Go to Jeff Salisbury LWGate Home Page.From: "Harold Josephson" <hj@hjosephson.com>
Subject: RE: [CANSLIM] Bailing out of a would-be breakout
Date: Sun, 13 Apr 2003 22:28:17 -0700
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Hi Tom,
You mention that you may "enter a limit buy back in the area of support
in case the b/o fails". How do you protect against getting filled as
the stock plummets south and keeps going.
On another subject, do you know of any broker whose online trading
software is powerful enough to enter a limit order when a stock reaches
x, immediately put on a trailing stop of, say, 3% and increase the
trailing stop to, say 5% when the stock reaches, say, 110% of your
purchase price.
Thanks,
Harold
Harold Josephson
Tel: 323.850.1333
Fax: 323.512.8968
hj@hjosephson.com
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: Friday, April 04, 2003 4:06 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Bailing out of a would-be breakout
Hi Jerome,
One of the important things about CANSLIM is knowing the rules, and
recognizing when you are bending (or even breaking) them. Any time you
do so, it must raise an extra caution flag.
To be honest, because I rarely can watch the market closely during the
day, I usually buy prior to the b/o, then wait for it to happen. Since I
invest for long term (1-2 years), I can afford to be more patient. It
also often permits me to buy close to strong support, so if the b/o
fails, it still will often leave me with a small profit. Unlike many
CANSLIMers, who search for c&h patterns, my personal favorite is a flat
line base with a very tight trading range that has lasted for a month or
two at least. I will also buy a c&h pattern while still forming the
handle if I see volume drying up without much decline in the handle. In
both cases, I am usually buying below the pivot, and close to support,
at the expense / risk of tying up capital for an indefinite time period.
I cannot emphasize too much the importance of "M". When it is bearish,
as it is still today, it becomes more risky to bend any rules. Making a
buy decision after the close at least means you are not rushed into that
decision, and can help take away the sense of missing something if you
don't act immediately. The trade off is that by the close, it may be
well past the pivot. In those cases, I may enter a limit buy back in the
area of support in case the b/o fails, or gives a second entry
opportunity.
Even tho I typically do an hour of more of "market evaluation" on a
global scale each morning, I still try to avoid making any buys or sells
in the first hour. The market can be very volatile in this period, and
can completely reverse itself by 10:30 or 11. If by midday the trend is
consistent since 9:30, then I have a little more confidence in the day's
trend continuing on to 4 PM. If I am doing a trade in the first hour, it
is because of what went on the prior day, I have already made a
decision, and set a price for action.
The best way to "stay in the game" is to preserve capital. That means
being in cash for most people, or only taking small positions with a
limited portion of your investment dollars, when "M" says to be on the
sidelines. Admittedly I personally will typically be fully invested, but
I consider myself both very aggressive and a high risk taker. I thrive
on stress, and take great delight in gaining a few percentage points in
my portfolios especially when the markets are down. I do my best work
when the markets are weak or declining, and small caps are being
ignored. I break a lot of rules in what I do, including holding some
stocks for a year or more. But that has also permitted me a number of
100% or more profits.
- ----- Original Message -----
From: Jerome Buckmelter <mailto:jsjbuck@myexcel.com>
To: canslim@lists.xmission.com
Sent: Friday, April 04, 2003 2:28 AM
Subject: RE: [CANSLIM] Bailing out of a would-be breakout
Tom, Thanks again for your input. I was surprised to read that you
generally buy into a breakout only after closing on the breakout day. I
always thought that one needed to monitor the market very closely in
order to buy as close to the pivot as possible to be successful in this
business. In the past three years I purchased stocks that were 3 to 5
percent above the pivot and got shaken out of most of them. But that
could very well have been the market. In better times I guess buying at
3 to 5 percent above the pivot might work better. What you do (buying
after the market closes) certainly makes sense. At least you know
conclusively that the volume materialized. I especially was intrigued
with your comment that you would not buy during the first hour or two.
Why is that? Also, you were right about the 4-day handle. I bent that
rule. The reason is -- the other day I passed on HITK which broke out
after forming a 4-day handle. And it is doing great. That was still
fresh in my mind. I didn't want to miss out on a similar breakout. It
seems that a lot of stocks breakout that do not meet all the
fundamentals and technicals, few probably do. I guess the trick is to
bend the fewest rules as possible and know why you're doing so. And, of
course, the main thing may be to just stay in the game and keep
swinging. You're bound to get a big hit sooner or later. I'm still
waiting for mine. Thanks again.
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: Thursday, April 03, 2003 8:48 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Bailing out of a would-be breakout
for a correct ("proper") breakout, I would certainly want to see volume
at least 50% over ADV (and preferably at least 100%). Problem with that
is for those trying to catch a breakout during the day, when the price
may have broken the pivot, and volume up to that point looks like it
will reach these levels, but then volume slows way up in the afternoon.
I rarely have the time to try to catch b/o's during the day, so normally
can consider the full day's trading with some leisure at night, or early
the next morning. But if I was to buy during the day, and volume up to
that point indicated double or better day's average (assuming I was at
least an hour or two into the day), then a slowdown in the afternoon
would not by itself cause me to sell out. Once I am in a stock, I rely
much more on the chart pattern, where it closes in terms of that day's
trading range, and whether it is up or down on more or less than ADV.
One of the principles of CANSLIM, in addition to being able to read the
charts, is to buy on a breakout within 5% of the pivot, then use an 8%
stop loss from your purchase price. This means you could slip below the
pivot, and still not feel obligated to sell. The closer to the pivot you
buy, the further below the pivot you could ride it.
In the case you mention with FRX, one point I would emphasize, which I
suspect you are already sensitive to, is that you saw a b/o with only a
4 day handle. The cup itself was well formed, including a capitulation
day on 2/14/03 on 2X ADV. However, the shortness of the handle, combined
with the lack of time for volume to dry up, suggests to me that the b/o
that enticed you was far too immature, especially given the state of
"M", and the market susceptibility to emotional reaction to the war in
Iraq (which has nothing to do at least directly to either "M" or the
state of the economy, but is nonetheless the most current overwhelming
and overriding influence on "M").
Sometimes you can get away with buying too quickly, or too early, but
normally you want the trend ("M") already in your favor when you do so.
With the economy continuing to weaken, emotions still very high over the
war with Iraq, and a lot of uncertainty still remaining, I think I would
be unlikely to buy a breakout intraday unless it had already traded
twice a normal ADV, regardless of just how far it is in the trading day.
Should you now sell (if you haven't already)?? I can't answer that, even
with today's drop below the pivot, and on 1.5X ADV. Certainly today was
not encouraging. But your investment time frame, risk tolerance, whether
you bot the entire intended position or just a portion, etc. all affect
what you should do now. The stock has not broken down, the fundies
remain quite healthy, forecasts are strong for the longer term.
- ----- Original Message -----
From: Jerome Buckmelter <mailto:jsjbuck@myexcel.com>
To: canslim@lists.xmission.com
Sent: Thursday, April 03, 2003 11:04 AM
Subject: RE: [CANSLIM] Bailing out of a would-be breakout
Tom, Thank you for your input. I value your insights and opinions. Is
it not true that if volume does not reach 50%, a breakout has not
occurred by definition? Therefore shouldn't I view the action I
described with FRX as not a breakout, and think about treating the buy
differently from a genuine breakout, i.e., setting the loss at 7% or 8%,
etc.? I
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: Wednesday, April 02, 2003 8:14 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Bailing out of a would-be breakout
Jerome, assuming you are accurate in selecting the pivot point, and
bought within 5% of that point, then I would stick to a stop loss of 8
- -10% below your purchase price. This is a very volatile and emotional
market. I would also pay close attention to where such a stop loss price
places you with recent downside support. Depending on that, I might use
a larger or smaller stop loss, so that my selling point is just under
support, especially institutional support.
- ----- Original Message -----
From: Jerome Buckmelter <mailto:jsjbuck@myexcel.com>
To: CANSLIM <mailto:canslim@lists.xmission.com> LIST
Sent: Wednesday, April 02, 2003 10:22 PM
Subject: [CANSLIM] Bailing out of a would-be breakout
Does anyone have an idea how to handle a "breakout" if it doesn't act
right on the first day? I got fooled this morning by the huge volume
FRX displayed as it zoomed by its pivot (on a 4-day handle). Of course,
everything else was surging upwards at the opening of the market! FRX
cooled off as the day progressed, and its volume ended the day a little
above average. And the price, of course, dropped below my purchase
price, but still held above the pivot. Some time ago I devised a
strategy for myself for such occasions, but I haven't tested it yet, and
I hope I could get some feed back from fellow CANSLIMers before making a
mistake with it. Here's my strategy: Sell near at the end of the first
day if 50% volume does not materialize and stock closes below purchase
price. Hold if volume does not materialize and stock price closes above
the purchase price. Sell at the end of the second day if volume does not
materialize, even if the price is up. Sell the second day if the price
falls below the pivot. Is this a sound strategy? Does WON address this
situation anywhere? Can anyone share their strategy? I would really
appreciate some input. Thanks.
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<body bgcolor=3Dwhite lang=3DEN-US link=3Dblue vlink=3Dpurple =
style=3D'tab-interval:.5in'>
<div class=3DSection1>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'>Hi =
Tom,<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'><o:p> </o:p></span></font></p=
>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'>You mention that you may =
“enter a
limit buy back in the area of support in case the b/o fails”.<span
style=3D'mso-spacerun:yes'> </span>How do you protect against =
getting
filled as the stock plummets south and keeps =
going.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'><o:p> </o:p></span></font></p=
>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'>On another subject, do you know =
of any broker
whose online trading software is powerful enough to enter a limit order =
when a
stock reaches x, immediately put on a trailing stop of, =
</span></font><st1:PersonName><font
color=3Dblack><span =
style=3D'color:black'>sa</span></font></st1:PersonName><font
color=3Dblack><span style=3D'color:black'>y, 3% and increase the =
trailing stop to, </span></font><st1:PersonName><font
color=3Dblack><span =
style=3D'color:black'>sa</span></font></st1:PersonName><font
color=3Dblack><span style=3D'color:black'>y 5% when the stock reaches, =
</span></font><st1:PersonName><font
color=3Dblack><span =
style=3D'color:black'>sa</span></font></st1:PersonName><font
color=3Dblack><span style=3D'color:black'>y, 110% of your purchase =
price.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'><o:p> </o:p></span></font></p=
>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'>Thanks,<o:p></o:p></span></font></=
p>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'><o:p> </o:p></span></font></p=
>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'>Harold<o:p></o:p></span></font></p=
>
<p class=3DMsoNormal><font size=3D3 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt;color:black'><o:p> </o:p></span></font></p=
>
<div>
<p><st1:PersonName><font size=3D2 color=3Dblack face=3D"Times New =
Roman"><span
style=3D'font-size:10.0pt;color:black;mso-no-proof:yes'>Harold =
Josephson</span></font></st1:PersonName><font
size=3D2 color=3Dblack><span =
style=3D'font-size:10.0pt;color:black;mso-no-proof:yes'><br>
Tel: 323.850.1333<br>
Fax: 323.512.8968<br>
hj@hjosephson.com</span></font><font color=3Dblack><span =
style=3D'color:black;
mso-no-proof:yes'> </span></font><o:p></o:p></p>
</div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Mes</span></font><st1:PersonName><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>sa</span></font></st1:Perso=
nName><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>ge-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b> =
</span></font><st1:PersonName><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>owner-canslim@lists.xmissio=
n.com</span></font></st1:PersonName><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'> =
[mailto:</span></font><st1:PersonName><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>owner-canslim@lists.xmissio=
n.com</span></font></st1:PersonName><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Tom Worley<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> =
</span></font><st1:date
Month=3D"4" Day=3D"4" Year=3D"2003"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:
10.0pt;font-family:Tahoma'>Friday, April 04, =
2003</span></font></st1:date><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'> </span></font><st1:time
Hour=3D"4" Minute=3D"6"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;
font-family:Tahoma'>4:06 AM</span></font></st1:time><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'><br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] =
Bailing out
of a would-be breakout</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>Hi =
Jerome,</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>One of the important things =
about
CANSLIM is knowing the rules, and recognizing when you are bending (or =
even
breaking) them. Any time you do so, it must raise an extra caution =
flag.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>To be honest, because I =
rarely can
watch the market closely during the day, I usually buy prior to the b/o, =
then
wait for it to happen. Since I invest for long term (1-2 years), I can =
afford
to be more patient. It also often permits me to buy close to strong =
support, so
if the b/o fails, it still will often leave me with a small profit. =
Unlike many
CANSLIMers, who search for c&h patterns, my personal favorite is a =
flat
line base with a very tight trading range that has lasted for a month or =
two at
least. I will also buy a c&h pattern while still forming the handle =
if I
see volume drying up without much decline in the handle. In both cases, =
I am
usually buying below the pivot, and close to support, at the expense / =
risk of
tying up capital for an indefinite time period. =
</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>I cannot emphasize too much =
the
importance of "M". When it is bearish, as it is still today, =
it
becomes more risky to bend any rules. Making a buy decision after the =
close at
least means you are not rushed into that decision, and can help take =
away the
sense of missing something if you don't act immediately. The trade off =
is that
by the close, it may be well past the pivot. In those cases, I may enter =
a
limit buy back in the area of support in case the b/o fails, or gives a =
second
entry opportunity.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>Even tho I typically do an =
hour of
more of "market evaluation" on a global scale each morning, I =
still
try to avoid making any buys or sells in the first hour. The market can =
be very
volatile in this period, and can completely reverse itself by =
</span></font><st1:time
Hour=3D"10" Minute=3D"30"><font face=3DArial><span =
style=3D'font-family:Arial'>10:30</span></font></st1:time><font
face=3DArial><span style=3D'font-family:Arial'> or 11. If by =
</span></font><st1:time
Hour=3D"12" Minute=3D"0"><font face=3DArial><span =
style=3D'font-family:Arial'>midday</span></font></st1:time><font
face=3DArial><span style=3D'font-family:Arial'> the trend is consistent =
since </span></font><st1:time
Hour=3D"9" Minute=3D"30"><font face=3DArial><span =
style=3D'font-family:Arial'>9:30</span></font></st1:time><font
face=3DArial><span style=3D'font-family:Arial'>, then I have a little =
more
confidence in the day's trend continuing on to </span></font><st1:time =
Hour=3D"16"
Minute=3D"0"><font face=3DArial><span style=3D'font-family:Arial'>4 =
PM</span></font></st1:time><font
face=3DArial><span style=3D'font-family:Arial'>. If I am doing a trade =
in the first
hour, it is because of what went on the prior day, I have already made a
decision, and set a price for action.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>The best way to "stay =
in the
game" is to preserve capital. That means being in cash for most =
people, or
only taking small positions with a limited portion of your investment =
dollars,
when "M" says to be on the sidelines. Admittedly I personally =
will
typically be fully invested, but I consider myself both very aggressive =
and a
high risk taker. I thrive on stress, and take great delight in gaining a =
few
percentage points in my portfolios especially when the markets are down. =
I do
my best work when the markets are weak or declining, and small caps are =
being
ignored. I break a lot of rules in what I do, including holding some =
stocks for
a year or more. But that has also permitted me a number of 100% or more
profits.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'>----- Original Message =
- ----- <o:p></o:p></span></font></p>
<div style=3D'font-color:black'>
<p class=3DMsoNormal =
style=3D'margin-left:.5in;background:#E4E4E4'><b><font size=3D2
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>From:</span=
></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> <a
href=3D"mailto:jsjbuck@myexcel.com" title=3D"jsjbuck@myexcel.com">Jerome =
Buckmelter</a>
<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>To:</span><=
/font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> <a
href=3D"mailto:canslim@lists.xmission.com" =
title=3D"canslim@lists.xmission.com">canslim@lists.xmission.com</a>
<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Sent:</span=
></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> </span></font><st1:date
Month=3D"4" Day=3D"4" Year=3D"2003"><font size=3D2 face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial'>Friday, April 04, =
2003</span></font></st1:date><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> </span></font><st1:time
Hour=3D"2" Minute=3D"28"><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'>2:28 AM</span></font></st1:time><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'><o:p></o:p></span></font></p=
>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Subject:</s=
pan></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> RE:
[CANSLIM] Bailing out of a would-be =
breakout<o:p></o:p></span></font></p>
</div>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
</div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;color:navy'>Tom, Thanks =
again for
your input.<span style=3D'mso-spacerun:yes'> </span>I was =
surprised to read
that you generally buy into a breakout only after closing on the =
breakout
day.<span style=3D'mso-spacerun:yes'> </span>I always thought that =
one
needed to monitor the market very closely in order to buy as close to =
the pivot
as possible to be successful in this business.<span
style=3D'mso-spacerun:yes'> </span>In the past three years I =
purchased
stocks that were 3 to 5 percent above the pivot and got shaken out of =
most of
them.<span style=3D'mso-spacerun:yes'> </span>But that could very =
well have
been the market.<span style=3D'mso-spacerun:yes'> </span>In better =
times I
guess buying at 3 to 5 percent above the pivot might work better.<span
style=3D'mso-spacerun:yes'> </span>What you do (buying after =
the
market closes) certainly makes sense.<span =
style=3D'mso-spacerun:yes'>
</span>At least you know conclusively that the volume materialized.<span
style=3D'mso-spacerun:yes'> </span>I especially was intrigued with =
your
comment that you would not buy during the first hour or two.<span
style=3D'mso-spacerun:yes'> </span>Why is that?<span
style=3D'mso-spacerun:yes'> </span>Also, you were right about the =
4-day
handle.<span style=3D'mso-spacerun:yes'> </span>I bent that =
rule.<span
style=3D'mso-spacerun:yes'> </span>The reason is -- the other day =
I passed
on HITK which broke out after forming a 4-day handle.<span
style=3D'mso-spacerun:yes'> </span>And it is doing great.<span
style=3D'mso-spacerun:yes'> </span>That was still fresh in my =
mind.<span
style=3D'mso-spacerun:yes'> </span>I didn’t want to miss out =
on a
similar breakout.<span style=3D'mso-spacerun:yes'> </span>It seems =
that a
lot of stocks breakout that do not meet all the fundamentals and =
technicals, few
probably do.<span style=3D'mso-spacerun:yes'> </span>I guess the =
trick is
to bend the fewest rules as possible and know why you’re doing =
so.<span
style=3D'mso-spacerun:yes'> </span>And, of course, the main thing =
may be to
just stay in the game and keep swinging. You’re bound to get a big =
hit
sooner or later.<span style=3D'mso-spacerun:yes'> </span>I’m =
still
waiting for mine. Thanks again.<span
style=3D'mso-spacerun:yes'> =
</span><o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;color:navy'><o:p> </o:p>=
</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b>
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Tom Worley<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> =
</span></font><st1:date
Year=3D"2003" Day=3D"3" Month=3D"4"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:
10.0pt;font-family:Tahoma'>Thursday, April 03, =
2003</span></font></st1:date><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'> </span></font><st1:time
Minute=3D"48" Hour=3D"20"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;
font-family:Tahoma'>8:48 PM</span></font></st1:time><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'><br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] =
Bailing out
of a would-be breakout</span></font><o:p></o:p></p>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>for a correct =
("proper")
breakout, I would certainly want to see volume at least 50% over ADV =
(and
preferably at least 100%). Problem with that is for those trying to =
catch a
breakout during the day, when the price may have broken the pivot, and =
volume
up to that point looks like it will reach these levels, but then volume =
slows
way up in the afternoon.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>I rarely have the time to =
try to
catch b/o's during the day, so normally can consider the full day's =
trading
with some leisure at night, or early the next morning. But if I was to =
buy
during the day, and volume up to that point indicated double or better =
day's
average (assuming I was at least an hour or two into the day), then a =
slowdown
in the afternoon would not by itself cause me to sell out. Once I am in =
a
stock, I rely much more on the chart pattern, where it closes in terms =
of that
day's trading range, and whether it is up or down on more or less than =
ADV.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>One of the principles of =
CANSLIM, in
addition to being able to read the charts, is to buy on a breakout =
within 5% of
the pivot, then use an 8% stop loss from your purchase price. This means =
you
could slip below the pivot, and still not feel obligated to sell. The =
closer to
the pivot you buy, the further below the pivot you could ride it. =
</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>In the case you mention =
with FRX,
one point I would emphasize, which I suspect you are already sensitive =
to, is
that you saw a b/o with only a 4 day handle. The cup itself was well =
formed,
including a capitulation day on </span></font><st1:date Year=3D"2003" =
Day=3D"14"
Month=3D"2"><font face=3DArial><span =
style=3D'font-family:Arial'>2/14/03</span></font></st1:date><font
face=3DArial><span style=3D'font-family:Arial'> on 2X ADV. However, the =
shortness
of the handle, combined with the lack of time for volume to dry up, =
suggests to
me that the b/o that enticed you was far too immature, especially given =
the
state of "M", and the market susceptibility to emotional =
reaction to
the war in Iraq (which has nothing to do at least directly to either
"M" or the state of the economy, but is nonetheless the most =
current
overwhelming and overriding influence on =
"M").</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>Sometimes you can get away =
with
buying too quickly, or too early, but normally you want the trend
("M") already in your favor when you do so. With the economy
continuing to weaken, emotions still very high over the war with =
</span></font><st1:country-region><st1:place><font
face=3DArial><span =
style=3D'font-family:Arial'>Iraq</span></font></st1:place></st1:country-r=
egion><font
face=3DArial><span style=3D'font-family:Arial'>, and a lot of =
uncertainty still
remaining, I think I would be unlikely to buy a breakout intraday unless =
it had
already traded twice a normal ADV, regardless of just how far it is in =
the
trading day.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>Should you now sell (if you =
haven't
already)?? I can't answer that, even with today's drop below the pivot, =
and on
1.5X ADV. Certainly today was not encouraging. But your investment time =
frame,
risk tolerance, whether you bot the entire intended position or just a =
portion,
etc. all affect what you should do now. The stock has not broken down, =
the
fundies remain quite healthy, forecasts are strong for the longer term. =
</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'>----- Original Message =
- ----- <o:p></o:p></span></font></p>
<div style=3D'font-color:black'>
<p class=3DMsoNormal =
style=3D'margin-left:1.0in;background:#E4E4E4'><b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;font-weight:
bold'>From:</span></font></b><font size=3D2 face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial'> <a href=3D"mailto:jsjbuck@myexcel.com"
title=3D"jsjbuck@myexcel.com">Jerome Buckmelter</a> =
<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>To:</span><=
/font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> <a
href=3D"mailto:canslim@lists.xmission.com" =
title=3D"canslim@lists.xmission.com">canslim@lists.xmission.com</a>
<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Sent:</span=
></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> </span></font><st1:date
Year=3D"2003" Day=3D"3" Month=3D"4"><font size=3D2 face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial'>Thursday, April 03, =
2003</span></font></st1:date><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> </span></font><st1:time
Minute=3D"4" Hour=3D"11"><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'>11:04 AM</span></font></st1:time><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'><o:p></o:p></span></font></p=
>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Subject:</s=
pan></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> RE:
[CANSLIM] Bailing out of a would-be =
breakout<o:p></o:p></span></font></p>
</div>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
</div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D2 =
color=3Dnavy
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:navy'>Tom,
Thank you for your input.<span style=3D'mso-spacerun:yes'> =
</span>I value
your insights and opinions.<span style=3D'mso-spacerun:yes'> =
</span>Is it
not true that if volume does not reach 50%, a breakout has not occurred =
by
definition?<span style=3D'mso-spacerun:yes'> </span>Therefore
shouldn’t I view the action I described with FRX as not a =
breakout, and
think about treating the buy differently from a genuine breakout, i.e., =
setting
the loss at 7% or 8%, etc.?<span style=3D'mso-spacerun:yes'> =
</span>I<o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D2 =
color=3Dnavy
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;color:navy'><o:p> </o:p>=
</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b>
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Tom Worley<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> =
</span></font><st1:date
Year=3D"2003" Day=3D"2" Month=3D"4"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:
10.0pt;font-family:Tahoma'>Wednesday, April 02, =
2003</span></font></st1:date><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'> </span></font><st1:time
Minute=3D"14" Hour=3D"20"><font size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;
font-family:Tahoma'>8:14 PM</span></font></st1:time><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'><br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] =
Bailing out
of a would-be breakout</span></font><o:p></o:p></p>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'>Jerome, assuming you are =
accurate in
selecting the pivot point, and bought within 5% of that point, then I =
would
stick to a stop loss of 8 -10% below your purchase price. This is a very
volatile and emotional market. I would also pay close attention to where =
such a
stop loss price places you with recent downside support. Depending on =
that, I
might use a larger or smaller stop loss, so that my selling point is =
just under
support, especially institutional support.</span></font><o:p></o:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D3 =
face=3DArial><span
style=3D'font-size:12.0pt;font-family:Arial'> </span></font><o:p></o=
:p></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'>----- Original Message =
- ----- <o:p></o:p></span></font></p>
<div style=3D'font-color:black'>
<p class=3DMsoNormal =
style=3D'margin-left:1.5in;background:#E4E4E4'><b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;font-weight:
bold'>From:</span></font></b><font size=3D2 face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial'> <a href=3D"mailto:jsjbuck@myexcel.com"
title=3D"jsjbuck@myexcel.com">Jerome Buckmelter</a> =
<o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>To:</span><=
/font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> <a
href=3D"mailto:canslim@lists.xmission.com" =
title=3D"canslim@lists.xmission.com">CANSLIM
LIST</a> <o:p></o:p></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Sent:</span=
></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> </span></font><st1:date
Year=3D"2003" Day=3D"2" Month=3D"4"><font size=3D2 face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial'>Wednesday, April 02, =
2003</span></font></st1:date><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> </span></font><st1:time
Minute=3D"22" Hour=3D"22"><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'>10:22 PM</span></font></st1:time><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'><o:p></o:p></span></font></p=
>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Subject:</s=
pan></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> [CANSLIM]
Bailing out of a would-be breakout<o:p></o:p></span></font></p>
</div>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
</div>
<p class=3DMsoNormal style=3D'margin-left:1.5in'><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'>Does anyone have an idea =
how to
handle a “breakout” if it doesn’t act right on the =
first
day?<span style=3D'mso-spacerun:yes'> </span>I got fooled this =
morning by
the huge volume FRX displayed as it zoomed by its pivot (on a 4-day =
handle).<span
style=3D'mso-spacerun:yes'> </span>Of course, everything else was =
surging
upwards at the opening of the market!<span =
style=3D'mso-spacerun:yes'>
</span>FRX cooled off as the day progressed, and its volume ended the =
day a
little above average.<span style=3D'mso-spacerun:yes'> </span>And =
the
price, of course, dropped below my purchase price, but still held above =
the
pivot.<span style=3D'mso-spacerun:yes'> </span>Some time ago I =
devised a
strategy for myself for such occasions, but I haven’t tested it =
yet, and
I hope I could get some feed back from fellow CANSLIMers before making a
mistake with it.<span style=3D'mso-spacerun:yes'> =
</span>Here’s my
strategy:<span style=3D'mso-spacerun:yes'> </span>Sell near at the =
end of
the first day if 50% volume does not materialize and stock closes below
purchase price. Hold if volume does not materialize and stock price =
closes
above the purchase price. Sell at the end of the second day if volume =
does not
materialize, even if the price is up.<span =
style=3D'mso-spacerun:yes'>
</span>Sell the second day if the price falls below the pivot.<span
style=3D'mso-spacerun:yes'> </span>Is this a sound strategy?<span
style=3D'mso-spacerun:yes'> </span>Does WON address this situation =
anywhere?<span
style=3D'mso-spacerun:yes'> </span>Can anyone share their =
strategy?<span
style=3D'mso-spacerun:yes'> </span>I would really appreciate some
input.<span style=3D'mso-spacerun:yes'> </span>Thanks. =
<o:p></o:p></span></font></p>
</div>
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