Re: [CANSLIM] MIK BO? Academic discussion considering M

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] MIK BO? Academic discussion considering M
Date: Wed, 4 Sep 2002 16:52:57 -0500

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Hi Kelly,

There's no official "rule" about basing below the 200 day MA that I'm aware
of other than with respect to flat bases. That is, the flat base must form
above both the 50 and 200 day MA's to be considered "healthy." (I think as
long as the base is "kissing" the 50 it's really OK) There's certainly a
school of thought that says that a good entry point occurs when the 50
crosses above the 200 dMA, but I don't think there's enough evidence to
support that as a reliable indicator. I'm fairly sure that WON has commented
on this and considers technical action itself to be far more reliable than
an MA crossover.

In general, price falling below the 200 day MA is a sign the stock is in
trouble. So, if I look at the chart and see most of the basing action below
the 200, that's a yellow flag in my book. All in all, if the base and the
market were otherwise healthy in all respects, then some basing action below
the 200 wouldn't necessarily kick out a good candidate. But, if I had 2
stocks that were the same in all respects and one was basing near the 50 and
far above the 200, I'd go for it in a millisecond over one forming much of
its base below the 200.

Katherine

- ----- Original Message -----
From: "Kelly Short" <kelly.short@fw.us.neoris.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, September 04, 2002 12:24 PM
Subject: RE: [CANSLIM] MIK BO? Academic discussion considering M


Katherine,

Thank you as always for the information. I would not have picked up on the
"wedging action" simply because it was not on my radar- but it has since
been placed in the notes to look for. Also, the comment regarding bottoming
action below the 200dma comment was interesting- I don't remember this rule
from HTMMIS. Is this something WON teaches or something you have developed
an eye for based on years of experience?

Also- thanks for the charts!

Kelly

- -----Original Message-----
From: Katherine Malm [mailto:kmalm@earthlink.net]
Sent: Wednesday, September 04, 2002 12:14 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] MIK BO? Academic discussion considering M


Hi Mike,

You don't know you've reached the "tip" of the wedge until the price falls
and "triggers" the move down. This really isn't CANSLIM, so I don't want to
get off topic...best for me to point you to TradingMarkets.com where you can
read all about shorting and covering, which is a short term trading tactic.
Dave Landry is a very good source and has numerous trading lessons on the
subject. (If you haven't already done so, you can take advantage of their 3
month free trial which was posted here last week. That'll give you access to
all their lessons and archives.) [I've no affiliation with TradingMarkets,
just a satisfied customer and member since early 2000]

Katherine

- ----- Original Message -----
From: <michael_niemotka@baxter.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, September 04, 2002 11:48 AM
Subject: Re: [CANSLIM] MIK BO? Academic discussion considering M


|
| Thanks for the great info. Now the $20,000 question, how do you identify
| the tip of the wedge (which I assume is the change point from area 2 to
| area 3) so you can maximize your gain?
|
| And how do you know when to cover?
|
| See how I only ask the "easy questions?
|
|
|
| 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] MIK BO? Academic discussion considering M
|                     ission.com
|
|
|                     09/04/2002 11:23 AM
|                     Please respond to
|                     canslim
|
|
|
|
|
|
| Hi Mike,
|
| Yes...that's it. "Wedging" is a pattern of increasing prices on decreasing
| volume. MIK isn't a textbook case of wedging, as the volume isn't clearly
| decreasing, but the volume was fairly light and then under heavy
| distribution in the last couple of days in that area I identified, so I
| considered it a "quasi-wedge." This wedging action is particularly
| troublesome in the right side of the cup and/or in a handle because it
| shows
| lack of conviction as the price is rising.
|
| I've uploaded a chart of another stock that gives a better view of some
| wedging action and the subsequent price action. I can see I've cut off
part
| of my comments on the chart, but that last bit should read "Notice how in
| area 3 the price tanks and retraces the move up." BTW, this is exactly the
| sort of setup one looks for in a good short candidate (shorting as the
| price
| fails at the tip of the wedge)!
|
| http://WallStreet-LLC.com/canslim/Wedging090402.jpg
|
| Katherine
|
|
| ----- Original Message -----
| From: <michael_niemotka@baxter.com>
| To: <canslim@lists.xmission.com>
| Sent: Wednesday, September 04, 2002 10:27 AM
| Subject: Re: [CANSLIM] MIK BO? Academic discussion considering M
|
|
| |
| | Katherine,
| |
| | Can you define the "wedging" action you note?  Does it mean price
| increase
| | with a corresponding volume decrease over a number of days?
| |
| | 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
| |
| |
| |
| |                     "Katherine Malm"
| |                     <kmalm@earthlink.net>         To:
| canslim@lists.xmission.com
| |                     Sent by:                      cc:
|
| |                     owner-canslim@lists.xm        Subject:     Re:
| [CANSLIM] MIK BO? Academic discussion considering M
| |                     ission.com
| |
| |
| |                     09/04/2002 09:40 AM
| |                     Please respond to
| |                     canslim
| |
| |
| |
| |
| |
| |
| | Hi Kelly,
| |
| | I've marked a chart with my interpretation of MIK's chart. See it at:
| |
| | http://WallStreet-LLC.com/canslim/MIK090402.jpg
| |
| | Katherine
| |  ----- Original Message -----
| |  From: Kelly Short
| |  To: canslim@lists.xmission.com
| |  Sent: Wednesday, September 04, 2002 9:12 AM
| |  Subject: [CANSLIM] MIK BO? Academic discussion considering M
| |
| |  Has MIK created a CwH formation (6/10 - 8/29) hitting its pivot point
on
| |  8/29 and now retreating to make a handle? EPS and Revenue growth have
| been
| |  strong for the past three qtrs (all though last qtr's EPS was down by
| |  $0.01). Volume looks suspiciously high though both in the bottom of the
| |  cup and now in the handle. Since M has heartburn right now I wouldn't
| |  imagine trading in it (given my level of expertise). Thoughts?
| |
| |  Kelly
| |
| |
| |
| |
| |
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