Re: [CANSLIM] New to the group

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] New to the group
Date: Sun, 26 Jan 2003 04:54:24 -0500

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Rolf,

I must agree with Katherine. There is always a reason for weak technicals on
a stock with strong fundies. It can be a variety of reasons, including that
stock's fundies beginning to weaken. It also can be leaders in the group
signaling weakness ahead for their industry sector at large. It can be
generalized poor "M". It could be a major customer of that stock that just
warned of weak sales. No stock trades in a vacuum, nor do the many variables
that influence the behavior of a stock's price always have to be rational or
logical. But even if that stock's fundies remain strong, its weak technicals
will hinder its performance.

We would also be fools if we truly believe, in this era of "full
disclosure", that major investors no longer have a pipeline right into the
corporate offices of companies where they heavily invest. Since the new
"Full Disclosure" regulation was passed, I have looked at hundreds of stocks
right after major negative news broke. Invariably, the stock had weakened
sharply and on heavy volume before the news became public. In some cases,
the weakness started a day or two before. This classic pattern of insiders
leaking major news to their largest holders is nothing new, it just didn't
change with the new regulation on full disclosure. And despite the SEC /
NASD having very good detection programs for unusual price and volume
activity, I have yet to see them pursue any of these cases for insider
trading.

- ----- Original Message -----
From: "Rolf Hertenstein" <rolfh@mindspring.com>
To: <canslim@lists.xmission.com>
Sent: Saturday, January 25, 2003 11:13 PM
Subject: Re: [CANSLIM] New to the group


Hi Katherine -  In the paragraph below, I've read your sentence beginning:
"As the market is always looking forward........."
Are you saying that even a fundamentally strong stock can become technically
weak?  If so, I understand.  But if you're saying weak technical behavior
somehow is an indication of weak fundies ahead, you lost me.  The only link
I can see there is if some big investors are better at foreseeing lower
future earning trends and start selling.

 Rolf

P.S. I liked the reading-etiquette-at-espresso-shop lesson!

> I think one of the most important things I learned from O'Neil was not
that
> fundamentals matter, as that has always been the case and is important to
> the biggest of gurus such as Buffett, but that *technicals* matter as
well.
> As the market is always forward looking, the technicals will tell the tale
> of the stock before the fundamentals (which lag in reporting) reflect what
> is going on. That's how it was easy to see that stocks such as QCOM, YHOO,
> AOL, etc. were rolling over and falling apart in early 2000, even as their
> recent financial reports showed excellent results. The simplest way to
read
> the market signals then, is to read the action of the leading stocks. When
> they begin to act in tandem, that tells you collectively of the general
> market health.
>



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