Re: [CANSLIM] Home Depot

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Home Depot
Date: Tue, 20 Aug 2002 13:09:41 -0500

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Hi Hermann,

HD certainly doesn't pass the requisite technical tests to be considered a
current CANSLIM candidate, but I see it as important in several ways:

HD is one of the 500 pound gorillas of retailing and at one time carried far
more CANSLIM characteristics than it does now. While it may not be
exhibiting current technical strength, it is still important as a sentiment
indicator. First, if it were to form a bottom here, it *may* indicate that
institutions are once more willing to load up on the stock of a very good
company which has been refocusing its strategy recently and expanding into
new market niches such as government contracting.  Second, if the market
reacts well to good news and the price rises without taking a big jump on
the news and then selling off, that may well indicate a change in tone in
the market. That is, stocks go *up* on good news. Add that to more cases
where stocks stop going down so severely on bad news and it could indicate a
turning point in the market. Third, consumers as a whole have been willing
to spend throughout the recessionary period. If they are feeling confident
about their current and future prospects, they will parlay that confidence
into spending at good retailers and on other consumer discretionary
products. That by itself doesn't create macroeconomic "safety" but it sure
helps.

Just to test the waters, I created a list of stocks from various industries
that I consider to be "consumer discretionary." Stocks don't make it to the
list unless they are minimum $6/30000 ADV. In all, that's 300 stocks. Of the
300, 141 have forward growth rates >=15%, HD included. That's what I
considered to be the bare bones minimum for a "growth" stock. There's also
nothing to say that current growth rates have not been reduced too far, as
forecasters always seem to severely underforecast in periods like this in
the same manner that they tend to severely overforecast in bubble times. Of
the 141, only 40 stocks currently pass what I consider to be "minimum
technicals." (RS>=60, price no more than 15% below the 50 day SMA, and price
at or above the 200 day SMA). This is an interesting list of 40 stocks, by
the way. Take a look and see if you see any CANSLIM themes running through
the list of 40.

See the complete list of 300 at:
http://WallStreet-LLC.com/canslim/ConsumerOverview.xls. You can filter any
of the columns to narrow the list as I suggested in the last paragraph.

Katherine


- ----- Original Message -----
From: "Hermann Ertl" <hertl@attglobal.net>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 11:05 AM
Subject: Re: [CANSLIM] Home Depot


| > From: "Tom Worley" <stkguru@bellsouth.net>
| > Date: Tue, 20 Aug 2002 08:14:05 -0400
| >
| > HD reported this morning, like Lowe's showing excellent growth with
earnings
| > up 28% (3 cents ahead of forecasts) and sales up 12%. Shouldn't be a
| > surprise, given all the new home owners, but Lowe's is being credited
with
| > yesterday's rally in part. Let's see if HD can take care of Tuesday.
|
|
| At what stage in its chart patterns is HD?
|
|
|
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