Go to Jeff Salisbury LWGate Home Page.From: "NANCY POLCARO" <ZILLAGIRL@msn.com>
Subject: Re: [CANSLIM] Recent activity
Date: Fri, 16 Aug 2002 12:11:04 -0700
Next Article (by Date): Re: [CANSLIM] stop losses and profits "Katherine Malm"
Articles sorted by: [Date]
[Author]
[Subject]
- ------=_NextPart_001_0000_01C2451D.FE6E3A00
Content-Type: text/plain; charset="iso-8859-1"
Content-Transfer-Encoding: quoted-printable
Kelly- your comment made me laugh so hard MY HEAD HURT! This is an emai=
l that I will copy and read thru the ages as I grow my knowledge, and gro=
w old. Next Wednesday astounds me!! What I would like to say to Eric is=
that if you are this well versed in investing-there are people out here =
like me that need to hear more from you more often. Thanks for showing m=
e how far I have to go. Nancy
=20
- ----- Original Message -----
From: Kelly Short
Sent: Friday, August 16, 2002 12:02 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Recent activity
=20
Eric,
=20
I'll get back to you next Wednesday when I'm through digesting all your p=
oints.... Kelly (my head hurts)
- -----Original Message-----
From: Eric Jaenike [mailto:ericjaenike@yahoo.com]
Sent: Friday, August 16, 2002 1:40 PM
To: canslim group
Subject: [CANSLIM] Recent activity
Hi all-
Just wanted to throw out a few thoughts and get some feedback.
I am not terribly sanguine about the market right now, for a number of re=
asons. Before I go into why, I will review the things I see as bullish. I=
f anyone has additional bull thoughts, please let me know.
Bull:
1.Heavy volume low mid-June, can be sign of climax bottom with sellers cl=
earing out. =20
2. Lots of secondary indicators flash extremes generally associated with =
bottoms, including put/call, % bullish/bearish, nasdaq vs. NYSE trading v=
olume, etc.
3. Rally confirms on indices.
4. Generally, up volume advances, down volume pullbacks.
5. Some breakouts occurring. These include (without regard to whether the=
y have succeeded or not) CTSH FCN IMN XRAY DORL WTW PIXR CSTR ISLE BYD AP=
OL.
6. Some potential leadership forming, including gaming (BYD ISLE), medica=
l (LNCR AMSG HSIC), education (APOL CECO COCO), HMOs (CVH SIE MME), regio=
nal banks (if you're willing to include that group as leadership), retail=
(JASA PETM MIK KSS).
7. Skepticism about rally.
8. Certain secondary factors, such as the addressing of corporate governa=
nce issues, potentially improved accounting, recent strengthening of the =
dollar, etc
9. Increased insider buying.
10. Valuations have become compelling in certain areas/companies.
The concerns I have are both fundamental and technical.
Technical:
1. Secular bears generally don't end with a bang, but with a whimper ('29=
, '74). Tendency toward climax bottom with reversal, followed by lower vo=
lume selloff into true bottom.
2. Secondary indicators are area code indicators. In a prolonged, hard be=
ar, they can be early and flash signals repeatedly before market has tru=
ly bottomed. Unreliable.
3. Rally confirm came very late on Dow and S&P, came on low volume on Nas=
daq and S&P 600 following large givebacks/distribution. Both late confirm=
s and excessive givebacks are signs of weakness, not strength.
4. While volume on up days has been up and on down days, down, volume has=
generally been very light. I prefer to see strong volume confirming, not=
just up volume. This might be seasonal, but it seems very suspicious.
5. There have been a number of up days spurred by positive news (ex. Thur=
s 8/8 Brazil loan approval announcement, CSCO call, etc.) News driven ral=
lies are suspect and failure prone.
6. A number of up days have been caused by buy programs, which create art=
ifically positive looking days. Wed. was a great example. There has also =
been support from institutional, charter based reallocations from bonds (=
think 40 yr low on Treasury yield) to stocks. This is not discretionary, =
informed buying.
7. There appears to be short covering activity. Not sustainable in longer=
term.
8. Oils are rallying. Generally not a good sign for market.
9. While there have been breakouts, they have not been particularly numer=
ous, nor have they been that powerful. I reviewed my breakout list from l=
ast September. I counted 16 reasonably solid breakouts from the low throu=
gh 10/15 (CACI AZO SANG RMCI AHMH APOL CPRT AMSG NDN MYL BVF CRL FRED MIK=
USPH ADVP). I count only 11 in the roughly same time period now (CTSH SI=
E IMH XRAY DORL WTW PIXR CSTR ISLE BYD APOL. Not counting banks, and I m=
ight have missed some). It appears that there are fewer, or at least not =
more, breakouts over the recent period. In reviewing the lists, it also a=
ppears to me that there was generally tighter, more consistent, and more =
prominent leadership back then. That rally, of course, failed rather quic=
kly. I actually consider the late '01 rally to have been more of an overs=
old bounce than a true rally.
10. Expanding on #9, I am not enamored of the power of the breakouts. Ex.=
WTW nasty bearish reversal tuesday, declining volume on rally resumption=
since. This is not the type of action I want to see.
11. There has been too much strength in tech in the past couple of days r=
elative to the general market, especially Wed. I do not believe there is =
much, if any, chance that tech will provide sustained leadership here, an=
d especially not large cap tech. See below for more.
12. Lots of broken charts, whippy runups.
Fundamentals:
1. Recent weakening in consumer spending and sentiment. Generally lacklus=
ter employment.
2. Market never got "cheap". Some have argued that on a P/E basis the mar=
ket got to acceptable trough valuations. Without going into detail, I hav=
e found those arguments generally lacking. =20
3. Tech fundamentals are bad, and appear to be getting worse. Look at all=
the recent calls in the semiconductor space (AMAT TSCM KLIC, etc). Reven=
ue and earnings guidedowns, capacity utilization dropping, etc. I think I=
posted a piece on this previously. That means the market will have to ra=
lly through bad tech news in the upcoming earnings period, with tech stoc=
ks going from very expensive to even more expensive. I do not consider th=
e Dell or CSCO calls positive for the industry in general. They are share=
takers, and are benefitting at the expense of the rest of their respecti=
ve industries. Recall, as Dell noted in its conference call, total PC sal=
es in the second quarter DROPPED 10%. Note the relatively poor action in =
the SOX.
4. We have shifted short term influences in the market. 5 weeks ago, corp=
orate governance/bad macroeconomic numbers were the short term driving fo=
rce, pushing the market to its lows. We digested that information as we h=
it the lows on volume. At that point, the market was poised to spring bac=
k, either sustainably or unsustainably. We shifted to a new short term dr=
iving factor: the oversold condition of the market (note how all negative=
news is being ignored- ex. AMAT horrible call. That is, IMO, because new=
s is not the current short term driving factor; the technical condition o=
f the market is). This short term factor is being augmented by asset allo=
cation and short covering. However, this short term factor will eventuall=
y dissipate, and we will get a new driving force. Given how poor, IMO, th=
e quality of this rally has been, I think the market will be primed to la=
tch onto something negative. We are currently in a bit of a news vacuum. =
If I'm not mistaken, we should be getting preannouncements starting somet=
ime in September, as well as additional economic insight. If this data co=
mes in poorly, the market might start reacting to it negatively, and this=
could be our new short term driving force.
5. There is still "headline risk" in the market. This would include thing=
s like the service and equipment swaps that Q has done with a variety of =
companies, including IBM and BLS (not widely known). GE has seen order sl=
owdowns. There are a host of bankruptcies yet to be announced. F is in tr=
ouble. Housing looks vulnerable. Retail sales were weak the week of Aug 1=
0, BBY preannounced, etc, so the consumer is still vulnerable. There are =
other problems as well. While I undertand that it often looks darkest bef=
ore the dawn, it also looks darkest before midnight.
6. Europe looks terrible. Brazil is still a threat, depending on who wins=
the presidential elections, and we could still lose South America.
7. There is annecdotal evidence questioning the strength of the rally. Ex=
. pulp and paper inventories were up above typical seasonal increases, In=
gersal Rand saw no evidence of an economic comeback, etc.
8. Yield spreads are very wide.
9. Energy sector debt at risk ($500 B), 3G programs, which were supposed =
to support telecom debt, have been weak.
10. First Call forward earnings growth has been coming down too quickly.
There are, of course, others. I would be willing to overlook many of thes=
e negatives IF the rally looked better. To me, it looks too much like the=
type of bounce we saw in September, but with a shorter duration.
Any thoughts?
Eric
=20
Do You Yahoo!?
HotJobs, a Yahoo! service - Search Thousands of New Jobs =20
For your protection, this e-mail message has been scanned for viruses. =20
Visit us at http://www.neoris.com/ =20
- ------=_NextPart_001_0000_01C2451D.FE6E3A00
Content-Type: text/html; charset="iso-8859-1"
Content-Transfer-Encoding: quoted-printable
<HTML><BODY STYLE=3D"font:10pt verdana; border:none;"><DIV>Kelly- your co=
mment made me laugh so hard MY HEAD HURT! This is an email th=
at I will copy and read thru the ages as I grow my knowledge, and grow ol=
d. Next Wednesday astounds me!! What I would like to say to E=
ric is that if you are this well versed in investing-there are people out=
here like me that need to hear more from you more often. Thanks fo=
r showing me how far I have to go. Nancy</DIV> <DIV> </DIV> <BLOCKQU=
OTE style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BOR=
DER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV style=3D"FONT: 10pt=
Arial">----- Original Message -----</DIV> <DIV style=3D"BACKGROUND: #e4e=
4e4; FONT: 10pt Arial; COLOR: black"><B>From:</B> Kelly Short</DIV> <DIV =
style=3D"FONT: 10pt Arial"><B>Sent:</B> Friday, August 16, 2002 12:02 PM<=
/DIV> <DIV style=3D"FONT: 10pt Arial"><B>To:</B> canslim@lists.xmission.c=
om</DIV> <DIV style=3D"FONT: 10pt Arial"><B>Subject:</B> RE: [CANSLIM] Re=
cent activity</DIV> <DIV> </DIV> <META content=3D"MSHTML 5.50.4916.2=
300" name=3DGENERATOR> <DIV><SPAN class=3D727325518-16082002><FONT face=3D=
Arial color=3D#0000ff size=3D2>Eric,</FONT></SPAN></DIV> <DIV><SPAN class=
=3D727325518-16082002><FONT face=3DArial color=3D#0000ff size=3D2></FONT>=
</SPAN> </DIV> <DIV><SPAN class=3D727325518-16082002><FONT face=3DAr=
ial color=3D#0000ff size=3D2>I'll get back to you next Wednesday when I'm=
through digesting all your points.... Kelly (my head hurts)<=
/FONT></SPAN></DIV> <BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px"> <D=
IV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT face=3DTahom=
a size=3D2>-----Original Message-----<BR><B>From:</B> Eric Jaenike [mailt=
o:ericjaenike@yahoo.com]<BR><B>Sent:</B> Friday, August 16, 2002 1:40 PM<=
BR><B>To:</B> canslim group<BR><B>Subject:</B> [CANSLIM] Recent activity<=
BR><BR></FONT></DIV> <P>Hi all-</P> <P>Just wanted to throw out a few tho=
ughts and get some feedback.</P> <P>I am not terribly sanguine about the =
market right now, for a number of reasons. Before I go into why, I will r=
eview the things I see as bullish. If anyone has additional bull thoughts=
, please let me know.</P> <P>Bull:</P> <P>1.Heavy volume low mid-June, ca=
n be sign of climax bottom with sellers clearing out. </P> <P>2. Lots of =
secondary indicators flash extremes generally associated with bottoms, in=
cluding put/call, % bullish/bearish, nasdaq vs. NYSE trading volume, etc.=
</P> <P>3. Rally confirms on indices.</P> <P>4. Generally, up volume adva=
nces, down volume pullbacks.</P> <P>5. Some breakouts occurring. These in=
clude (without regard to whether they have succeeded or not) CTSH FCN IMN=
XRAY DORL WTW PIXR CSTR ISLE BYD APOL.</P> <P>6. Some potential leadersh=
ip forming, including gaming (BYD ISLE), medical (LNCR AMSG HSIC), educat=
ion (APOL CECO COCO), HMOs (CVH SIE MME), regional banks (if you're willi=
ng to include that group as leadership), retail (JASA PETM MIK KSS).</P> =
<P>7. Skepticism about rally.</P> <P>8. Certain secondary factors, such a=
s the addressing of corporate governance issues, potentially improved acc=
ounting, recent strengthening of the dollar, etc</P> <P>9. Increased insi=
der buying.</P> <P>10. Valuations have become compelling in certain areas=
/companies.</P> <P>The concerns I have are both fundamental and technical=
.</P> <P>Technical:</P> <P>1. Secular bears generally don't end with a ba=
ng, but with a whimper ('29, '74). Tendency toward climax bottom with rev=
ersal, followed by lower volume selloff into true bottom.</P> <P>2. Secon=
dary indicators are area code indicators. In a prolonged, hard bear, they=
can be early and flash signals repeatedly before market has truly =
bottomed. Unreliable.</P> <P>3. Rally confirm came very late on Dow and S=
&P, came on low volume on Nasdaq and S&P 600 following large give=
backs/distribution. Both late confirms and excessive givebacks are signs =
of weakness, not strength.</P> <P>4. While volume on up days has been up =
and on down days, down, volume has generally been very light. I prefer to=
see strong volume confirming, not just up volume. This might be seasonal=
, but it seems very suspicious.</P> <P>5. There have been a number of up =
days spurred by positive news (ex. Thurs 8/8 Brazil loan approval announc=
ement, CSCO call, etc.) News driven rallies are suspect and failure prone=
.</P> <P>6. A number of up days have been caused by buy programs, which c=
reate artifically positive looking days. Wed. was a great example. There =
has also been support from institutional, charter based reallocations fro=
m bonds (think 40 yr low on Treasury yield) to stocks. This is not discre=
tionary, informed buying.</P> <P>7. There appears to be short covering ac=
tivity. Not sustainable in longer term.</P> <P>8. Oils are rallying. Gene=
rally not a good sign for market.</P> <P>9. While there have been breakou=
ts, they have not been particularly numerous, nor have they been that pow=
erful. I reviewed my breakout list from last September. I counted 16 reas=
onably solid breakouts from the low through 10/15 (CACI AZO SANG RMCI AHM=
H APOL CPRT AMSG NDN MYL BVF CRL FRED MIK USPH ADVP). I count only 11 in =
the roughly same time period now (CTSH SIE IMH XRAY DORL WTW PIXR C=
STR ISLE BYD APOL. Not counting banks, and I might have missed some). It =
appears that there are fewer, or at least not more, breakouts over the re=
cent period. In reviewing the lists, it also appears to me that there was=
generally tighter, more consistent, and more prominent leadership b=
ack then. That rally, of course, failed rather quickly. I actually consid=
er the late '01 rally to have been more of an oversold bounce than a true=
rally.</P> <P>10. Expanding on #9, I am not enamored of the power of the=
breakouts. Ex. WTW nasty bearish reversal tuesday, declining volume on r=
ally resumption since. This is not the type of action I want to see.</P> =
<P>11. There has been too much strength in tech in the past couple of day=
s relative to the general market, especially Wed. I do not believe there =
is much, if any, chance that tech will provide sustained leadership here,=
and especially not large cap tech. See below for more.</P> <P>12. Lots o=
f broken charts, whippy runups.</P> <P>Fundamentals:</P> <P>1. Recent wea=
kening in consumer spending and sentiment. Generally lackluster employmen=
t.</P> <P>2. Market never got "cheap". Some have argued that on a P/E bas=
is the market got to acceptable trough valuations. Without going into det=
ail, I have found those arguments generally lacking. </P> <P>3. Tech fund=
amentals are bad, and appear to be getting worse. Look at all the recent =
calls in the semiconductor space (AMAT TSCM KLIC, etc). Revenue and earni=
ngs guidedowns, capacity utilization dropping, etc. I think I posted a pi=
ece on this previously. That means the market will have to rally through =
bad tech news in the upcoming earnings period, with tech stocks going fro=
m very expensive to even more expensive. I do not consider the Dell or CS=
CO calls positive for the industry in general. They are share takers, and=
are benefitting at the expense of the rest of their respective industrie=
s. Recall, as Dell noted in its conference call, total PC sales in the se=
cond quarter DROPPED 10%. Note the relatively poor action in the SOX.</P>=
<P>4. We have shifted short term influences in the market. 5 weeks ago, =
corporate governance/bad macroeconomic numbers were the short term drivin=
g force, pushing the market to its lows. We digested that information as =
we hit the lows on volume. At that point, the market was poised to spring=
back, either sustainably or unsustainably. We shifted to a new short ter=
m driving factor: the oversold condition of the market (note how all nega=
tive news is being ignored- ex. AMAT horrible call. That is, IMO, because=
news is not the current short term driving factor; the technical conditi=
on of the market is). This short term factor is being augmented by asset =
allocation and short covering. However, this short term factor will event=
ually dissipate, and we will get a new driving force. Given how poor, IMO=
, the quality of this rally has been, I think the market will be primed t=
o latch onto something negative. We are currently in a bit of a news vacu=
um. If I'm not mistaken, we should be getting preannouncements starting s=
ometime in September, as well as additional economic insight. If this dat=
a comes in poorly, the market might start reacting to it negatively, and =
this could be our new short term driving force.</P> <P>5. There is still =
"headline risk" in the market. This would include things like the service=
and equipment swaps that Q has done with a variety of companies, includi=
ng IBM and BLS (not widely known). GE has seen order slowdowns. Ther=
e are a host of bankruptcies yet to be announced. F is in trouble. Housin=
g looks vulnerable. Retail sales were weak the week of Aug 10, BBY preann=
ounced, etc, so the consumer is still vulnerable. There are other problem=
s as well. While I undertand that it often looks darkest before the dawn,=
it also looks darkest before midnight.</P> <P>6. Europe looks terrible. =
Brazil is still a threat, depending on who wins the presidential election=
s, and we could still lose South America.</P> <P>7. There is annecdotal e=
vidence questioning the strength of the rally. Ex. pulp and paper invento=
ries were up above typical seasonal increases, Ingersal Rand saw no evide=
nce of an economic comeback, etc.</P> <P>8. Yield spreads are very wide.<=
/P> <P>9. Energy sector debt at risk ($500 B), 3G programs, which were su=
pposed to support telecom debt, have been weak.</P> <P>10. First Call for=
ward earnings growth has been coming down too quickly.</P> <P>There are, =
of course, others. I would be willing to overlook many of these negatives=
IF the rally looked better. To me, it looks too much like the type of bo=
unce we saw in September, but with a shorter duration.</P> <P>Any thought=
s?</P> <P>Eric</P> <P> </P> <P><BR> <HR SIZE=3D1> <B>Do You Yahoo!?<=
/B><BR><A href=3D"http://rd.yahoo.com/careers/mailsig/new/*http://www.hot=
jobs.com">HotJobs, a Yahoo! service</A> - Search Thousands of New Jobs <=
HR> For your protection, this e-mail message has been scanned for viruses=
. <P>Visit us at <A href=3D"http://www.neoris.com/">http://www.neoris.co=
m/</A> <HR> <P></P></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
- ------=_NextPart_001_0000_01C2451D.FE6E3A00--
- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim". Do not use quotes in your email.
Next Article (by Date): Re: [CANSLIM] stop losses and profits "Katherine Malm"
Articles sorted by: [Date]
[Author]
[Subject]