Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] stop losses and profits
Date: Fri, 16 Aug 2002 16:55:25 -0500
Previous Article (by Date): [CANSLIM] Re: Handles, A list of Characteristics (was: CVH handle) "Katherine Malm"
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Hi Mike, 8% standard stop loss, though I don't see this happen too often when the market is healthy. Katherine - ----- Original Message ----- From: <michael_niemotka@baxter.com> To: <canslim@lists.xmission.com> Sent: Friday, August 16, 2002 2:54 PM Subject: Re: [CANSLIM] stop losses and profits | | Katherine, | | I knew I could count on you for a good answer. As a follow up to your | answer #4, if you made 10-15% in one week, how low would you allow the | stock to drop on low volume and still buy more, as opposed to selling out? | | Put another way, if it ran up 15% in a week, would you allow it to go below | your original buy point, even if it was at low volume? | | | Have a great weekend everyone! | | Mike | | Mike Niemotka , PE | Sr. Principal Engineer | Baxter Healthcare Corporation | Route 120 & Wilson Road | Round Lake, IL 60073 | Tel (847) 270-4075 | Fax (847) 270-4525 | michael_niemotka@baxter.com | | | | "Katherine Malm" | <kmalm@earthlink.net> To: canslim@lists.xmission.com | Sent by: cc: | owner-canslim@lists.xm Subject: Re: [CANSLIM] stop losses and profits | ission.com | | | 08/16/2002 02:31 PM | Please respond to | canslim | | | | | | | Hi Nancy, | | Let me try and clear up some of your confusion: | | 1. A stock's "rise" does not occur *in* a base, but *between* bases. While | the price will fluctuate up and down within the base itself, the amount of | fluctuation will vary depending on the severity of correction and the time | it takes to form the area of consolidation. The stock is essentially | *absorbing* the gains of its previous advance. | | 2. When you purchase a stock, you will always purchase it as it *breaks | out* | of that base. This preferred buy point is referred to as the "pivot" and is | again defined by the pattern that the base forms. | | 4. When a stock begins a healthy rising pattern after it breaks out, it can | rise *any* amount before it consolidates (bases) again. There is no hard | and | fast rule as to how much it will rise before basing, though WON suggests | that if it is >=25%, the next base would then be considered a "new stage | base." This is only important in that his studies show that most stocks | can't muster the oomph to keep going after they've reached the 3rd or 4th | stage base. | | 3. Mike's question about a sell rule is not dependent on *which* base in | the | base count we are evaluating. A base is a base. If the stock breaks out as | it should and begins to rise, how are you going to handle selling it | when/if | the time comes? | | 4. WON suggests that, if you buy correctly at the pivot (or no more than 5% | above it), that you should never have to suffer a loss of more than 8%. | This | is because, in his studies, he has found that a healthy stock never falls | more than 8% below the pivot before continuing a healthy advance. | | 5. Mike's question, specifically, was "if a stock breaks out of a base, | then | rises 10-15%, then falls back, where do you place your sell stop? 8% below | your buy price or something other than that?" In other words, should you be | willing to accept *any* loss if a stock has managed to rise 10-15% in 6 | wks, | then falls back to where you bought it. My vote is, if it takes 6 wks to | rise and then erases the entire advance, I don't want to take an 8% loss. | If | it rose 10-15% in *one* week and then fell back on low volume, I'd look at | that as "normal" and might consider it a second chance to *buy* more. | | Katherine | | | ----- Original Message ----- | From: "NANCY POLCARO" <zillagirl@msn.com> | To: <canslim@lists.xmission.com> | Sent: Friday, August 16, 2002 1:47 PM | Subject: Re: [CANSLIM] stop losses and profits | | | | Katherine-let me see if I am following correctly please. My question is | | that previously I understood that after the third rise in a base | formation | a | | stock may correct by dropping below the previous base and then starting | up | | again if all is well with the stock. Then the bases start to be | recounted | | again. In this case, if you just bought in during the third rise in the | | base, which from my understanding would probably go up between 15%(Mikes | | figure) and 25%( the amount of each rise in a base of a healthy stock) | you | | would sell(not you personally but someone with my amount of experience or | | the like) before the 8% drop, to protect your gain. Then follow the | stock | | and watch for a buy in again at some point depending on how the stock | acts | | from this point on? Is that close to correct ??? Thanks for your | thoughts | | Nancy | | | | | | >From: "Katherine Malm" <kmalm@earthlink.net> | | >Reply-To: canslim@lists.xmission.com | | >To: <canslim@lists.xmission.com> | | >Subject: Re: [CANSLIM] stop losses and profits | | >Date: Fri, 16 Aug 2002 13:09:30 -0500 | | > | | >HI Mike, | | > | | >I think you'll get a hundred different answers on this one, so I'll just | | >answer from my personal point of view. | | > | | >If a stock breaks out of a well-formed base on volume, then takes 6 | weeks | | >to | | >rise 10 or 15 percent, then I sure wouldn't want to risk 8% loss at that | | >point, even if it were falling back "normally" as you suggest. To me | that | | >means that no sell signals were triggered on the way up, and that the | | >general pattern included up days on higher volume than down days, | support | | >at | | >the 50 day moving average, etc. My personal preference, however, would | be | | >to | | >move my stop to breakeven or slightly below (3-4% max, depending on | market | | >conditions) if the stock had risen like this. | | > | | >Katherine | | > | | > | | >----- Original Message ----- | | >From: <michael_niemotka@baxter.com> | | >To: <canslim@lists.xmission.com> | | >Sent: Friday, August 16, 2002 9:17 AM | | >Subject: [CANSLIM] stop losses and profits | | > | | > | | >| Group, | | >| | | >| In reading WON, he makes a statement that you should never let a stock | in | | >| which you are up 10-15% turn into a loss, but I was wondering you have | | >| interpreted that along with the sell at no more than an 8% loss rule. | | >| | | >| Say you buy a stock, at a breakout, and it rises 10-15% over a few (6+ | | >| weeks), and then is started to correct....Do you sell at you break | even | | >| point, or do you allow it to go to your 8% loss point before selling? | | >This | | >| is assuming that the stock is NOT giving any strong sell signals, but | | >| appears to be pulling back "normally". | | >| | | >| Thanks | | >| | | >| Mike Niemotka , PE | | >| Sr. Principal Engineer | | >| Baxter Healthcare Corporation | | >| Route 120 & Wilson Road | | >| Round Lake, IL 60073 | | >| Tel (847) 270-4075 | | >| Fax (847) 270-4525 | | >| michael_niemotka@baxter.com | | >| | | >| | | >| | | >| - | | >| -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. | | | | | | | | | | _________________________________________________________________ | | Send and receive Hotmail on your mobile device: http://mobile.msn.com | | | | | | - | | -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". 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