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Subject: Re: [CANSLIM] M
Date: Sat, 23 Nov 2002 11:46:09 -0600
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Hi Eric,
Thanks once again for clearing up your definitions, as that was more =
than anything my main concern. I think it's common for folks to "see" =
the market differently when they are following different indicators and =
now that you've given more definition to your "X", it demonstrates that =
we don't necessarily view the market differently at its core, but are =
only focusing on different things when looking ahead.
A good example of that is the focus on stocks making new 52 week highs. =
I agree with you wholeheartedly that in a robust market, there is a =
consistently growing list of high quality stocks showing up. I also =
agree that one useful way of viewing the health of a recent FTD is to =
track the number of stocks breaking out from sound bases and rising =
>=3D20% in a few weeks (that's a personal measure I use, though I don't =
know if it matches your "X" definition).
I am in agreement with you that the current rally has a lot of negatives =
going for it, all of which you've so clearly laid out in your previous =
emails. On the other hand, I think focusing on the underlying setups and =
*potential* leadership is important as well. In other words, I also =
measure the strength of a rally by looking at CANSLIM quality stocks =
making new 60 day highs, setting up in sound bases, etc. I also feel =
that after a long downward trending market that you're more likely to =
find stocks setting up as bottoming bases that reverse downtrends than =
you are to find bases setting up after strong and lengthy uptrends. I =
also think that the extension of this phenomenon is that you'll see =
stocks breaking out from bases when their RSRank is a non-laggard 70 and =
above. (Even in HTMMIS, WON explains the misuse of high RS's for stock =
selection.) This is supported by studies in the market place that show =
that stocks/industries that do well over the previous 2 year period have =
a low probability of doing well during the next 2 year period, and by =
comments made by WON himself in articles such as his recent "Ask Bill" =
column. **
All in all, I'd say that we agree that the current rally has a lot of =
reasons that it could fail, and watching for continued evidence that =
high quality stocks can set up and make a good strong run will be =
critical. I'd also agree with you that keeping long positions on a short =
leash is also important as we go forward. On the other hand, I have to =
agree with Ed Gjertsen's point of view that this rally could have enough =
oomph behind it to power up for 3-6 months. (I'm paraphrasing Ed's =
comments) The problem with being overly skeptical and not taking long =
trades in good quality stocks when they set up is that the majority of =
the gains to be had in a rally are off positions taken early in the =
rally. Too skeptical and 5 or 6 months go by before one is willing to =
take a trade and...phoot...before you know it, it could be over. That's =
opportunity cost that has a high price tag in my mind.
Katherine
**Ask Bill O'Neil
Wednesday, November 20, 2002=20
=20
It's been suggested that we keep an eye on stocks that have performed =
well during this bear market, but avoid those that have doubled or more. =
What's the difference between these two types of stocks?=20
=20
- - Submitted from Minneapolis, Minn.=20
=20
=20
The distinction is not as simple as that. In the current environment, =
stocks that have had big moves over the past year or two have been =
getting hit by selling as they try to emerge from their bases. This is =
because they are often in late-stage, obvious bases, and because most =
money managers are inclined to take profits as stocks move into new high =
ground in a weak overall market environment. It is better to look for =
stocks that are acting well and forming proper bases that have not had a =
big run, given the current environment. For help with late-stage bases, =
read an article on the subject in the Investor's Corner Archives.=20
----- Original Message -----=20
From: Eric Jaenike=20
To: canslim@lists.xmission.com=20
Sent: Friday, November 22, 2002 12:35 PM
Subject: Re: [CANSLIM] M
I don't think I did a good job of explaining myself.=20
I am, in essence, comparing a narrow class of stocks defined by "X" =
characteristics for this rally with the same class of stocks defined by =
"X" characteristics from previous rallies/"true" bull runs to gain some =
insight as to the durability of the rally, and its underlying quality. =
One characteristic in "X" is that the stock has to be at a new or =
multiyear high.=20
Now, I am not saying that leadership for a run comes only from stocks =
at new or multiyear highs. What I am doing is simply looking at stocks =
that meet that definition, and drawing inferences from the size, =
concentration, and breadth of that list. Thus, stocks such as EBAY and =
SFNT are not included in that list. FRX would be. My list of stocks I =
gave was not meant to be taken as the totality of stocks on that "well" =
list, just as examples of those stocks.=20
Another characteristic in "X" is that it has to have broken out and =
run well after the breakout point. Thus, stocks such as MNTR and WFMI =
are not on my list because they just recently broke out, and have not =
yet proven that they have run well. Does that mean that they are not =
potential leaders? No. Does it mean they shouldn't have been purchased =
on the breakout? Certainly not. Does it mean they don't meet the =
definitions of "X"? Yes.=20
Finally, the stocks need to have run strongly. Again, all I am doing =
is looking at the "best of the best", and getting a feel for that group. =
For example, take BLUD. It broke out of its recent range at around 19. =
As of close yesterday, it was at 21, for a gain of about 10% in just =
under 7 weeks. Not bad, but at the same time, the S&P has run about 20%. =
The situation is similar with IGT. It broke out about 5 weeks ago, has =
run from 70/71 to about 79. Not bad, but somewhat less impressive when =
compared to the runs in the indices. So would I consider BLUD and IGT to =
be great stocks in this run? Tough call. I think it is a little gray.=20
Finally, and this time I mean it, there are lots of other stocks that =
are forming solid bases, but which have not yet broken out. Those are =
all potential leaders. However, they received no mention in my email =
because they didn't meet the definition of "X".=20
I am using this narrow study as one of many things I look at to get a =
feel for what's happening. A more comprehensive and insightful study =
would be to expand the definition of "X" to include these other types of =
stocks. I think that would be of much more value than the restricted =
definition of "X" that I used. However, that is not what I did.=20
When I look at this run, I see a 7ish week rally that has run 20-30% =
on the general indices, that has seen a 70% run in the SOX, and a skew =
in terms of participation that is too heavily weighted towards =
speculative and beaten down tech relative to new leadership.=20
I see weak participation by retailers (some smaller, niche stocks =
(TSCO CHS JOSB PETM ROST KSWS CENT SHRP (until recently) AZO CPWM) have =
done well, but retail is a very large category, and will always have =
some shops doing well, so I don't consider their moves taken in =
isolation to be indicative of a strong consumer. WMTs weak same store =
sales numbers bother me a lot. The consumer has been exploiting cash out =
refis aggressively as well, which has been boosting retail spending. =
Ex-refis, I think retail would be materially weaker. I consider this a =
negative in evaluating the health of this rally.=20
I see weakness in the homebuilders, which I find troubling. I find the =
recent participation of highly speculative tech stocks disconcerting. I =
also find the bull/bear %, as well as the 30 day put/call moving =
average, 30 day ma of a/d on the NYSE, and the NYSE up vol. as a % of =
total volume indicative of a looming top. (A bit off topic, I know). =
There are a lot of other things I'm looking at as well that make me =
uncomfortable with the current rally.=20
So, in sum, when I look at all these things, and look at the current =
state of leadership considering we've had a substantial run, I lean more =
towards a cautious stance toward this rally at this point than an =
aggressive one.=20
Hope that helps.=20
Eric=20
=20
Katherine Malm <kmalm@earthlink.net> wrote:=20
Thanks for the clarification, Eric. If I understand you correctly, =
then, you are insisting on perfect charts and strong moves since the =
breakouts before considering something for inclusion on your list. What =
is still not clear to me, however, is how you select a stock for =
consideration as a CANSLIM stock when making your leader board.
If I look at action since the market bottom, I find 263 stocks that =
have shown relative outperformance to the S&P (Price>=3D6, =
AvgVol>=3D30000, forward growth rate>=3D15--that's just a simple way of =
identifying "growth" stocks). Granted, not all of them would pass all =
the CANSLIM fundamental tests and not all of them have yet staged =
breakouts, but that's a fairly substantial list of stocks acting well in =
my mind (The average gain in these stocks off the 10/10 bottom is 45%). =
I wondered why you wouldn't have mentioned stocks such as INFY, MNTR, =
SFNT, FRX, OVTI, WFMI, VIP, BLUD, ICUI, SYK, EBAY, IGT, SCSC, or PNRA. =
That's a small sampling of stocks with decent (though not perfect) =
charts off the list of 263 that are doing well, so not a complete list =
of "stocks doing well" in my mind.
I believe that after such a strong downtrend, that we're not going =
to find perfection in all aspects, either fundamental or technical, but =
certainly if one weighs the preponderance of evidence on a list such as =
this, there's a lot of emerging leadership. Granted, the moves are =
subtle, as they are not en masse as with the Fall's homebuilder's move =
you mentioned, but in a new Bull market (cyclical though it may be), the =
new leaders will emerge one by one from various industries. Only when =
and if a strong Bull ensues will we see strong group moves and stong =
breakout moves one after the other. In the nascent stages, I think it's =
actually encouraging that the emerging leaders are quietly gaining =
strength, unknown to the general public. I also think that it's healthy =
that money is not rushing headlong into former leaders as it did in so =
many of the previous bear rallies and that it's not a "bad thing" that =
money might be flowing to some beaten down quality stocks. I think WON =
states that about 14% of "former winners" will actually have what it =
takes to make a fresh run in a new Bull market.
Katherine
----- Original Message -----=20
From: Eric Jaenike=20
To: canslim@lists.xmission.com=20
Sent: Friday, November 22, 2002 9:44 AM
Subject: Re: [CANSLIM] M
In saying "well", I am referring to "well" relative to the move in =
the indices as well as relative to the universe of canslim stocks that =
have broken out, i.e. the best of the breakouts.=20
In a bull run, you're going to see lots of breakouts. Some of =
those breakouts will work "well", in that they have strong price =
appreciation, tepid pullbacks, etc. In other words, really strong =
canslim breakouts. Others will work fine, in that they hold above their =
breakouts, move up, etc, but don't act as well as the former category.=20
For the purposes of the post, I was using "well" to mean this best =
of the best group. So, for example, TSCO has acted OK, in that its above =
its breakout, etc, but it hasn't acted "well" in that it dropped below =
its pivot (albiet slightly), and there have been some p/v yellow flags, =
etc.=20
Also for the purposes of the discussion, I am excluding stocks =
like UNTD, which I believe is the combo of the old Netzero and Juno. =
While it certainly is a canslim/turnaround type stock, I am excluding it =
from the list, because I excluded that type of stock from the previous =
runs' lists, and I want to be consistent across comparisons. That is not =
to say it is not a playable stock, but merely that for comparison =
purposes, I don't want to include it.=20
In sum, for the move we've had in the indices, the doing "well" =
list, which I take as a barometer of market health, seems awfully thin. =
The point I was trying to make is simply that the market in general is =
not as strong as the move in the indices would indicate.=20
Hope that provides some clarity.=20
Eric=20
Katherine Malm <kmalm@earthlink.net> wrote:=20
Hi Eric,
A question for you--I noticed in your list of stocks that are =
"working" that there were many CANSLIM quality growth stocks that *have* =
been working and demonstrating leadership noticeably missing from your =
list. When you look at market health, how are you defining the =
candidates you consider to be CANSLIM stocks?
Katherine
----- Original Message -----=20
From: Eric Jaenike=20
To: canslim@lists.xmission.com=20
Sent: Thursday, November 21, 2002 4:02 PM
Subject: Re: [CANSLIM] M
I think this market is not nearly as strong as the indices =
make it appear. While it clearly has a bid under it, the very fact that =
people are questioning whether it is real or not says something.=20
Market leadership is firmly rooted in the SOX right now, the =
playground of the beta chasers, and I think that is pulling the market =
along with it. While there certainly is playable strength in the market, =
I think a true bull run would display much better leadership. We are up =
32% on the Nas from the October low, and 21% on the S&P. That is a long =
way to go without clear, assertive leadership. Consider also that we are =
now above 50% bulls.=20
I can find only a handful of stocks that have broken out and =
really performed well. These include VRNT IDXX BSX ELAB TEVA LCI ATRS =
IGT PIXR. (These are only the ones I have on my own lists. There are, of =
course, others, such as ISSX, but for the purposes of this discussion, I =
am excluding them as not pure, traditional CANSLIM). Contrast these with =
the runs in stocks such as KLAC, INTC, VSEA, AMAT, LRCX, QLGC, etc.=20
It seems I am having to work far to hard to find the =
leadership in this market for this to be the solid bull run the indices =
would have us believe.=20
Most recently, there have been runs in the real speculative =
dogs, such as PUMA AKAM INKT LOOK ARBA LEXR OPWV RSAS CELL WGRD TIVO. I =
consider that to also be a sign that this run is getting old.=20
As I watch this run, I am constantly reminded of last year's =
4Q. I think this run still has legs, but I would pay very close =
attention to my longs.=20
Eric=20
=20
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Thursday, November 21, 2002 2:04 PM
Subject: Re: [CANSLIM] M
Hi Ian,
Just a quick note... re your comment "It is also baffling =
to me that the sectors that stand to benefit the most from coming =
increases in government spending - the defense and security sector - are =
watching this action from the sideline as well."=20
I noticed SFNT powering ahead today. I've also noticed =
that money is definitely coming *out* of the safe-haven defensive issues =
such as healthcare/hospitals, etc. In general, I see far more breakouts =
than I've seen since last year, so all together, still looks promising =
to me.
Katherine
----- Original Message -----=20
From: Ian=20
To: canslim@lists.xmission.com=20
Sent: Thursday, November 21, 2002 3:23 PM
Subject: [CANSLIM] M
Is anyone else finding any "NEW" winners emerging from =
this buying frenzy?
It seems to me that several recent rally leaders are =
rolling over ugly today - HITK, LCI, ACET - while the indices power =
ahead, propelled by the most heavily shorted isues.
It is also baffling to me that the sectors that stand to =
benefit the most from coming increases in government spending - the =
defense and security sector - are watching this action from the sideline =
as well.
So am I mising the new leaders of the bull, or is this =
just shot-term traders using liquidity to squeeze heavily shorted =
positions? Opinions? Whither 'M'?
Ian
Eric Jaenike
President
Vector Investment Management
303-300-2961
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<DIV>Hi Eric,</DIV>
<DIV> </DIV>
<DIV>Thanks once again for clearing up your definitions, as that was =
more than=20
anything my main concern. I think it's common for folks to "see" the =
market=20
differently when they are following different indicators and now that =
you've=20
given more definition to your "X", it demonstrates that we don't =
necessarily=20
view the market differently at its core, but are only focusing on =
different=20
things when looking ahead.</DIV>
<DIV> </DIV>
<DIV>A good example of that is the focus on stocks making new 52 week =
highs. I=20
agree with you wholeheartedly that in a robust market, there is a =
consistently=20
growing list of high quality stocks showing up. I also agree that one =
useful way=20
of viewing the health of a recent FTD is to track the number of stocks =
breaking=20
out from sound bases and rising >=3D20% in a few weeks (that's a =
personal=20
measure I use, though I don't know if it matches your "X" =
definition).</DIV>
<DIV> </DIV>
<DIV>I am in agreement with you that the current rally has a lot of =
negatives=20
going for it, all of which you've so clearly laid out in your previous =
emails.=20
On the other hand, I think focusing on the underlying setups and =
*potential*=20
leadership is important as well. In other words, I also measure the =
strength of=20
a rally by looking at CANSLIM quality stocks making new 60 day highs, =
setting up=20
in sound bases, etc. I also feel that after a long downward trending =
market that=20
you're more likely to find stocks setting up as bottoming bases that =
reverse=20
downtrends than you are to find bases setting up after strong and =
lengthy=20
uptrends. I also think that the extension of this phenomenon is that =
you'll see=20
stocks breaking out from bases when their RSRank is a non-laggard 70 and =
above.=20
(Even in HTMMIS, WON explains the misuse of high RS's for stock=20
selection.) This is supported by studies in the market place that =
show that=20
stocks/industries that do well over the previous 2 year period have a =
low=20
probability of doing well during the next 2 year period, and by comments =
made=20
by WON himself in articles such as his recent "Ask Bill"=20
column. **</DIV>
<DIV> </DIV>
<DIV>All in all, I'd say that we agree that the current rally has a lot =
of=20
reasons that it could fail, and watching for continued evidence that =
high=20
quality stocks can set up and make a good strong run will be critical. =
I'd also=20
agree with you that keeping long positions on a short leash is also =
important as=20
we go forward. On the other hand, I have to agree with Ed Gjertsen's =
point of=20
view that this rally could have enough oomph behind it to power up for =
3-6=20
months. (I'm paraphrasing Ed's comments) The problem with being =
overly=20
skeptical and not taking long trades in good quality stocks when they =
set up is=20
that the majority of the gains to be had in a rally are off positions =
taken=20
early in the rally. Too skeptical and 5 or 6 months go by before one is =
willing=20
to take a trade and...phoot...before you know it, it could be over. =
That's=20
opportunity cost that has a high price tag in my mind.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>**<SPAN style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT =
size=3D2><FONT=20
face=3D"Courier New">Ask Bill O'Neil<?xml:namespace prefix =3D o ns =3D=20
"urn:schemas-microsoft-com:office:office"=20
/><o:p></o:p></FONT></FONT></SPAN></DIV>
<DIV>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">Wednesday, November<SPAN style=3D"mso-spacerun: =
yes"> =20
</SPAN>20, 2002 <o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes"> </SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">It's been suggested that we keep an eye on stocks =
that have=20
performed well during this bear market, but avoid those that have =
doubled or=20
more. What's the difference between these two types of stocks?=20
<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes"> </SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">- Submitted from Minneapolis, Minn.=20
<o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes"> </SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New"><SPAN=20
style=3D"mso-spacerun: =
yes"> </SPAN><o:p></o:p></FONT></FONT></SPAN></P>
<P class=3DMsoPlainText style=3D"MARGIN: 0in 0in 0pt"><SPAN=20
style=3D"mso-fareast-font-family: 'MS Mincho'"><FONT size=3D2><FONT=20
face=3D"Courier New">The distinction is not as simple as that. In the =
current=20
environment, stocks that have had big moves over the past year or two =
have been=20
getting hit by selling as they try to emerge from their bases. This is =
because=20
they are often in late-stage, obvious bases, and because most money =
managers are=20
inclined to take profits as stocks move into new high ground in a weak =
overall=20
market environment. It is better to look for stocks that are acting well =
and=20
forming proper bases that have not had a big run, given the current =
environment.=20
For help with late-stage bases, read an article on the subject in the =
Investor's=20
Corner Archives. <o:p></o:p></FONT></FONT></SPAN></P></DIV>
<DIV> </DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dericjaenike@yahoo.com =
href=3D"mailto:ericjaenike@yahoo.com">Eric=20
Jaenike</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Friday, November 22, 2002 =
12:35=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] M</DIV>
<DIV><BR></DIV>
<P>I don't think I did a good job of explaining myself.=20
<P>I am, in essence, comparing a narrow class of stocks defined by "X" =
characteristics for this rally with the same class of stocks defined =
by "X"=20
characteristics from previous rallies/"true" bull runs to gain some =
insight as=20
to the durability of the rally, and its underlying quality. One =
characteristic=20
in "X" is that the stock has to be at a new or multiyear high.=20
<P>Now, I am not saying that leadership for a run comes only from =
stocks at=20
new or multiyear highs. What I am doing is simply looking at stocks =
that meet=20
that definition, and drawing inferences from the size, concentration, =
and=20
breadth of that list. Thus, stocks such as EBAY and SFNT are not =
included in=20
that list. FRX would be. My list of stocks I gave was not meant =
to be=20
taken as the totality of stocks on that "well" list, just as examples =
of those=20
stocks.=20
<P>Another characteristic in "X" is that it has to have broken out and =
run=20
well after the breakout point. Thus, stocks such as MNTR and WFMI are =
not on=20
my list because they just recently broke out, and have not yet proven =
that=20
they have run well. Does that mean that they are not potential =
leaders? No.=20
Does it mean they shouldn't have been purchased on the breakout? =
Certainly=20
not. Does it mean they don't meet the definitions of "X"? Yes.=20
<P>Finally, the stocks need to have run strongly. Again, all I am =
doing is=20
looking at the "best of the best", and getting a feel for that group. =
For=20
example, take BLUD. It broke out of its recent range at around 19. As =
of close=20
yesterday, it was at 21, for a gain of about 10% in just =
under 7=20
weeks. Not bad, but at the same time, the S&P has run about 20%. =
The=20
situation is similar with IGT. It broke out about 5 weeks ago, has run =
from=20
70/71 to about 79. Not bad, but somewhat less impressive when compared =
to the=20
runs in the indices. So would I consider BLUD and IGT to be great =
stocks in=20
this run? Tough call. I think it is a little gray.=20
<P>Finally, and this time I mean it, there are lots of other stocks =
that are=20
forming solid bases, but which have not yet broken out. Those are all=20
potential leaders. However, they received no mention in my email =
because they=20
didn't meet the definition of "X".=20
<P>I am using this narrow study as one of many things I look at to get =
a feel=20
for what's happening. A more comprehensive and insightful study would =
be to=20
expand the definition of "X" to include these other types of stocks. I =
think=20
that would be of much more value than the restricted definition of "X" =
that I=20
used. However, that is not what I did.=20
<P>When I look at this run, I see a 7ish week rally that has run =
20-30% on the=20
general indices, that has seen a 70% run in the SOX, and a skew in =
terms of=20
participation that is too heavily weighted towards speculative and =
beaten down=20
tech relative to new leadership.=20
<P>I see weak participation by retailers (some smaller, niche stocks =
(TSCO CHS=20
JOSB PETM ROST KSWS CENT SHRP (until recently) AZO CPWM) have done =
well, but=20
retail is a very large category, and will always have some shops doing =
well,=20
so I don't consider their moves taken in isolation to be indicative of =
a=20
strong consumer. WMTs weak same store sales numbers bother me a lot. =
The=20
consumer has been exploiting cash out refis aggressively as well, =
which has=20
been boosting retail spending. Ex-refis, I think retail would be =
materially=20
weaker. I consider this a negative in evaluating the health of this =
rally.=20
<P>I see weakness in the homebuilders, which I find troubling. I find =
the=20
recent participation of highly speculative tech stocks disconcerting. =
I also=20
find the bull/bear %, as well as the 30 day put/call moving average, =
30 day ma=20
of a/d on the NYSE, and the NYSE up vol. as a % of total volume =
indicative of=20
a looming top. (A bit off topic, I know). There are a lot of other =
things I'm=20
looking at as well that make me uncomfortable with the current rally.=20
<P>So, in sum, when I look at all these things, and look at the =
current state=20
of leadership considering we've had a substantial run, I lean more =
towards a=20
cautious stance toward this rally at this point than an aggressive =
one.=20
<P>Hope that helps.=20
<P>Eric=20
<P>=20
<P> <B><I>Katherine Malm <kmalm@earthlink.net></I></B> =
wrote:=20
<BLOCKQUOTE=20
style=3D"PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px =
solid">
<META content=3D"MSHTML 6.00.2800.1106" name=3DGENERATOR>
<DIV>Thanks for the clarification, Eric. If I understand you =
correctly,=20
then, you are insisting on perfect charts and strong moves since the =
breakouts before considering something for inclusion on your list. =
What is=20
still not clear to me, however, is how you select a stock for =
consideration=20
as a CANSLIM stock when making your leader board.</DIV>
<DIV> </DIV>
<DIV>If I look at action since the market bottom, I find 263 stocks =
that=20
have shown relative outperformance to the S&P (Price>=3D6,=20
AvgVol>=3D30000, forward growth rate>=3D15--that's just a =
simple way of=20
identifying "growth" stocks). Granted, not all of them would pass =
all the=20
CANSLIM fundamental tests and not all of them have yet staged =
breakouts, but=20
that's a fairly substantial list of stocks acting well in my mind =
(The=20
average gain in these stocks off the 10/10 bottom is 45%). I =
wondered why=20
you wouldn't have mentioned stocks such as INFY, MNTR, SFNT, FRX, =
OVTI,=20
WFMI, VIP, BLUD, ICUI, SYK, EBAY, IGT, SCSC, or PNRA. That's a small =
sampling of stocks with decent (though not perfect) charts off =
the list=20
of 263 that are doing well, so not a complete list of "stocks doing =
well" in=20
my mind.</DIV>
<DIV> </DIV>
<DIV>I believe that after such a strong downtrend, that we're not =
going to=20
find perfection in all aspects, either fundamental or technical, but =
certainly if one weighs the preponderance of evidence on a list such =
as=20
this, there's a lot of emerging leadership. Granted, the moves are =
subtle,=20
as they are not en masse as with the Fall's homebuilder's move you=20
mentioned, but in a new Bull market (cyclical though it may be), the =
new=20
leaders will emerge one by one from various industries. Only when =
and if a=20
strong Bull ensues will we see strong group moves and stong breakout =
moves=20
one after the other. In the nascent stages, I think it's actually=20
encouraging that the emerging leaders are quietly gaining strength, =
unknown=20
to the general public. I also think that it's healthy that money is =
not=20
rushing headlong into former leaders as it did in so many of =
the=20
previous bear rallies and that it's not a "bad thing" that money =
might be=20
flowing to some beaten down quality stocks. I think WON states that =
about=20
14% of "former winners" will actually have what it takes to make a =
fresh run=20
in a new Bull market.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- =
</DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dericjaenike@yahoo.com =
href=3D"mailto:ericjaenike@yahoo.com">Eric=20
Jaenike</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Friday, November 22, =
2002 9:44=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
M</DIV>
<DIV><BR></DIV>
<P>In saying "well", I am referring to "well" relative to the move =
in the=20
indices as well as relative to the universe of canslim stocks that =
have=20
broken out, i.e. the best of the breakouts.=20
<P>In a bull run, you're going to see lots of breakouts. Some of =
those=20
breakouts will work "well", in that they have strong price =
appreciation,=20
tepid pullbacks, etc. In other words, really strong canslim =
breakouts.=20
Others will work fine, in that they hold above their breakouts, =
move up,=20
etc, but don't act as well as the former category.=20
<P>For the purposes of the post, I was using "well" to mean this =
best of=20
the best group. So, for example, TSCO has acted OK, in that its =
above its=20
breakout, etc, but it hasn't acted "well" in that it dropped =
below=20
its pivot (albiet slightly), and there have been some p/v yellow =
flags,=20
etc.=20
<P>Also for the purposes of the discussion, I am excluding stocks =
like=20
UNTD, which I believe is the combo of the old Netzero and Juno. =
While it=20
certainly is a canslim/turnaround type stock, I am excluding it =
from the=20
list, because I excluded that type of stock from the previous =
runs' lists,=20
and I want to be consistent across comparisons. That is not to say =
it=20
is not a playable stock, but merely that for comparison =
purposes, I=20
don't want to include it.=20
<P>In sum, for the move we've had in the indices, the doing "well" =
list,=20
which I take as a barometer of market health, seems awfully thin. =
The=20
point I was trying to make is simply that the market in general is =
not as=20
strong as the move in the indices would indicate.=20
<P>Hope that provides some clarity.=20
<P>Eric=20
<P>
<P> <B><I>Katherine Malm <kmalm@earthlink.net></I></B> =
wrote:=20
<BLOCKQUOTE=20
style=3D"PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff =
2px solid">
<META content=3D"MSHTML 6.00.2800.1106" name=3DGENERATOR>
<DIV>Hi Eric,</DIV>
<DIV> </DIV>
<DIV>A question for you--I noticed in your list of stocks that =
are=20
"working" that there were many CANSLIM quality growth stocks =
that *have*=20
been working and demonstrating leadership noticeably missing =
from your=20
list. When you look at market health, how are you defining the=20
candidates you consider to be CANSLIM stocks?</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV>
<DIV> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: =
5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dericjaenike@yahoo.com=20
href=3D"mailto:ericjaenike@yahoo.com">Eric Jaenike</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, =
November 21, 2002=20
4:02 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] =
M</DIV>
<DIV><BR></DIV>
<P>I think this market is not nearly as strong as the indices =
make it=20
appear. While it clearly has a bid under it, the very fact =
that people=20
are questioning whether it is real or not says something.=20
<P>Market leadership is firmly rooted in the SOX right now, =
the=20
playground of the beta chasers, and I think that is pulling =
the market=20
along with it. While there certainly is playable strength in =
the=20
market, I think a true bull run would display much better =
leadership.=20
We are up 32% on the Nas from the October low, and 21% on the =
S&P.=20
That is a long way to go without clear, assertive leadership. =
Consider=20
also that we are now above 50% bulls.=20
<P>I can find only a handful of stocks that have broken out =
and really=20
performed well. These include VRNT IDXX BSX ELAB TEVA LCI ATRS =
IGT=20
PIXR. (These are only the ones I have on my own lists. There =
are, of=20
course, others, such as ISSX, but for the purposes of this =
discussion,=20
I am excluding them as not pure, traditional CANSLIM). =
Contrast=20
these with the runs in stocks such as KLAC, INTC, VSEA, AMAT, =
LRCX,=20
QLGC, etc.=20
<P>It seems I am having to work far to hard to find the =
leadership in=20
this market for this to be the solid bull run the indices =
would have=20
us believe.=20
<P>Most recently, there have been runs in the real speculative =
dogs,=20
such as PUMA AKAM INKT LOOK ARBA LEXR OPWV RSAS CELL WGRD =
TIVO. I=20
consider that to also be a sign that this run is getting old.=20
<P>As I watch this run, I am constantly reminded of last =
year's 4Q. I=20
think this run still has legs, but I would pay very close =
attention to=20
my longs.=20
<P>Eric=20
<P>
<P>
<BLOCKQUOTE=20
style=3D"PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: =
#1010ff 2px solid">
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: =
5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message =
- ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; =
font-color: black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net=20
href=3D"mailto:kmalm@earthlink.net">Katherine Malm</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, =
November 21,=20
2002 2:04 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: =
[CANSLIM]=20
M</DIV>
<DIV><BR></DIV>
<DIV>Hi Ian,</DIV>
<DIV> </DIV>
<DIV>Just a quick note... re your comment "It is also =
baffling to=20
me that the sectors that stand to benefit the most=20
from coming increases in government spending - the =
defense=20
and security sector - are watching this action from the =
sideline=20
as well."=20
<DIV> </DIV>
<DIV>I noticed SFNT powering ahead today. I've also =
noticed that=20
money is definitely coming *out* of the safe-haven =
defensive=20
issues such as healthcare/hospitals, etc. In general, I =
see far=20
more breakouts than I've seen since last year, so all =
together,=20
still looks promising to me.</DIV>
<DIV> </DIV>
<DIV>Katherine</DIV></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; =
MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message =
- -----=20
</DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; =
font-color: black"><B>From:</B>=20
<A title=3Dianstm@shaw.ca =
href=3D"mailto:ianstm@shaw.ca">Ian</A>=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, =
November=20
21, 2002 3:23 PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> =
[CANSLIM] M</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2>Is anyone else finding any "NEW" =
winners=20
emerging from this buying frenzy?</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>It seems to me that several =
recent rally=20
leaders are rolling over ugly today - HITK, LCI, ACET - =
while=20
the indices power ahead, propelled by the most heavily =
shorted=20
isues.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>It is also baffling to me that the =
sectors=20
that stand to benefit the most from coming =
increases in=20
government spending - the defense and security sector - =
are=20
watching this action from the sideline as =
well.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>So am I mising the new leaders of =
the bull, or=20
is this just shot-term traders using liquidity to =
squeeze=20
heavily shorted positions? Opinions? Whither =
'M'?</FONT></DIV>
<DIV> </DIV>
<DIV><FONT=20
=
size=3D2>Ian</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE><BR><BR>
<ADDRESS>Eric Jaenike</ADDRESS>
<ADDRESS>President</ADDRESS>
<ADDRESS>Vector Investment Management</ADDRESS>
=
<ADDRESS>303-300-2961</ADDRESS></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></B=
LOCKQUOTE><A=20
=
href=3D"http://rd.yahoo.com/mail/mailsig/*http://mailplus.yahoo.com"></A>=
</BLOCKQUOTE></BODY></HTML>
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