Re: [CANSLIM] hitk

From: Spencer48@aol.com
Subject: Re: [CANSLIM] hitk
Date: Wed, 29 Jan 2003 20:35:38 EST

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Katherine,=20

     Regarding your Rubberband sell signal, IBD recently had an Investors=20
Corner (1/24/03) article with respect to when the stock gets too extended vi=
s=20
=E0 vis the 50 DMA.   I copied and pasted relevant passages below:

     ... if a stock breaks out and later pulls back to its 50-day line in a=20
rock-solid market uptrend, watch and wait. If it has logged double-digit=20
gains, industry peers are acting well and no other sell signals have been=20
triggered, the 50-day might serve only as a rest stop in a long journey to=20
epic gains. But recently the market hasn't been a hard-charging bull. It's=20
acted like an infant learning to walk.             But when a good stock=20
rises excessively above the line there may be too much investor . enthusiasm=
=20
for the stock, and the stock is going up in price at a rate that simply=20
cannot be sustained. Hello, correction!  Remember, profits aren't paintings.=
=20
Take them, don't admire them.
So how high above the 50-day is too high? IBD studied the 95 best small- and=
=20
mid-cap stocks of the 1995-97 bull market. After these stocks broke out, on=20
average they got as high as 51% above their 50-day moving average lines=20
during their big runs. The maximum rise above the 50-day was 146%.

jans=20



In a message dated 1/29/2003 7:32:38 PM Eastern Standard Time,=20
kmalm@earthlink.net writes:

<< I agree with you that HITK is somewhat extended, as it's a hair's breath
 away from Rubberband Sell Rule territory (Price >=3D 25% of 50dMA + >=3D 70=
% of
 200dMA). It certainly was in territory at its recent high and gives some
 explanation for the recent pullback. Whether or not the pullback continues
 to the current trend line or stops at the 50dMA is anybody's guess, but
 either way, my earlier comments about the stock being in no-man's land are
 still valid, and given the market backdrop, I would definitely wait until a
 valid consolidation and breakout were formed before making an entry.
  >>

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