Go to Jeff Salisbury LWGate Home Page.From: "Bill Triffet" <btriffet@earthlink.net>
Subject: Re: [CANSLIM] CVH
Date: Tue, 20 Aug 2002 10:20:37 -0700
Next Article (by Author): Re: [CANSLIM] Too many CANSLIMers? "Boyd"
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Katherine, Thanks for the detailed reply (printed for ref). Coming out of this ugly bear, I'm always looking for a reason not to jump in. My thought on this was," well it will get to it's old high of 34.20 and fall". There's something more convincing to me when a stock breaks out to a new high right from the pivot. This I see is not canslim but a mental limitation. I also see it forces me to look only at high handles which is not desirable. I do remember a lot of higher handle breakouts in 98-99 which may contribute to my misconception. Thanks, - -Bill - ----- Original Message ----- From: "Katherine Malm" <kmalm@earthlink.net> To: <canslim@lists.xmission.com> Sent: Tuesday, August 20, 2002 9:20 AM Subject: Re: [CANSLIM] CVH Hi Bill, Thought I might use your comment as a chance to clear up a few things on handles. It is most common for handles to form within 5-15% of the left lip of the cup. In this case, CVH formed within 9.4% of the high of the left of the cup (34.65). In general, as long as the handle forms properly and falls within the upper half of the base and other handle characteristics are present, then you have a valid handle. That means that handles can actually form well below the "normal" 5-15% range. See an annotated chart at: http://WallStreet-LLC.com/canslim/CVH081902.jpg (Sorry, some of my comments are a bit difficult to read on the chart, but are repeated in this email.) Just in case you missed my post the other day, here is my summary of handle characteristics: HANDLES General Requirements: 1. Handles most often begin to form lower than the left side of the base, generally when the stock has climbed within 5-15% of the high. 2. The midpoint of a good handle should be higher than the midpoint of the base. 3. The handle should form in the upper half of the base. 4. The handle should form above the 200 day MA, but trade may often lull below the 50 day MA. 5. The handle should drift sideways or lower. Upward "wedging" handles are failure prone because the upwardly drifting price doesn't shake out the weak holders, leaving the stock vulnerable to a correction. Wedging handles also make pivots harder to spot. WON considers this the most important aspect of a handle formation. 6. The handle should drift lower on light volume. This shows existing holders are content to remain invested. 7. Within the handle, volatility should contract. The distance between price highs and lows (intraday and day to day) should narrow. Avoid zigzagging or wide and loose handles. Choppy handles carry more uncertainty. 8. In normal markets, proper handles correct 10-20%. In Bear markets, they can correct as much as 30%. A handle that drifts <10% is fine as long as it is drifting downward and meets other requirements. 9. The handle must be at least one week in length but can stretch as much as 7-10 weeks. It should be smaller in proportion to the size of the cup. Special Considerations: 1. "High handles" can begin to form at prices higher than the left side of the base. This is neither ideal nor common, but can still be successful as long as the other handle requirements are met. 2. Be sure to look at both daily and weekly charts, as stocks with lengthy bases will have long handles. The lengthy handle may appear as a base if looking at a daily chart. Long bases signal strong support and are very strong patterns. (The longer the base, the stronger the subsequent move.) Based on a study done by the IBD in 96-97, small and mid cap stocks had 33 week bases on average. Large caps had 66 week bases on average. 3. A stock can form a handle, near its pivot point and then begin forming another handle. In this case, consider this to be one long handle. 4. "No-handle" bases are more error prone, but tend to work at the start of a fresh rally, especially if the rally is strong. Look for volume to dry up as the stock comes within 5-10% of its old peak. Stocks breaking out of bases without a handle are most likely industry leaders; lead the market in relative price performance, sales and earnings growth; and have high institutional sponsorship. 5. Double bottom bases can form a handle, though normally they do not do so. [Note: These notes are compiled from many years worth of Investors' Corners, HTMMIS, the IBD web site and other misc. sources.] - --Katherine - ----- Original Message ----- From: "Bill Triffet" <btriffet@earthlink.net> To: <canslim@lists.xmission.com> Sent: Tuesday, August 20, 2002 10:49 AM Subject: Re: [CANSLIM] CVH | One more point of interest to me about CVH is the pivot point in relation to | the high of 34.20 back on 6/18. I realize that coming out of a bear (if we | indeed are) the pivot point may be lower than the 52 week high. Still, that | seems to me it would make a very possible point of resistance. | Am I just splitting hairs here? | | -Bill | | | ----- Original Message ----- | From: "Katherine Malm" <kmalm@earthlink.net> | To: <canslim@lists.xmission.com> | Sent: Tuesday, August 20, 2002 5:10 AM | Subject: Re: [CANSLIM] CVH | | | > Hi All, | > | > Just to close the loop on yesterday's CVH discussion---see today's weblink | > on CVH: | > | > www.investors.com/weblink | > | > | > Katherine - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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