Re: [CANSLIM] ROOM Redux

From: Spencer48@aol.com
Subject: Re: [CANSLIM] ROOM Redux
Date: Mon, 6 Jan 2003 20:45:56 EST

Next Article (by Subject): RE: [CANSLIM] ROOM Redux "Katherine Malm"
Previous Article (by Subject): Re: [CANSLIM] ROOM Redux Chazmoore@aol.com
Top of Thread: [CANSLIM] ROOM Redux "Katherine Malm"
Next in Thread: RE: [CANSLIM] ROOM Redux "Katherine Malm"
Articles sorted by: [Date] [Author] [Subject]

Katherine:

     Just to make life interesting:  You didn't ask for an opinion, but=20
here's mine regarding ROOM's chart.

     If one uses the left lip as the BO Pt. (the PP is about 70=BD), then th=
e=20
volume was very poor.  So it failed on that point.

     However, if one uses 9/13 as the PP date with the Right Lip PP at 50=
=BD=20
(it made a false BO 9/27 to close at 51.44 on LESS than ADV), ROOM BrokeOut=20
10/11 to close near its high at 51.84 on very high volume.

     Now it rose in around 6 weeks over 40%.  That ain't hay, especially in=20
this volatile market. It then fell around 10 pts from its high on higher=20
volume than the prior weeks' advances.  That was a warning; as was the=20
stock's RS-Line not making much of a new high as the week's price rose 1.50=20
(ie. it's RS-Line seemed to be getting winded; its slope was not as steep).=20=
=20

     The final warning (outside of the down-gap) was obvious to anyone who=20
abides by WON's dictums on when to sell.  It fell, the next week on=20
relatively high volume (although less than ADV).  However, the clincher was=20
that it fell below it's 50DMA on the relatively high volume.

     The upshot is that if you had bought on its BO, you would have garnered=
=20
around 10% in 8 weeks (this, by the way, is around 65% annually). =20

     Katherine, as far as your analysis goes, I don't think I would have=20
viewed it that way.  I do see the wedging as the stock finishes what you=20
describe as the base; but as I said, I believe the base was completed=20
9/13-and then ROOM had 3 weeks of a Handle on lower volume.

     However, just looking at it right now (in your context), a sign that th=
e=20
stock was weak is that it continued its ascent, after BOing out 10/11.  If=20
you agree with my analysis (or even if you don't), you might want to note=20
that a stock, after BO, whose ascent is on low volume might indicate a weak=20
stock, and one to watch all the more closely for a sell signal.  It'd be nic=
e=20
if there were any data on this phenomenon (ie. whether or not a stock's=20
weakness can be predicted based on its ADV after it Breaks Out).

jans




In a message dated 1/6/2003 6:23:53 PM Eastern Standard Time,=20
kmalm@earthlink.net writes:

<< Every now and then a stock will act in a way that reaffirms my belief in
 technical analysis. ROOM is a good recent example and one that came up here=
=20
for
 discussion in the last month. At the time the base was finishing off, it=20
looked
 as though the it was wedging higher on low volume. That's enough to make me=
=20
mark
 off a chart like that as "flawed and too risky." ROOM managed to rise for a
 brief while, but started failing badly. Today it gapped down. Nice to know=20
this
 stuff really works!
  >>

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.

Go to Jeff Salisbury LWGate Home Page.