Re: [CANSLIM] CSTR CVH Failed breakouts Post Analysis

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] CSTR CVH Failed breakouts Post Analysis
Date: Thu, 5 Sep 2002 08:50:07 -0400
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John, if you want to view more than a 10 day chart at Big Charts, just
change the setting for "Frequency" to one of the lower settings (below the
line) such as Daily, Weekly, etc. The settings above the line (minute, 15
minutes, etc) only work with charts up to the last 10 days.

- ----- Original Message -----
From: "John Calkins" <jcalkins@olypen.com>
To: <canslim@lists.xmission.com>
Sent: Thursday, September 05, 2002 8:16 AM
Subject: Re: [CANSLIM] CSTR CVH Failed breakouts Post Analysis


Hi James,

Thanks for your incredible responce to my Failed Breakout and Stops!  I've
tried to look at the intraday charts before but didn't take them seriously
enough I guess.  I have noted before that big moves on high volume during
the day seemed to be connected to some news or something, but was afraid it
was just market makers or day trading.  I can't get more than 10 days ago at
BigCharts for a history on CSTR for the time frame but I think I understand
that when you see a CWH pattern within a 5 day  then watch for a handle to
form or breakdown or up in price with high volume.  Do you look at BigCharts
for this intraday charting and what is you setting preference, such as 5 or
10 day/ 1 hour or 15 min.?  I had been getting my volume/price information
each day from my telephone service with TD Waterhouse but it looks like your
intra-day charts work much better.






- ---- Original Message -----
From: "James Bond" <james_bond_3rd@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, September 03, 2002 6:44 PM
Subject: Re: [CANSLIM] CSTR CVH Failed breakouts Post Analysis


> CSTR presents an interesting example of the importance
> of intraday charts. There is no clue of impending
> trouble on the daily chart until the stock broke down.
> The intraday chart, however, telegraphed the bad news
> well in advance.
>
> Like many other people, I too cannot follow the market
> during the day and have to check charts during the
> evening. When I have a position open, I check the
> chart every night with no exception.
>
> On Thursday, Aug 22, when this rally was still
> advancing, I was surprised that evening to see many
> bearish charts among the leading stocks. For example,
> FCN had a deterioting relative strength, CCR made a
> new high but its relative strength lagged, DORL gapped
> to a new high but saw no progress in daily price
> (distribution), and PIXR had formed an evening star
> candlestick pattern. If one or two stocks were acting
> poorly it probably wouldn't have bothered me so much.
> When most of the leading stocks were showing signs of
> weakness the market was in trouble. At that time I was
> long CCR, CSTR, DORL, NUTR, and PIXR. My first
> decision was to sell CCR, DORL and PIXR at the open
> next morning, and but to keep CSTR and NUTR.
>
> I changed my mind when I looked at the intraday chart
> for CSTR. On the daily chart, CSTR had formed an
> impeccible CwH base, with pp at 31.22. The breakout
> was on very good volume, and reached a high of 34.2.
> Because of a little overhead resistance (as mentioned
> by others), it was expected to form a second handle
> before breaking out to new highs. This was also noted
> by the issue of IBD the day after its breakout. It
> consolidated between 32 and 34 the next 5 days, with
> nothing extraordinary shown on the daily chart. I was
> several times tempted to add shares when it pulled to
> low 32's but thougt better of it. My plan was to add
> to my position when it broke out of the second handle.
> I wasn't even thinking about selling it before I
> looked at the intraday chart.
>
> I was alarmed by the intraday chart. On the intraday
> chart, the consolidation between 32 and 34 showed up
> as a five day CwH formation, with the appropriate
> volume actions (large volume on left and right sides,
> dryups on bottom and in handle). Handle high was 33.76
> which was the intraday high on Thursday. Everything
> was great except for the last hour or so of Thursday.
> Some heavy selling came in and broke the handle
> formation (little did I know that the Off Wall Street
> report was issued to its clients on that Thursday).
> WON told us that heavy selling in handle was a sign of
> trouble, and a good short can be entered when the
> handle low was broken as the volume picked up. Of
> course he was refering to daily charts. Intraday
> charts work the same way except its validity is much
> shorter in duration. If the market were healthy, I
> probably would have expected CSTR to pullback and test
> the pp and a decision could be made after the test.
> But with the other leading stocks weakening, there was
> no question at that point that CSTR was going to break
> below its pivot point. So I decided to sell it the
> next morning along with the others for a small profit.
>
> I was kicking myself a few days later when CSTR barely
> dipped below the pp and then rallied past my sell
> price. But that lasted only one day. Thank goodness
> the intraday chart gave me the only clue there was.
>
> As far as CVH was concerned, I ruled it out as a buy
> candidate early on. There were several issues with
> CVH. First was the lack of confirming strength in the
> group - although the group ranking was high, other
> stocks in the group either didn't have a proper base
> (SIE), or had a wide and loose base (MME). I avoid
> groups like this. Second CVH was overowned by
> institutions - over 90% of ownership. WON's rule was
> less than 50% institutional ownership. Third was a
> non-CANSLIM issue: CVH was being investigated for
> overcharging government. Although it was an old issue,
> as long as it remained unresolved, there could always
> be surprises.
>
> One final note. I don't think taking a 7% loss on
> every losing trade is ok. If one takes a 7% loss in a
> string of 5 trades (a finite probability), that's a
> third of capital lost - too much for any trading
> method, considering how hard it is to have a 50%
> return (the amount needed to come back). My
> understanding of it is that WON didn't intend 7% to be
> where you place the stop order. Instead it's the
> maximum allowable loss for a single trade. Usually it
> should take a screwup to have a 7% loss. If one buys a
> stock correctly, a 2-3% loss is achievable if the
> stock fails. Sometimes one can even exit with a small
> profit if the chart is read correctly.
>
> __________________________________________________
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> http://finance.yahoo.com
>
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