Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Current Case Study - XRAY
Date: Wed, 14 Aug 2002 13:08:23 -0500
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Hi Jeffrey,
I've had your question set a side since you posted, because frankly, =
XRAY's pattern did not fit the mold of the "Healthy Rising Stock" in =
which you can easily count bases and I was clueless as to how to answer.
Here's what I *did* know by looking at XRAY's chart:
- -This is a stock on the rise, each time sporting a new, valid, base as =
it progresses along the uptrending path. In that sense, it fits the =
model of a "healthy rising stock" as I outlined in my notes the other =
day on the CECO discussion.
=
http://WallStreet-LLC.com/canslim/HealthyRisingStock.JPG
- -This is not an ascending base, but instead a series of bases one after =
the other
http://WallStreet-LLC.com/canslim/TypesOfBases.JPG
- -The problem with your question is that the rise between each successive =
base is not at least 25%, which would allow you to "count bases" in a =
traditional sense. That means that it's unlikely that this would be =
considered a first stage base. Intuitively, it doesn't make sense that =
it would be, either.
Now, I was stuck, because the advance doesn't fit the mold. So how in =
the world to count bases? WON says that if it doesn't rise at least 25%, =
you don't add to the count. But.... I'm still not sure how you would =
treat something like this in that context. In my mind, if a stock is =
rising/basing/rising/basing/etc., *especially* in a Bear Market, then =
there's something going for it. So, to answer your question =
specifically, I called in the big guns and asked Tim Truebenbach of =
TradingMarkets.com.
Here is his reply in answer to the specific question, "If the rise =
between bases is <25%, how do you count it?"
His answer: "If the rise is less than 25% and the stock forms a new =
qualifying base (7 weeks or longer) then I would not count the previous =
base in the base count." [KM Note: a flat base only needs to be =
>=3D5wks]
But, interestingly, he added this additional comment: "I don't put much =
weight into base counts during a Bear Market, because a stock that would =
normally push higher in an orderly fashion gets very choppy. At this =
point, just look at the most recent base of a stock and assess it from =
there."
Well, there you go... a fresh point of view and something new learned as =
a result!
In our conversation, another very interesting point came up. That is, =
though I am a fiend about reading market history, my own personal active =
trading experience is entirely in the '90's. That means that I have =
mental models of chart patterns formed accordingly. Tim suggested that =
it would be a great exercise to go back and re-review chart models =
*prior* to the '90's in HTMMIS and in the CANSLIM/IBD Advanced Seminar =
notebook (for those who have attended). A great idea and something I'll =
be adding to my to-do list.
So...back to XRAY. Because XRAY hasn't formed a series of bases =
separated by a rise of 25%, you don't reset the base count. See my =
annotations at: http://WallStreet-LLC.com/canslim/XRAY081402.jpg.
That leaves us with looking at the most current base, a V-shaped cup =
with no valid handle yet in my mind. (Certainly open to interpretation, =
so fire away!). See it at: =
http://WallStreet-LLC.com/canslim/XRAY(2)081402.jpg
Katherine
PS...Thanks for your question Jeffrey.... a real gold mine of learning =
for me personally.
- ----- Original Message -----=20
From: Gasta, Jeffrey=20
To: 'canslim@lists.xmission.com'=20
Sent: Thursday, August 08, 2002 2:58 PM
Subject: RE: [CANSLIM] Current Case Study - XRAY
Hello, another neophyte here. If the most recent pattern for XRAY is =
a valid CWH, then what stage base is it? I think I see a flat base =
running from about Feb. 02 until late May. This most recent pattern =
undercuts the previous pattern. So maybe this is a 1st stage base? =
Thanks, jg
-----Original Message-----
From: Mike Gibbons [mailto:mike@proactech.com]
Sent: Thursday, August 08, 2002 3:27 PM
To: canslim@lists.xmission.com
Subject: [CANSLIM] Current Case Study - XRAY
In view of the interest in current cases rather than 20-20 =
hindsight, and discussions to aid the learning process, I offer XRAY =
as an example, which broke out today from a CwH pattern with short =
handle
Firstly, let me add the disclaimer that I'm a programmer who was =
introduced to CANSLIM as a development project, and I'm 1 year into the =
3 yr learning curve, so further comment by the "experts" is welcomed to =
improve my own understanding.
Firstly the fundamentals which are very strong, with the exception =
that Institutional Ownership is already quite high. There are differing =
views on what the level should be, but somewhere less than 30% would be =
better. Additional DD would be required to determine why pre-tax profit =
margins are decreasing and if that is cause for concern. (This =
information is drawn from yahoo/multex not IBD) =20
C Current Earnings Earnings per share growth of at least 25% =
in the most recent quarter Most recent quarter year on year growth. =
(Published financial data).
35.00 % =20
Latest three quarters of sales growth should be a minimum of =
25% Average year on year growth for last 3 quarters. (Published =
financial data). 51.00 % =20
Sales growth should be accelerating. Difference in year on =
year growth rates over last 3 quarters. (Published financial data). =
23.00 =20
A Strong Annual Earnings Growth Annual earnings growth for the =
last three years of 25% or greater 3 year compound EPS growth rate. =
(Published financial data). 53.00 % =20
Return on equity should be at least 17% Published financial =
data. 21.00 %=20
Pretax profit margins should be increasing Profit Margin for =
most recent quarter minus profit margin 1 year ago. (Published financial =
data). -1.00 =20
N New Products, Services or Leadership If a company has a =
dynamic new product or service, or is capitalizing on new conditions in =
the economy, this can have a dramatic impact on the price of a stock. =
Buy stocks just as they emerge from a sound "base" pattern and make new =
price highs. Not Known =20
S Supply and Demand Watch the demand for shares by looking at =
the percentage change in volume for each of your stocks. Analyze a =
stock's daily and weekly price and volume changes. The up/down volume =
ratio measures the ratio of accumulation days to distribution days over =
the last 50 days. 0.90 =20
L Leading Stocks in Leading Industry Groups Nearly 50% of a =
stock's price action is a result of its industry group's performance. =
Focus on the top industry groups, and within those groups select stocks =
with the best price performance. Multex Industry Rank ( 0 - 99 )
(26 week relative performance). 90 =20
Multex Rank within Industry ( 0 - 99 ). Provided for =
informational purposes only.
(4 week relative performance)
22 =20
The stock's Relative Price Strength Rating should be in the =
80s or 90s We calculate RS daily by ranking all NYSE, AMEX and NASDAQ =
stocks. Our RS algorithm is described here. It correlates well with =
IBD's. Value. Score pro-rated in range 60-79. 83 =20
I Institutional Sponsorship You want at least a few of the =
better performing mutual funds owning the stock. They're the ones who =
will drive the stock up on a sustained basis. Institutional Ownership. =
Value in range 5 - 30% needed to score 1. 79.00 % =20
No. of Institutions. Provided for informational purposes only. =
568 =20
M Market Direction You can buy the best stocks, but if the =
general market is weak, most likely your stocks will be weak also. =
Because Market Direction is not specific to any one particular stock, we =
do not evaluate it on a per stock basis. =20
Look at the chart below. Note that the handle is only 3 days long. =
This is normally insufficient to have shaken out the potential sellers =
and WON recommends that a handle should be at least 1-2 weeks long, =
otherwise a breakout is prone to failure. Also the volume in the handle =
has not dried up. This is often the case in the early days of handle =
formation and we would like to see the volume decrease below the ADV and =
the price wedge downwards as the handle progresses.
Look at the volume coming up the right side of the cup - =
consistently above the 50 ADV accompanied by big price positive price =
movements, with only two days when the stock closed slightly down. It =
would have been better if the volume had been below the ADV on those =
days, in which case the stock would have earned a higher CQ (Chart =
Quality) score.
Note the RS line. This is quite high at 83, but has advanced only =
slightly over the last few days despite significant price gains in this =
stock. This indicates that other stocks are doing at least as well.
The 50 day up/down volume is at 0.90. Values less than 1 mean that =
the down volume days exceed the up volume days. However, the trend of =
the line is upwards, which is a positive sign.
I'll go out on a limb and say my guess is that todays breakout will =
not be sustained (although its holding now - just) and it will continue =
to form a handle.=20
I conclude that this is one to watch but not to buy right now.
Aloha,
Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com
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<DIV>Hi Jeffrey,</DIV>
<DIV> </DIV>
<DIV>I've had your question set a side since you posted, because =
frankly, XRAY's=20
pattern did not fit the mold of the "Healthy Rising Stock" in which you =
can=20
easily count bases and I was clueless as to how to answer.</DIV>
<DIV> </DIV>
<DIV>Here's what I *did* know by looking at XRAY's chart:</DIV>
<DIV>-This is a stock on the rise, each time sporting a new, valid, base =
as it=20
progresses along the uptrending path. In that sense, it fits the model =
of a=20
"healthy rising stock" as I outlined in my notes the other day on the =
CECO=20
discussion.</DIV>
<DIV><SPAN style=3D"mso-fareast-font-family: 'MS Mincho'"><SPAN=20
style=3D"mso-fareast-font-family: 'MS =
Mincho'"> &nbs=
p; =20
<A=20
href=3D"http://WallStreet-LLC.com/canslim/HealthyRisingStock.JPG">http://=
WallStreet-LLC.com/canslim/</SPAN>HealthyRisingStock.JPG</A></SPAN></DIV>=
<DIV>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">-This is not an ascending =
base, but=20
instead a series of bases one after the other</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><SPAN=20
style=3D"mso-fareast-font-family: 'MS =
Mincho'"> &nbs=
p; =20
<A=20
href=3D"http://WallStreet-LLC.com/canslim/TypesOfBases.JPG">http://WallSt=
reet-LLC.com/canslim/</SPAN>TypesOfBases.JPG</A></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">-The problem with your =
question is=20
that the rise between each successive base is not at least 25%, which =
would=20
allow you to "count bases" in a traditional sense. That means that it's =
unlikely=20
that this would be considered a first stage base. Intuitively, it =
doesn't make=20
sense that it would be, either.</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"></SPAN> </P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">Now, I was stuck, because =
the=20
advance doesn't fit the mold. So how in the world to count bases? WON =
says that=20
if it doesn't rise at least 25%, you don't add to the count. But.... I'm =
still=20
not sure how you would treat something like this in that context. In my =
mind, if=20
a stock is rising/basing/rising/basing/etc., *especially* in a Bear =
Market, then=20
there's something going for it. So, to answer your question =
specifically, I=20
called in the big guns and asked Tim Truebenbach of=20
TradingMarkets.com.</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"></SPAN> </P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">Here is his reply in =
answer to the=20
specific question, "If the rise between bases is <25%, how do you =
count=20
it?"</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">His answer: "If the rise =
is less=20
than 25% and the stock forms a new qualifying base (7 weeks or longer) =
then I=20
would not count the previous base in the base count." [KM Note: a flat =
base only=20
needs to be >=3D5wks]</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"></SPAN> </P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">But, interestingly, he =
added this=20
additional comment: "I don't put much weight into base counts during a =
Bear=20
Market, because a stock that would normally push higher in an orderly =
fashion=20
gets very choppy. At this point, just look at the most recent base of a =
stock=20
and assess it from there."</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"></SPAN> </P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">Well, there you go... a =
fresh point=20
of view and something new learned as a result!</SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"></SPAN> </P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'">In our conversation, =
another very=20
interesting point came up. That is, though I am a fiend about reading =
market=20
history, my own personal active trading experience is entirely in the =
'90's.=20
That means that I have mental models of chart patterns formed =
accordingly. Tim=20
suggested that it would be a great exercise to go back and re-review =
chart=20
models *prior* to the '90's in HTMMIS and in the CANSLIM/IBD Advanced =
Seminar=20
notebook (for those who have attended). A great idea and something I'll =
be=20
adding to my to-do list.</P></SPAN></DIV>
<DIV> </DIV>
<DIV>So...back to XRAY. Because XRAY hasn't formed a series of bases =
separated=20
by a rise of 25%, you don't reset the base count. See my annotations at: =
<A=20
href=3D"http://WallStreet-LLC.com/canslim/XRAY081402.jpg.">http://WallStr=
eet-LLC.com/canslim/XRAY081402.jpg.</A></DIV>
<DIV> </DIV>
<DIV>That leaves us with looking at the most current base, a V-shaped =
cup with=20
no valid handle yet in my mind. (Certainly open to interpretation, so =
fire=20
away!). See it at: <A=20
href=3D"http://WallStreet-LLC.com/canslim/XRAY(2)081402.jpg">http://WallS=
treet-LLC.com/canslim/XRAY(2)081402.jpg</A></DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>PS...Thanks for your question Jeffrey.... a real gold mine of =
learning for=20
me personally.</DIV>
<DIV> </DIV>
<DIV> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3DJeff.Gasta@marriott.com =
href=3D"mailto:Jeff.Gasta@marriott.com">Gasta,=20
Jeffrey</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:'canslim@lists.xmission.com'">'canslim@lists.xmission.com'=
</A>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, August 08, 2002 =
2:58=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> RE: [CANSLIM] Current =
Case Study=20
- XRAY</DIV>
<DIV><BR></DIV>
<DIV><SPAN class=3D317335419-08082002><FONT face=3DArial =
color=3D#0000ff=20
size=3D2>Hello, another neophyte here. If the most recent =
pattern for XRAY=20
is a valid CWH, then what stage base is it? I think I see a flat =
base=20
running from about Feb. 02 until late May. This most recent =
pattern=20
undercuts the previous pattern. So maybe this is a 1st stage =
base? =20
Thanks, jg</FONT></SPAN></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B> Mike Gibbons=20
[mailto:mike@proactech.com]<BR><B>Sent:</B> Thursday, August 08, =
2002 3:27=20
PM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> =
[CANSLIM]=20
Current Case Study - XRAY<BR><BR></FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002>In view of the interest in current cases =
rather=20
than 20-20 hindsight,<FONT color=3D#0000ff><SPAN=20
class=3D770040819-08082002> </SPAN><SPAN=20
class=3D770040819-08082002><FONT color=3D#000080>and discussions to =
aid the=20
learning process,</FONT> </SPAN></FONT> I offer XRAY as an =
example,=20
which broke out today from a CwH pattern with short=20
handle</SPAN></FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002>Firstly, let me add the disclaimer that =
I'm a=20
programmer who was introduced to CANSLIM as a development project, =
and I'm 1=20
year into the 3 yr learning curve, so further comment by the =
"experts" is=20
welcomed to improve my own understanding.</SPAN></FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><SPAN class=3D210001418-08082002><FONT face=3DTahoma><FONT =
size=3D2><FONT=20
color=3D#000080>Firstly the fundamentals which are very strong, with =
the=20
exception that Institutional Ownership is already quite high. There =
are=20
differing views on what the level should be, but somewhere less than =
30%=20
would be better.<SPAN class=3D770040819-08082002> </SPAN><SPAN=20
class=3D770040819-08082002>Additional DD would be required to =
determine why=20
pre-tax profit margins are decreasing and if that is cause =
for=20
concern. (This information is drawn from yahoo/multex not=20
IBD) </SPAN><SPAN=20
=
class=3D770040819-08082002> </SPAN></FONT></FONT></FONT></SPAN></DIV=
>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN =
class=3D210001418-08082002>
<TABLE cellSpacing=3D1 cellPadding=3D2 width=3D"100%" align=3Dcenter =
bgColor=3D#5588bb=20
border=3D0>
<TBODY>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#ffffff =
rowSpan=3D3><B><FONT=20
size=3D2>C</FONT></B></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#ffffff rowSpan=3D3>
<DIV align=3Dleft><FONT size=3D2>Current =
Earnings</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Earnings per share growth of =
at least 25%=20
in the most recent quarter</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff>
<P align=3Dleft><FONT size=3D2>Most recent quarter year on =
year growth.=20
(Published financial data).</FONT></P></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT size=3D2>35.00 % =
</FONT></TD></TR>
<TR>
<TD width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Latest three quarters of =
sales growth=20
should be a minimum of 25%</FONT></DIV></TD>
<TD vAlign=3Dtop width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Average year on year growth =
for last 3=20
quarters. (Published financial data).</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT size=3D2>51.00 % =
</FONT></TD></TR>
<TR>
<TD vAlign=3Dtop width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Sales growth should be =
accelerating.=20
</FONT></DIV></TD>
<TD vAlign=3Dtop width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Difference in year on year =
growth rates=20
over last 3 quarters. (Published financial data). =
</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT size=3D2>23.00 =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#dddddd =
rowSpan=3D3><B><FONT=20
size=3D2>A</FONT></B></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#dddddd rowSpan=3D3>
<DIV align=3Dleft><FONT size=3D2>Strong Annual Earnings=20
Growth</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Annual earnings growth for =
the last three=20
years of 25% or greater</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>3 year compound EPS growth =
rate.=20
(Published financial data).</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#dddddd><FONT size=3D2>53.00 % =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Return on equity should be at =
least=20
17%</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Published financial =
data.</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#dddddd><FONT size=3D2>21.00 =
%</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Pretax profit margins should =
be=20
increasing</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Profit Margin for most recent =
quarter=20
minus profit margin 1 year ago. (Published financial=20
data).</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#dddddd><FONT size=3D2>-1.00 =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#ffffff><B><FONT=20
size=3D2>N</FONT></B></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>New Products, Services or =
Leadership<FONT=20
class=3Dfont5> </FONT></FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>If a company has a dynamic =
new product or=20
service, or is capitalizing on new conditions in the economy, =
this can=20
have a dramatic impact on the price of a stock. Buy stocks =
just as=20
they emerge from a sound "base" pattern and make new price =
highs.=20
</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff><FONT size=3D2>Not =
Known</FONT></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT =
size=3D2> </FONT></TD></TR>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#dddddd><B><FONT=20
size=3D2>S</FONT></B></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Supply and Demand =
</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Watch the demand for shares =
by looking at=20
the percentage change in volume for each of your stocks. =
Analyze a=20
stock's daily and weekly price and volume changes. =
</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>The up/down volume ratio =
measures the=20
ratio of accumulation days to distribution days over the last =
50=20
days.</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#dddddd><FONT size=3D2>0.90 =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#ffffff =
rowSpan=3D3><FONT=20
size=3D2><B>L</B><B></B></FONT></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#ffffff rowSpan=3D3>
<DIV align=3Dleft><FONT size=3D2>Leading Stocks in Leading =
Industry Groups=20
</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff rowSpan=3D2>
<DIV align=3Dleft><FONT size=3D2>Nearly 50% of a stock's price =
action is a=20
result of its industry group's performance. Focus on the top =
industry=20
groups, and within those groups select stocks with the best =
price=20
performance.</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff height=3D"50%">
<DIV align=3Dleft><FONT size=3D2>Multex Industry Rank ( 0 - 99 =
)<BR>(26=20
week relative performance).</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT size=3D2>90 =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD width=3D"30%" bgColor=3D#ffffff height=3D"50%">
<P align=3Dleft><FONT size=3D2>Multex Rank within Industry ( 0 =
- - 99 ).=20
Provided for informational purposes only.<BR>(4 week relative=20
performance)</FONT></P></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT size=3D2>22 =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>The stock's Relative Price =
Strength=20
Rating should be in the 80s or 90s </FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>We calculate RS daily by =
ranking all=20
NYSE, AMEX and NASDAQ stocks. Our RS algorithm is </FONT><A=20
=
onclick=3D"MM_openBrWindow('html/rs.html','','scrollbars=3Dyes,resizable=3D=
yes,width=3D500,height=3D500')"=20
href=3D"file:///H:/cwhcharts/TMP1m5cljfr3.htm#"><FONT =
size=3D2>described=20
here</FONT></A><FONT size=3D2>. It correlates well with IBD's. =
Value.=20
Score pro-rated in range 60-79.</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#ffffff><FONT size=3D2>83</FONT> =
</TD></TR>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#dddddd =
rowSpan=3D2><B>I</B></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#dddddd rowSpan=3D2>
<DIV align=3Dleft><FONT size=3D2>Institutional =
Sponsorship</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd rowSpan=3D2>
<DIV align=3Dleft><FONT size=3D2>You want at least a few of =
the better=20
performing mutual funds owning the stock. They're the ones who =
will=20
drive the stock up on a sustained basis.</FONT></DIV></TD>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>Institutional Ownership. =
Value in range 5=20
- 30% needed to score 1.</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#dddddd><FONT size=3D2>79.00 % =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD width=3D"30%" bgColor=3D#dddddd>
<DIV align=3Dleft><FONT size=3D2>No. of Institutions. Provided =
for=20
informational purposes only.</FONT></DIV></TD>
<TD align=3Dmiddle bgColor=3D#dddddd><FONT size=3D2>568 =
</FONT></TD></TR>
<TR vAlign=3Dtop>
<TD align=3Dmiddle width=3D"5%" bgColor=3D#ffffff><B><FONT=20
size=3D2>M</FONT></B></TD>
<TD align=3Dleft width=3D"15%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Market Direction =
</FONT></DIV></TD>
<TD width=3D"20%" bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>You can buy the best stocks, =
but if the=20
general market is weak, most likely your stocks will be weak=20
also.</FONT></DIV></TD>
<TD bgColor=3D#ffffff>
<DIV align=3Dleft><FONT size=3D2>Because Market Direction is =
not specific=20
to any one particular stock, we do not evaluate it on a per =
stock=20
basis.</FONT></DIV></TD>
<TD align=3Dmiddle=20
=
bgColor=3D#ffffff> </TD></TR></TBODY></TABLE></SPAN></FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002>Look at the chart below. Note that the =
handle is=20
only 3 days long. This is normally insufficient to have shaken out =
the=20
potential sellers and WON recommends that a handle should be at =
least 1-2=20
weeks long, otherwise a breakout is prone to failure. Also the =
volume in the=20
handle has not dried up. This is often the case in the early days of =
handle=20
formation and we would like to see the volume decrease below the ADV =
and the=20
price wedge downwards as the handle progresses.</SPAN></FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><FONT color=3D#000080><SPAN class=3D210001418-08082002><FONT=20
face=3DTahoma><FONT size=3D2>Look at the volume coming up the right =
side of the=20
cup - consistently above the 50 ADV accompanied by big price =
positive price=20
movements, with only two days when the stock closed slightly down. =
It would=20
have been better if the volume had been below the ADV on those days, =
in=20
which case the stock would have earned a higher CQ (Chart Quality)=20
score.<BR></FONT></FONT></SPAN></FONT><FONT color=3D#000080><SPAN=20
class=3D210001418-08082002><FONT face=3DTahoma><FONT size=3D2><SPAN=20
class=3D260395018-08082002></SPAN></FONT></FONT></SPAN></FONT></DIV>
<DIV><SPAN class=3D210001418-08082002><FONT color=3D#000080><SPAN=20
class=3D260395018-08082002><BR><FONT face=3DTahoma><FONT =
size=3D2><SPAN=20
class=3D770040819-08082002><FONT =
color=3D#0000ff> </FONT></SPAN>Note the RS=20
line. This is quite high at 83, but has advanced<SPAN=20
class=3D770040819-08082002><FONT color=3D#0000ff><FONT =
color=3D#000080> only=20
slightly</FONT> </FONT></SPAN>over the last few days despite=20
significant price gains in this stock. This indicates that other=20
stocks are doing at least as=20
well.</FONT></FONT></SPAN></FONT></SPAN></DIV>
<DIV><FONT size=3D+0><SPAN class=3D210001418-08082002><FONT =
face=3DTahoma><FONT=20
color=3D#000080 size=3D2><SPAN=20
=
class=3D260395018-08082002></SPAN></FONT></FONT></SPAN></FONT> </DIV=
>
<DIV><FONT size=3D+0><SPAN class=3D210001418-08082002><FONT =
face=3DTahoma><FONT=20
color=3D#000080 size=3D2><SPAN class=3D260395018-08082002>The 50 day =
up/down=20
volume is at 0.90. Values less than 1 mean that the down volume days =
exceed=20
the up volume days. However, the trend of the line is upwards, which =
is a=20
positive sign.</SPAN></FONT></FONT></SPAN></FONT></DIV>
<DIV><FONT size=3D+0><SPAN class=3D210001418-08082002><FONT =
face=3DTahoma><FONT=20
color=3D#000080 size=3D2><SPAN=20
=
class=3D260395018-08082002></SPAN></FONT></FONT></SPAN></FONT> </DIV=
>
<DIV><SPAN class=3D210001418-08082002><FONT face=3DTahoma =
color=3D#000080=20
size=3D2><SPAN class=3D260395018-08082002> <SPAN=20
class=3D770040819-08082002>I'll go out on a limb and =
say m</SPAN>y guess=20
is that todays breakout will not be sustained<SPAN=20
class=3D770040819-08082002> (although its holding now -=20
just) </SPAN>and it will continue to form a handle.=20
</SPAN></FONT></SPAN></DIV>
<DIV><FONT size=3D+0><SPAN class=3D210001418-08082002><FONT =
face=3DTahoma><FONT=20
color=3D#000080 size=3D2><SPAN=20
=
class=3D260395018-08082002></SPAN></FONT></FONT></SPAN></FONT> </DIV=
>
<DIV><FONT size=3D+0><SPAN class=3D210001418-08082002><FONT =
face=3DTahoma><FONT=20
color=3D#000080 size=3D2><SPAN class=3D260395018-08082002><SPAN=20
class=3D210001418-08082002><FONT face=3DTahoma><FONT color=3D#000080 =
size=3D2><SPAN=20
class=3D260395018-08082002>I conclude that this is one to watch but =
not to buy=20
right=20
=
now.</SPAN></FONT></FONT></SPAN></SPAN></FONT></FONT></SPAN></FONT></DIV>=
<DIV><FONT size=3D+0><SPAN class=3D210001418-08082002><FONT =
face=3DTahoma><FONT=20
color=3D#000080 size=3D2><SPAN class=3D260395018-08082002><SPAN=20
class=3D210001418-08082002><FONT face=3DTahoma><FONT color=3D#000080 =
size=3D2><SPAN=20
=
class=3D260395018-08082002></SPAN></FONT></FONT></SPAN></SPAN></FONT></FO=
NT></SPAN></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002><IMG alt=3D"" hspace=3D0=20
src=3D"cid:317335419@08082002-0a80" align=3Dbaseline=20
border=3D0></SPAN></FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2><SPAN=20
class=3D210001418-08082002></SPAN></FONT><FONT face=3DTahoma =
color=3D#000080=20
size=3D2>Aloha,</FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 =
size=3D2></FONT> </DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2>Mike =
Gibbons</FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080 size=3D2>Proactive =
Technologies,=20
LLC</FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#000080=20
size=3D2>http://www.proactech.com</FONT></DIV>
<DIV><FONT face=3DTahoma color=3D#0000ff=20
size=3D2></FONT> </DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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