Go to Jeff Salisbury LWGate Home Page.From: "J. Lobatto" <jlobatto@nyc.rr.com>
Subject: [CANSLIM] Breakout Blues
Date: Wed, 21 Aug 2002 17:40:44 -0400
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This is a multi-part message in MIME format. - ------=_NextPart_000_000B_01C24939.E0531520 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable To expand on the "are there too many Canslimers" out there, Here's what = I note is going on recently. Breakouts have been far less successful and = lasting than the bounce back of "oversold" stocks. WON has always = maintained that one of the reasons for purchasing a stock at a new high = is that there is no overhead supply to contend with. On the face of it = this argument makes sense. However, things seem to be a bit topsy-turvy = recently. It appears that on breakouts, you now get a tremendous amount = of what I'll call "underfoot" supply (vs. overhead, get it?). All the = Canslim folks and the pure technically oriented and/or momentum players = jump into the few breakouts we see and drive them up beyond the pivot = point. At the first hint of weakness (which for the paranoid may be = orchestrated by market makers or specialists), a few of the momentum = players sell, this begets further weakness until the pivot point is = violated and finally perhaps the 8% stop holdouts.=20 At the moment, it actually seems safer to purchase stocks bouncing back = from lower levels than to try and grab breakouts. Perhaps the rationale = is that when a stock quickly drops from 60 down to 20, those still in = the stock are so shell shocked they probably won't sell at all, and = would rather go down with the ship. When the stock starts to climb back, = these same people think. Hey, I didn't sell out at 20, so why dump it = now at 27. Let's hold on and see what happens.... This is not to advocate buy low/sell high bargain hunting, but just a = view of why CANSLIM may be a tough way to make money until we get lots = of daily breakouts and all the cash devoted to various forms of the = strategy gets spread out over a large group of stocks rather than the 4 = or 5 breakouts a day we see now. - ------=_NextPart_000_000B_01C24939.E0531520 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2600.0" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3DArial color=3D#0000ff>To expand on the "are there too = many=20 Canslimers" out there, Here's what I note is going on recently. = Breakouts have=20 been far less successful and lasting than the bounce back of "oversold" = stocks.=20 WON has always maintained that one of the reasons for purchasing a stock = at a=20 new high is that there is no overhead supply to contend with. On the = face of it=20 this argument makes sense. However, things seem to be a bit topsy-turvy=20 recently. It appears that on breakouts, you now get a tremendous amount = of what=20 I'll call "underfoot" supply (vs. overhead, get it?). All the = Canslim folks=20 and the pure technically oriented and/or momentum players jump into the = few=20 breakouts we see and drive them up beyond the pivot point. At the = first=20 hint of weakness (which for the paranoid may be orchestrated by market = makers or=20 specialists), a few of the momentum players sell, this begets further = weakness=20 until the pivot point is violated and finally perhaps the 8% stop = holdouts.=20 </FONT></DIV> <DIV><FONT face=3DArial color=3D#0000ff></FONT> </DIV> <DIV><FONT face=3DArial color=3D#0000ff>At the moment, it actually seems = safer to=20 purchase stocks bouncing back from lower levels than to try and grab = breakouts.=20 Perhaps the rationale is that when a stock quickly drops from 60 down to = 20,=20 those still in the stock are so shell shocked they probably won't sell = at all,=20 and would rather go down with the ship. When the stock starts to climb = back,=20 these same people think. Hey, I didn't sell out at 20, so why dump it = now at 27.=20 Let's hold on and see what happens....</FONT></DIV> <DIV><FONT face=3DArial color=3D#0000ff></FONT> </DIV> <DIV><FONT face=3DArial color=3D#0000ff>This is not to advocate buy = low/sell high=20 bargain hunting, but just a view of why CANSLIM may be a tough way to = make money=20 until we get lots of daily breakouts and all the cash devoted to various = forms=20 of the strategy gets spread out over a large group of stocks rather than = the 4=20 or 5 breakouts a day we see now.</FONT></DIV> <DIV><FONT face=3DArial color=3D#0000ff></FONT> </DIV> <DIV> </DIV></BODY></HTML> - ------=_NextPart_000_000B_01C24939.E0531520-- - - - -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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