RE: RSR-Rubberband Sell Rule (was:[CANSLIM] hitk)

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: RSR-Rubberband Sell Rule (was:[CANSLIM] hitk)
Date: Thu, 30 Jan 2003 10:10:14 -0600

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Hi Dave,

Good point on the similarity between RSR and Bollinger bands. I agree with
you that the RSR is only applicable to the sell side in CANSLIM-land, as the
idea of buying a stock overextended to the downside is contrary to buying on
strength, a key principle in the style.

Katherine



- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Davellil5@aol.com
Sent: Thursday, January 30, 2003 9:58 AM
To: kmalm@earthlink.net; canslim@lists.xmission.com
Subject: Re: RSR-Rubberband Sell Rule (was:[CANSLIM] hitk)


Katherine:

The logic of your rubber-band concept seems analogous to that of John
Bollinger.  As you know, his system calculates a midline, ascending or
descending, and parallel upper and lower limits.  The upper limit is the
same
distance above the midline as the lower limit is below it.  I think he uses
2
sigmas (standard deviations) to get the limits.

He claims to have found that a stock approaching its upper limit is more
likely to regress to the lower limit, than to go on rising.  And, vice
versa.
 This, of course, assumes that the stock is not about to break out or break
down, but is moving between two slightly rising or descending limits.

Since we CANSLIM-er's make buy decisions on breakouts, I don't see the
rubber-band or Bollinger idea being used for buy-decisions.  I can see this
logic applying to sell-decisions, especially in spooky markets, like now.

Regards, Dave

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