Go to Jeff Salisbury LWGate Home Page.From: Spencer48@aol.com
Subject: Re: [CANSLIM] MSN CANSLIM PowerSearch list grows substantially
Date: Wed, 18 Sep 2002 14:39:15 EDT
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Tom:
Yesterday's Investors Corner focused on the short-lived rally in
January/01 when the Fed. surprised nearly everyone with a 1/2 point interest
rate cut. It goes on to say that the market made a nice FT on that day
(around a 14% rise in the S&P with about 3 Billion in volume).
It then observes (a passage of the article follows. The article was
written by Jonah Keri):
"Jan. 3 wasn't any old follow-through, though. That day, the Fed
delivered a surprise half-point interest rate cut. The Nasdaq zoomed up 14.2%
[around 74 points on the S&P 500] as volume burst to 3.14 billion shares,
both records. The Dow also scored huge gains on heavy volume. The same held
true two weeks later, following another high-volume up day Jan. 18 . Aside
from several home builders and retailers, few promising stocks took off. On
Jan. 31, the S&P reversed, dropping on brisker trade after an early rally ).
Within the next five sessions, two distribution days on Feb. 6 and 7 set the
stage for another collapse."
The opening paragraphs in the same article notes:
"What could possibly be more frustrating than a market that plummets
straight down? How about a market that rallies just enough to suck you in,
then delivers a fresh round of crippling declines? That's what the major
indexes have done since 2000. Even some of the shrewdest traders have waded
into false rallies, only to get slammed by bear traps. Still, it can be hard
to sit on your hands for two, three or more years. But what if the market has
little to offer? That was the case in December 2000, when the major indexes
staged a six-week rally. Those who lunged blindly learned a valuable
lesson. Even after a follow-through day of 2% or greater gains on the Dow,
S&P 500 or Nasdaq, the market needs reams of powerhouse stocks leading it
higher to succeed long-term."
My point is that: When most of the leading stocks are in only one
industry (and for arguments sake, we'll define many of the leaders as being
in Kelly's list), then, perhaps, it is only that industry that is strongish.
It isn't saying anything positive, though, about the resurgent strength of
the market as a whole.
The Market's poor volume and lack of leadership, in my opinion,
indicates a bear trap. (However, and I guess Ian of small caps, is still
there: Ian has pointed out in the past that small caps with nice repeatable
earnings and a healthy PEG [which is based on-presumptively continuable-sales
growth in the current corner], and nice up volume with listless down
volume-these stocks do well, even in a down market.)
My question, though, Ian, is: can you time these stocks, ie. are there
technical tools or chart patterns that you've used in the past that have
signaled success in timing an uptrend in small cap stocks?
jans
In a message dated 9/17/2002 11:04:55 PM Eastern Daylight Time,
stkguru@bellsouth.net writes:
<< Kelly, don't know if you saw the pattern yet, but almost every single stock
on this list is a bank or bank holding company. The NYSE Financials had one
of the strongest rallies off the 7/24 lows, and has given back the least of
that rally so far, so doesn't surprise me that banks would populate this
list. Why so many at one time I don't know, nor why your screening criteria
results in almost nothing but banks.
>>
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