they tend to drive the market
to new lows that further frighten investors and cause them to withdraw more
money from the market --and so on.
- ----- Original Message -----
From: "Tom Worley" <stkguru@bellsouth.net>
To: "CANSLIM" <canslim@lists.xmission.com>
Sent: Sunday, July 28, 2002 10:15 AM
Subject: [CANSLIM] Health of the small cap growth sector

> With some time on my hands this weekend and so few stocks worth looking
at,
> I decided to expand my normal review of stocks in my VR (Virtual Reality)
> Fund. Since we are well into the quarterly earnings reporting, I wanted to
> assess which ones had reported, and the quality and direction of the
> results, more than looking at how the chart looked. Basically, a drop back
> to more emphasis on fundamentals. I used my VR Fund rather than what I
own,
> or indexes, as it gave me a broader review of stocks with expected strong
> growth.
>
> In all, I was looking at 42 different stocks, mostly under $500 million
> market capitalization. Most I already hold in the Fund, several of which
> have not yet been purchased but are being monitored, or I missed an
initial
> entry point and am waiting to see if I can find an appropriate (tho
higher)
> entry.
>
> Of the 42, 18 have reported for the period ending 6/30/02, and of these 14
> were up year over year, and most were also up sequentially. Three were
down
> either sequentially or year over year, or both. One was flat sequentially,
> but still up strong year over year. Of the remainder, 19 have yet to
report,
> and the remaining 5 are on a non-standard fiscal year with the quarter
> ending other than 6/30/02.
>
> Of the 19 yet to report, I sold one last week (naturally it immediately
> spiked 35%) for a loss, and dropped another from watching because of its
> fall in the past week. Very few of the 42 have good charts right now,
altho
> several were forming long consolidation patterns. I am encouraged,
however,
> with the earnings results, and continue to believe that fundamentals will
> win out in the long term. I suspect a similar review of mid cap, and
higher
> priced, stocks would show similar results.
>
> "M" is clearly still saying to remain in cash for now. CANSLIM says to
take
> this time to find the future leaders, and be ready for when they emerge
into
> a more favorable market. This review confirmed my belief that, at least in
> the small cap growth sector, earnings are improving, fundamentals are
> intact, and in time "M" will begin to reflect this. Although the market
did
> look healthier last week, there is still not conclusive evidence that a
> bottom has been reached. More and more, though, it is looking to me like
> this will be a bottom reached without screaming evidence of capitulation.
>
> Good luck to all,
>
> Tom Worley
> stkguru@bellsouth.net
> AIM: TexWorley
>
>
>
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