Go to Jeff Salisbury LWGate Home Page.From: Roger Tawa <roger@tawacentral.net>
Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB)
Date: Tue, 06 May 2003 22:12:49 -0400
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Hi Katherine,
I have a question with regard to your =93poor=94 handle comment. Acc=
ording to
24 lessons, page 47, a handle should drift down on lows *OR* have a s=
hake
out. In this case, the shake out did happen on the two days after th=
e
pivot.
Furthermore, at the top of page 48, it says a proper handle will dry =
up near
its lows, which this one seems to do, *OR* will have several tight ar=
eas,
which this one also has.
Finally, the JOSB handle actually looks very much like the handle of
Microsoft shown in the example on page 46.
Now, being a novice at this, I would have looked at this handle and s=
aid
=93looks good=94 by the time april 1st came around.
Do you feel that the handle should drift down along its lows for the =
entire
duration of handle before it breaks out? Would you consider this a b=
etter
indication of a good handle than the other things? Thanks.
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D
Roger Tawa
http://tawacentral.net/
[One thing about paradigms: shift happens.]
[When you stop, you're done.]
- -----Original Message-----
=46rom: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Katherine Malm
Sent: Tuesday, May 06, 2003 10:57 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] How much support is the 50 DMA? (JOSB)
Hi Chris,
I see several folks have already commented on the discipline of selli=
ng, 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 establis=
hed
3/21 at $25.51. It put in a poor handle which didn't drift down, indi=
cating
a possible lack of shakeout, then staged a wimpy breakout on 4/2 (tho=
ugh it
did show some follow through action the next day). With those credent=
ials,
buying right is particularly important. Odds favor, at minimum, a pul=
lback
at least to the original breakout area around 25-26. Sure enough, tha=
t'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 m=
ental
stop at $27 was above the logical support area. See an annotated cha=
rt at:
http://www.cwhcharts.com/katherine/JOSB050603.JPG
These kinds of pullbacks are fairly common. BSTE did the same thing r=
ecently
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-----
=46rom: 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 st=
op 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 pl=
aced a
mental stop, which could have avoided this, however I can't change th=
at now.
Normally I would sell right at the market since my loss has now dropp=
ed to
12%, but the stock now sits about $.25 above it's 50 DMA. Should I h=
ang 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 thi=
s
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, si=
nce
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
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<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'>Hi
Katherine,<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'> <o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'>I have a
question with regard to your “poor” handle comment.<span =
style=3D"mso-spacerun:
yes"> </span>According to 24 lessons, page 47, a handle should =
drift down
on lows *<b><span style=3D'font-weight:bold'>OR</span></b>* have a sh=
ake
out.<span style=3D"mso-spacerun: yes"> </span>In this case, the=
shake out
did happen on the two days after the pivot.<o:p></o:p></span></font><=
/span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'> <o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'>Furthermore,
at the top of page 48, it says a proper handle will dry up near its l=
ows, which
this one seems to do, *<b><span style=3D'font-weight:bold'>OR</span><=
/b>* will
have several tight areas, which this one also has.<o:p></o:p></span><=
/font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'> <o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'>Finally,
the JOSB handle actually looks very much like the handle of Microsoft=
shown in
the example on page 46.<o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'> <o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'>Now, being
a novice at this, I would have looked at this handle and said “=
looks good” by
the time april 1<sup>st</sup> came around.<o:p></o:p></span></font></=
span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'> <o:p></o:p></span></font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle19><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'>Do you
feel that the handle should drift down along its lows for the entire =
duration
of handle before it breaks out?<span style=3D"mso-spacerun: yes">&nbs=
p; </span>Would
you consider this a better indication of a good handle than the other=
things?<span
style=3D"mso-spacerun: yes"> </span>Thanks.<o:p></o:p></span></=
font></span></p>
<p class=3DMsoNormal><span class=3DEmailStyle17><font size=3D2 color=
=3Dnavy face=3DArial><span
style=3D'font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial=
'><![if !supportEmptyParas]> <![endif]><o:p></o:p></span></font>=
</span></p>
<p class=3DMsoNormal><!--[if supportFields]><span class=3DEmailStyle1=
7><font=20
size=3D2 color=3Dnavy face=3DArial><span style=3D'font-size:10.0pt;ms=
o-bidi-font-size:
12.0pt;font-family:Arial'><span style=3D'mso-element:field-begin'></s=
pan><span=20
style=3D"mso-spacerun: yes"> </span>AUTOTEXTLIST \s "E-mail=
=20
Signature" <span style=3D'mso-element:field-separator'></span></=
span></font></span><![endif]--><font
color=3Dnavy><span style=3D'color:navy'>=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D</span></font><=
font
color=3Dnavy><span style=3D'color:navy;mso-color-alt:windowtext'><o:p=
></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 color=3Dnavy face=3D"Times New Ro=
man"><span
style=3D'font-size:12.0pt;color:navy'>Roger Tawa</span></font><font c=
olor=3Dnavy><span
style=3D'color:navy;mso-color-alt:windowtext'><o:p></o:p></span></fon=
t></p>
<p class=3DMsoNormal><font size=3D3 color=3Dnavy face=3D"Times New Ro=
man"><span
style=3D'font-size:12.0pt;color:navy'>http://tawacentral.net/</span><=
/font><font
color=3Dnavy><span style=3D'color:navy;mso-color-alt:windowtext'><o:p=
></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 color=3Dnavy face=3D"Times New Ro=
man"><span
style=3D'font-size:12.0pt;color:navy'>[One thing about paradigms: shi=
ft happens.]</span></font><font
color=3Dnavy><span style=3D'color:navy;mso-color-alt:windowtext'><o:p=
></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 color=3Dnavy face=3D"Times New Ro=
man"><span
style=3D'font-size:12.0pt;color:navy'>[When you stop, you're done.]</=
span></font><font
color=3Dnavy><span style=3D'color:navy;mso-color-alt:windowtext'><o:p=
></o:p></span></font></p>
<p class=3DMsoNormal><!--[if supportFields]><span class=3DEmailStyle1=
7><font=20
size=3D2 color=3Dnavy face=3DArial><span style=3D'font-size:10.0pt;ms=
o-bidi-font-size:
12.0pt;font-family:Arial'><span style=3D'mso-element:field-end'></spa=
n></span></font></span><![endif]--><span
class=3DEmailStyle17><font size=3D2 color=3Dnavy face=3DArial><span s=
tyle=3D'font-size:
10.0pt;mso-bidi-font-size:12.0pt;font-family:Arial'><![if !supportEmp=
tyParas]> <![endif]><o:p></o:p></span></font></span></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 color=
=3Dblack
face=3DTahoma><span style=3D'font-size:10.0pt;font-family:Tahoma;colo=
r:black'>-----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>Katherine Malm<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Tuesday, May 06,=
2003 10:57
AM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> canslim@lists.xmis=
sion.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> RE: [CANSLIM]=
How much
support is the 50 DMA? (JOSB)</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'><![if !supportEmptyParas]> <![endif]>=
<o:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
>Hi Chris,</span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
> </span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
>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."</spa=
n></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
> </span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
>The biggest
problem I see with your JOSB situation is that by buying late, you to=
ok away
all your wiggle room. JOSB set up with a pivot established 3/21 at $2=
5.51. It
put in a poor handle which didn't drift down, indicating a possible l=
ack of
shakeout, then staged a wimpy breakout on 4/2 (though it did show som=
e follow
through action the next day). With those credentials, buying right is
particularly important. Odds favor, at minimum, a pullback at least t=
o the
original breakout area around 25-26. Sure enough, that's what happene=
d. As your
purchase was late, when the stock was already 13% extended from the b=
reakout
price, you have no wiggle room to survive a pullback without triggeri=
ng your 8%
rule. Notice that your original mental stop at $27 was above the logi=
cal
support area. See an annotated chart at:</span></font><font col=
or=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></fo=
nt></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
> </span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
><a
href=3D"http://www.cwhcharts.com/katherine/JOSB050603.JPG">http://www=
.cwhcharts.com/katherine/JOSB050603.JPG</a></span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
> </span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
>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 withou=
t
triggering sell rules. Take a look at the reward:</span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
> </span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
><a
href=3D"http://www.cwhcharts.com/katherine/BSTE050603.JPG">http://www=
.cwhcharts.com/katherine/BSTE050603.JPG</a></span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
> </span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 color=
=3Dblack
face=3D"Times New Roman"><span style=3D'font-size:12.0pt;color:black'=
>Katherine</span></font><font
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'mso-margin-top-alt:auto;margin-bottom:1=
2.0pt;
margin-left:1.0in'><font size=3D2 color=3Dblack face=3DTahoma><span s=
tyle=3D'font-size:
10.0pt;font-family:Tahoma;color:black'>-----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>Chris Jones<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Monday, May 05, =
2003 3:45 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> CANSLIM<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> [CANSLIM] How=
much
support is the 50 DMA? (JOSB)</span></font><font color=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></fo=
nt></p>
<p class=3DMsoNormal style=3D'mso-margin-top-alt:auto;mso-margin-bott=
om-alt:auto;
margin-left:1.0in'><font size=3D2 color=3Dblack face=3DArial><span st=
yle=3D'font-size:
10.0pt;font-family:Arial;color:black'>I have a dilemma - I bought JOS=
B a few
weeks back and put a mental stop in at $27 (8%). When I ch=
ecked
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, whic=
h 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 sto=
ck now
sits about $.25 above it's 50 DMA. Should I hang on and hope in=
stitutions
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."&n=
bsp;
However, it seems that the 50 DMA hasn't been too much of a support/r=
esistance 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 intere=
sting
twist. Should I sell at the market, or wait to see if it bounce=
s
back? Opinions are appreciated!</span></font><font color=3Dblac=
k><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></fo=
nt></p>
<p class=3DMsoNormal style=3D'mso-margin-top-alt:auto;mso-margin-bott=
om-alt:auto;
margin-left:1.0in'><font size=3D3 color=3Dblack face=3D"Times New Rom=
an"><span
style=3D'font-size:12.0pt;color:black'> </span></font><font colo=
r=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></fo=
nt></p>
<p class=3DMsoNormal style=3D'mso-margin-top-alt:auto;mso-margin-bott=
om-alt:auto;
margin-left:1.0in'><font size=3D2 color=3Dblack face=3DArial><span st=
yle=3D'font-size:
10.0pt;font-family:Arial;color:black'>Thanks so much!</span></font><f=
ont
color=3Dblack><span style=3D'color:black;mso-color-alt:windowtext'><o=
:p></o:p></span></font></p>
<p class=3DMsoNormal style=3D'mso-margin-top-alt:auto;mso-margin-bott=
om-alt:auto;
margin-left:1.0in'><font size=3D3 color=3Dblack face=3D"Times New Rom=
an"><span
style=3D'font-size:12.0pt;color:black'> </span></font><font colo=
r=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></fo=
nt></p>
<p class=3DMsoNormal style=3D'mso-margin-top-alt:auto;mso-margin-bott=
om-alt:auto;
margin-left:1.0in'><font size=3D2 color=3Dblack face=3DArial><span st=
yle=3D'font-size:
10.0pt;font-family:Arial;color:black'>Chris</span></font><font color=
=3Dblack><span
style=3D'color:black;mso-color-alt:windowtext'><o:p></o:p></span></fo=
nt></p>
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