Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB)
Date: Tue, 6 May 2003 09:56:30 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_002A_01C313B5.C4BC29E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Hi Chris, I see several folks have already commented on the discipline of selling, so thought I'd focus on a slightly different angle. That is, something I call "wiggle room" or "the best selling rule is to buy right." The biggest problem I see with your JOSB situation is that by buying late, you took away all your wiggle room. JOSB set up with a pivot established 3/21 at $25.51. It put in a poor handle which didn't drift down, indicating a possible lack of shakeout, then staged a wimpy breakout on 4/2 (though it did show some follow through action the next day). With those credentials, buying right is particularly important. Odds favor, at minimum, a pullback at least to the original breakout area around 25-26. Sure enough, that's what happened. As your purchase was late, when the stock was already 13% extended from the breakout price, you have no wiggle room to survive a pullback without triggering your 8% rule. Notice that your original mental stop at $27 was above the logical support area. See an annotated chart at: http://www.cwhcharts.com/katherine/JOSB050603.JPG These kinds of pullbacks are fairly common. BSTE did the same thing recently and if purchased correctly, one could've sat out the minor correction without triggering sell rules. Take a look at the reward: http://www.cwhcharts.com/katherine/BSTE050603.JPG Katherine -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Chris Jones Sent: Monday, May 05, 2003 3:45 PM To: CANSLIM Subject: [CANSLIM] How much support is the 50 DMA? (JOSB) I have a dilemma - I bought JOSB a few weeks back and put a mental stop in at $27 (8%). When I checked today after the market closed, I saw it had dropped $1.88, and is now at $25.51. I'm a little mad that I only placed a mental stop, which could have avoided this, however I can't change that now. Normally I would sell right at the market since my loss has now dropped to 12%, but the stock now sits about $.25 above it's 50 DMA. Should I hang on and hope institutions will step in? IBD says "many institutions view the 50-day line as a level at which they can add to their positions at a reasonable price. That's why many strong stocks find "support" at this line." However, it seems that the 50 DMA hasn't been too much of a support/resistance for JOSB in the past. I hate to wait and hope, since that's exactly what O'Neil said bad investors do, but the 50 DMA adds an interesting twist. Should I sell at the market, or wait to see if it bounces back? Opinions are appreciated! Thanks so much! Chris - ------=_NextPart_000_002A_01C313B5.C4BC29E0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2800.1126" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><SPAN class=3D718524114-06052003>Hi Chris,</SPAN></DIV> <DIV><SPAN class=3D718524114-06052003></SPAN> </DIV> <DIV><SPAN class=3D718524114-06052003>I see several folks have already = commented=20 on the discipline of selling, so thought I'd focus on a slightly = different=20 angle. That is, something I call "wiggle room" or "the best selling rule = is to=20 buy right."</SPAN></DIV> <DIV><SPAN class=3D718524114-06052003></SPAN> </DIV> <DIV><SPAN class=3D718524114-06052003>The biggest problem I see with = your JOSB=20 situation is that by buying late, you took away all your wiggle room. = JOSB set=20 up with a pivot established 3/21 at $25.51. It put in a poor handle = which didn't=20 drift down, indicating a possible lack of shakeout, then staged a wimpy = breakout=20 on 4/2 (though it did show some follow through action the next day). = With those=20 credentials, buying right is particularly important. Odds favor, at = minimum, a=20 pullback at least to the original breakout area around 25-26. Sure = enough,=20 that's what happened. As your purchase was late, when the stock was = already 13%=20 extended from the breakout price, you have no wiggle room to survive a = pullback=20 without triggering your 8% rule. Notice that your original mental stop = at $27=20 was above the logical support area. See an annotated chart=20 at:</SPAN></DIV> <DIV><SPAN class=3D718524114-06052003></SPAN> </DIV> <DIV><SPAN class=3D718524114-06052003><A=20 href=3D"http://www.cwhcharts.com/katherine/JOSB050603.JPG">http://www.cwh= charts.com/katherine/JOSB050603.JPG</A></SPAN></DIV> <DIV><SPAN class=3D718524114-06052003></SPAN> </DIV> <DIV><SPAN class=3D718524114-06052003>These kinds of pullbacks are = fairly common.=20 BSTE did the same thing recently and if purchased correctly, one = could've sat=20 out the minor correction without triggering sell rules. Take a look at = the=20 reward:</SPAN></DIV> <DIV><SPAN class=3D718524114-06052003></SPAN> </DIV> <DIV><SPAN class=3D718524114-06052003><A=20 href=3D"http://www.cwhcharts.com/katherine/BSTE050603.JPG">http://www.cwh= charts.com/katherine/BSTE050603.JPG</A></SPAN></DIV> <DIV><SPAN class=3D718524114-06052003></SPAN> </DIV> <DIV><SPAN class=3D718524114-06052003>Katherine</SPAN></DIV> <BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px"> <DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT = face=3DTahoma=20 size=3D2>-----Original Message-----<BR><B>From:</B>=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Chris=20 Jones<BR><B>Sent:</B> Monday, May 05, 2003 3:45 PM<BR><B>To:</B>=20 CANSLIM<BR><B>Subject:</B> [CANSLIM] How much support is the 50 DMA?=20 (JOSB)<BR><BR></FONT></DIV> <DIV><FONT face=3DArial size=3D2>I have a dilemma - I bought JOSB a = few weeks back=20 and put a mental stop in at $27 (8%). When I checked today = after=20 the market closed, I saw it had dropped $1.88, and is now at = $25.51. I'm=20 a little mad that I only placed a mental stop, which could have = avoided this,=20 however I can't change that now. Normally I would sell right at = the=20 market since my loss has now dropped to 12%, but the stock now sits = about $.25=20 above it's 50 DMA. Should I hang on and hope institutions will = step=20 in? IBD says "many institutions view the 50-day line as a level = at which=20 they can add to their positions at a reasonable price. That's why many = strong=20 stocks find "support" at this line." However, it seems that the = 50 DMA=20 hasn't been too much of a support/resistance for JOSB in the = past. I=20 hate to wait and hope, since that's exactly what O'Neil said bad=20 investors do, but the 50 DMA adds an interesting twist. Should I = sell at=20 the market, or wait to see if it bounces back? Opinions are=20 appreciated!</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial size=3D2>Thanks so much!</FONT></DIV> <DIV><FONT face=3DArial size=3D2></FONT> </DIV> <DIV><FONT face=3DArial = size=3D2>Chris</FONT></DIV></BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_002A_01C313B5.C4BC29E0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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