Go to Jeff Salisbury LWGate Home Page.From: "Gasta, Jeffrey" <Jeff.Gasta@marriott.com>
Subject: RE: [CANSLIM] Current Case Study - XRAY
Date: Mon, 19 Aug 2002 16:02:46 -0400
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Katherine, Thank you very much! Usually I have to pay tuition or
consulting fees to get advice as good as yours. I feel fortunate to be in
this group. Thanks, jg
- -----Original Message-----
From: Katherine Malm [mailto:kmalm@earthlink.net]
Sent: Wednesday, August 14, 2002 2:08 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Current Case Study - XRAY
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/
<http://WallStreet-LLC.com/canslim/HealthyRisingStock.JPG>
HealthyRisingStock.JPG
- -This is not an ascending base, but instead a series of bases one after the
other
http://WallStreet-LLC.com/canslim/
<http://WallStreet-LLC.com/canslim/TypesOfBases.JPG> 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 >=5wks]
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.
<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
<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 -----
From: Gasta, Jeffrey <mailto:Jeff.Gasta@marriott.com>
To: 'canslim@lists.xmission.com' <mailto:'canslim@lists.xmission.com'>
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)
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 %
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 %
Sales growth should be accelerating.
Difference in year on year growth rates over last 3 quarters. (Published
financial data).
23.00
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 %
Return on equity should be at least 17%
Published financial data.
21.00 %
Pretax profit margins should be increasing
Profit Margin for most recent quarter minus profit margin 1 year ago.
(Published financial data).
- -1.00
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
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
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
Multex Rank within Industry ( 0 - 99 ). Provided for informational purposes
only.
(4 week relative performance)
22
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 <file:///H:/cwhcharts/TMP1m5cljfr3.htm#> described here. It
correlates well with IBD's. Value. Score pro-rated in range 60-79.
83
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 %
No. of Institutions. Provided for informational purposes only.
568
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.
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.
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><SPAN class=3D907390120-19082002><FONT face=3DArial =
color=3D#0000ff=20
size=3D2>Katherine, Thank you very much! Usually I have to =
pay tuition=20
or consulting fees to get advice as good as yours. I feel =
fortunate to be=20
in this group. 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> Katherine Malm=20
[mailto:kmalm@earthlink.net]<BR><B>Sent:</B> Wednesday, August 14, =
2002 2:08=20
PM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> Re: =
[CANSLIM]=20
Current Case Study - XRAY<BR><BR></FONT></DIV>
<DIV>Hi Jeffrey,</DIV>
<DIV> </DIV>
<DIV>I've had your question set a side since you posted, because =
frankly,=20
XRAY's pattern did not fit the mold of the "Healthy Rising Stock" in =
which you=20
can 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'"> &nb=
sp; =20
<A=20
=
href=3D"http://WallStreet-LLC.com/canslim/HealthyRisingStock.JPG">http:/=
/WallStreet-LLC.com/canslim/</SPAN>HealthyRisingStock.JPG</A></SPAN></DI=
V>
<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,=20
but 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'"> &nb=
sp; =20
<A=20
=
href=3D"http://WallStreet-LLC.com/canslim/TypesOfBases.JPG">http://WallS=
treet-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=20
is 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=20
unlikely that this would be considered a first stage base. =
Intuitively, it=20
doesn't make 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=20
that if it doesn't rise at least 25%, you don't add to the count. =
But.... I'm=20
still not sure how you would treat something like this in that =
context. In my=20
mind, if a stock is rising/basing/rising/basing/etc., *especially* in =
a Bear=20
Market, then there's something going for it. So, to answer your =
question=20
specifically, I 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=20
the 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=20
only 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=20
point 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://WallSt=
reet-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://Wall=
Street-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=20
for 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=20
href=3D"mailto:Jeff.Gasta@marriott.com">Gasta, 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=20
Study - XRAY</DIV>
<DIV><BR></DIV>
<DIV><SPAN class=3D317335419-08082002><FONT face=3DArial color=3D#00=
00ff=20
size=3D2>Hello, another neophyte here. If the most recent =
pattern for=20
XRAY is a valid CWH, then what stage base is it? I think I =
see a flat=20
base running from about Feb. 02 until late May. This most =
recent=20
pattern undercuts the previous pattern. So maybe this is a =
1st stage=20
base? 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=20
1 year into the 3 yr learning curve, so further comment by the =
"experts"=20
is 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></DI=
V>
<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>
<TABLE cellSpacing=3D1 cellPadding=3D2 width=3D"100%" =
align=3Dcenter=20
bgColor=3D#5588bb 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=20
25% 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=20
three 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=20
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=20
Leadership<FONT 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=20
or service, or is capitalizing on new conditions in the =
economy,=20
this can have a dramatic impact on the price of a stock. =
Buy stocks=20
just as they emerge from a sound "base" pattern and make =
new price=20
highs. </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=20
at the percentage change in volume for each of your stocks. =
Analyze=20
a stock's daily and weekly price and volume changes.=20
</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=20
Groups </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=20
a result of its industry group's performance. Focus on the =
top=20
industry groups, and within those groups select stocks with =
the best=20
price 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 =
=
onclick=3D"MM_openBrWindow('html/rs.html','','scrollbars=3Dyes,resizable=
=3Dyes,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=20
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=20
5 - 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=20
specific to any one particular stock, we do not evaluate it =
on a per=20
stock 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=20
the handle has not dried up. This is often the case in the early =
days of=20
handle formation and we would like to see the volume decrease =
below the=20
ADV and the price wedge downwards as the handle=20
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 =
face=3DTahoma><FONT size=3D2>Look at the volume coming up the =
right side of=20
the cup - consistently above the 50 ADV accompanied by big price =
positive=20
price movements, with only two days when the stock closed =
slightly down.=20
It would have been better if the volume had been below the ADV on =
those=20
days, in which case the stock would have earned a higher CQ =
(Chart=20
Quality) 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 =
class=3D260395018-08082002><BR><FONT face=3DTahoma><FONT =
size=3D2><SPAN=20
class=3D770040819-08082002><FONT =
color=3D#0000ff> </FONT></SPAN>Note the=20
RS 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 =
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> </DI=
V>
<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=20
exceed the up volume days. However, the trend of the line is =
upwards,=20
which is a 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> </DI=
V>
<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=20
guess 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> </DI=
V>
<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=20
size=3D2><SPAN class=3D260395018-08082002>I conclude that this is =
one to watch=20
but not to buy 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=20
size=3D2><SPAN=20
=
class=3D260395018-08082002></SPAN></FONT></FONT></SPAN></SPAN></FONT></F=
ONT></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></BLOCKQUOTE></BOD=
Y></HTML>
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