Go to Jeff Salisbury LWGate Home Page.From: Chris Dempsey <cdempsey@houston.oilfield.slb.com>
Subject: RE: [CANSLIM] IBD Weblink
Date: Fri, 11 Oct 2002 18:40:03 -0500
Next Article (by Author): Re: [CANSLIM] IBD Weblink "Katherine Malm"
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Excellent work. I agree with you.
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm
Sent: Friday, October 11, 2002 6:09 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] IBD Weblink
Hi jans & Mike,
I've read through the weblink a couple of times and gone back to my notes on
C&H bases, handles, and HTMMIS. I think what's happened is a case of sloppy
editing in the weblink.
The left side of a cup is printed when the stock starts a correction after a
prior uptrend of 30% or more. With APPX, that means that the left side of
the cup is *not* the 52 wk high set on 1/4 (22.00) as they implied, but
instead, is the high set on 3/15 (19.11). The left side starts on 3/15
because the rise from the low 2/8 (12.97) to the peak on 3/15 was
(19.11-12.97)/12.97 = 47%, setting up the new correction and beginning of
the cup. See an annotated chart at
http://WallStreet-LLC.com/canslim/APPX101102.JPG
In HTMMIS, the wording WON uses to define the beginning of the handle and
the pivot buy point is "most occur 5% to 10% below the former peak....and
this is almost always somewhat below the base's actual high point." The key
word to me is that they are identifying the start of the handle in
relationship to the *base's* high point. There are a couple of examples to
demonstrate that the left side of the base is not always the old 52 wk high.
See for example, VRSN on p. 159 or PMCS on p. 162 of the new edition of
HTMMIS.
Once the left side of the base is properly identified, then it's simply a
matter of testing whether the handle is valid:
1. Did it form within 5-15% of the base high? yes
2. Did it form in the upper half of the base? yes
3. Did it droop no more than 30% (that's a valid "bear market droop", though
the norm is 10-20%)? yes
4. Did it drift down on light volume? yes--though you could see the
beginning of the breakout in the last day of the handle.
5. Did it form above the 200 day MA? yes
6. Was it at least 5 days long? yes
7. Did volatility in the handle contract? debatable, though not exceedingly
zig zaggish and handles will often have a big shakeout day
None of that's to say that the breakout won't fail, but I have to disagree
with the weblink's analysis this time.
Katherine
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<p class=MsoNormal><span class=EmailStyle17><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial'>Excellent
work. I agree with you.<o:p></o:p></span></font></span></p>
<p class=MsoNormal><span class=EmailStyle17><font size=2 color=navy face=Arial><span
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<p class=MsoNormal style='margin-left:.5in'><font size=2 color=black
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma;color:black'>-----Original
Message-----<br>
<b><span style='font-weight:bold'>From:</span></b> owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]<b><span style='font-weight:bold'>On
Behalf Of </span></b>Katherine Malm<br>
<b><span style='font-weight:bold'>Sent:</span></b> Friday, October 11, 2002
6:09 PM<br>
<b><span style='font-weight:bold'>To:</span></b> canslim@lists.xmission.com<br>
<b><span style='font-weight:bold'>Subject:</span></b> Re: [CANSLIM] IBD Weblink</span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 face="Times New Roman"><span
style='font-size:12.0pt'><![if !supportEmptyParas]> <![endif]><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>Hi jans &
Mike,</span></font><font color=black><span style='color:black;mso-color-alt:
windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>I've read
through the weblink a couple of times and gone back to my notes on C&H
bases, handles, and HTMMIS. I think what's happened is a case of sloppy editing
in the weblink. </span></font><font color=black><span style='color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>The left side
of a cup is printed when the stock starts a correction after a prior uptrend of
30% or more. With APPX, that means that the left side of the cup is *not* the
52 wk high set on 1/4 (22.00) as they implied, but instead, is the high set on
3/15 (19.11). The left side starts on 3/15 because the rise from the low 2/8
(12.97) to the peak on 3/15 was (19.11-12.97)/12.97 = 47%, setting up the new
correction and beginning of the cup. See an annotated chart at <a
href="http://WallStreet-LLC.com/canslim/APPX101102.JPG">http://WallStreet-LLC.com/canslim/APPX101102.JPG</a></span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>In HTMMIS,
the wording WON uses to define the beginning of the handle and the pivot buy
point is "most occur 5% to 10% below the former peak....and this is almost
always somewhat below the base's actual high point." The key word to me is
that they are identifying the start of the handle in relationship to the
*base's* high point. There are a couple of examples to demonstrate that the
left side of the base is not always the old 52 wk high. See for example, VRSN
on p. 159 or PMCS on p. 162 of the new edition of HTMMIS.</span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>Once the left
side of the base is properly identified, then it's simply a matter of testing
whether the handle is valid:</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>1. Did it
form within 5-15% of the base high? yes</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>2. Did it
form in the upper half of the base? yes</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>3. Did it
droop no more than 30% (that's a valid "bear market droop",
though the norm is 10-20%)? yes</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>4. Did it
drift down on light volume? yes--though you could see the beginning of the
breakout in the last day of the handle.</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>5. Did it
form above the 200 day MA? yes</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>6. Was it at
least 5 days long? yes</span></font><font color=black><span style='color:black;
mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>7. Did
volatility in the handle contract? debatable, though not exceedingly zig
zaggish and handles will often have a big shakeout day</span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>None of
that's to say that the breakout won't fail, but I have to disagree with the
weblink's analysis this time.</span></font><font color=black><span
style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'> </span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'>Katherine</span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
<p class=MsoNormal style='margin-left:.5in'><font size=3 color=black
face="Times New Roman"><span style='font-size:12.0pt;color:black'><![if !supportEmptyParas]> <![endif]></span></font><font
color=black><span style='color:black;mso-color-alt:windowtext'><o:p></o:p></span></font></p>
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Next Article (by Author): Re: [CANSLIM] IBD Weblink "Katherine Malm"
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