Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] stop losses and profits
Date: Wed, 21 Aug 2002 02:25:00 -0400
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Michael, one of the hardest things for me to learn, and I still consider
myself a beginner at it, is to learn how to hold onto the biggest long term
gainers. Frankly, if I had bought DOCC in my IRA instead of my margin
account just over six months ago, I likely would have already sold part of
it. Instead, I hold a major winner because I also want to avoid long term
capital gains taxes if this stock permits me to.
Likewise, every stock is different depending on its price, past performance,
overall volatility, price spread between the bid and ask, average volume,
shape of the base, how cleanly defined is the pivot, etc. Because I only buy
small and micro cap stocks, often low priced, often with low volume, I have
learned to give them more room to roam. More risk, more chance of a major
percentage loss. But necessary if I am to continue owning one or more big
winners periodically. But like many, I have a day job and cannot sit in
front of a monitor all day, so I try to sneak in ahead of a potential b/o
rather than waiting for the actual b/o and maybe missing it. I believe that
most should adhere to a 8% stop loss until they gain experience, and even
thereafter for some. Whether you raise this stop loss at a 15% or 20% gain
is less important than that you have a plan, a discipline, in place.
- ----- Original Message -----
From: <michael_niemotka@baxter.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 3:19 PM
Subject: Re: [CANSLIM] stop losses and profits
Katherine,
I actually followed this thinking and watched a nice profit (15%) in NCEN
turn into an 8% loss as the bottom dropped out. I think it has made me
make a modification to stop at break even if I end up at 15% gain, at least
until M has be proven to be turned. I came up with this based on assuming
a stock that breaks out would "normally" be expected to rise about 25-30%
before re-basing, so if never gets up by that amount from my buy point,
then I should exit sooner rather than later...
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 05:01 PM
Please respond to
canslim
Oops...I realize now I misread your question.
I would *hold on* up to 8% below buy price, but if the stock comes back and
*kisses* the pivot, then I would buy more. I'm not inclined to buy more
when the stock drops *below* the pivot, unless it shows strong volume
pushing it back up to the pivot and beyond. Now I think I've confused even
myself!
This is the way I think of it "Kiss the pivot, second chance to buy
more---Hit the pivot, yellow flag"
Katherine
- ----- Original Message -----
From: "Katherine Malm" <kmalm@earthlink.net>
To: <canslim@lists.xmission.com>
Sent: Friday, August 16, 2002 4:55 PM
Subject: Re: [CANSLIM] stop losses and profits
| 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"
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| | |
| | |
| | |
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