RE: [CANSLIM] ADVP

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] ADVP
Date: Sat, 24 May 2003 11:35:44 -0500
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Hi Roger,

Contrary to what might seem to be the case, a strong stock will most often
see the RSLine stay flat or (preferrably) rise even as price is falling.
That occurs because, despite the pullback, the price action *relative to the
market as a whole* is still showing superiority. For example, if the price
of stock A is falling at a *slower rate* than the market is falling, the
RSLine will rise. That's why you can have a stock's RSLine rise even as the
price is falling on the left side of the cup and why it's possible for the
RSLine to make new highs, even as the stock's price is drifting down within
the handle (which is ideally what you would like to see). However, I
wouldn't get overly concerned about a minor pullback in the RSLine during
the handle as long as the overall upward trend of the RSLine remains intact.
That can happen when the market as a whole is very strong.

What you really want to keep your eye on is a very marked negative
divergence in the direction of the RSLine relative to the price action in
the stock. This will happen in ill formed bases and in stocks that are
currently rising after a previous breakout. If the price continues to rise
while the RSLine heads markedly South, that's a warning sign the move is
running out of gas. This is the same reasoning you would use when looking
for the "wedging" action discussed here on the list previously. That is, if
price is rising on ever decreasing volume, that divergence shows a lack of
conviction in the move and raises the likelihood that the stock will
correct. That's why you ideally want to see volume *rise* on the right side
of the cup.

Katherine

>  -----Original Message-----
> From: 	owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com] 
> Sent:	Saturday, May 24, 2003 10:13 AM
> To:	canslim@lists.xmission.com
> Subject:	RE: [CANSLIM] ADVP
> 
> Thanks Katherine.
> 
> As for the down-sloping ud volume in the handle, I guess that's to be
> expected in a proper handle given that the price should be falling.  would
> the same be true for the rsline and rsrank?  Assuming the handle is
> forming due to a general market downturn, you might expect the rsline and
> rank to (at least) be flat for a true leader.  Does that make sense?
> 
> =================================================
> Roger Tawa
> http://tawacentral.net/
> [One thing about paradigms: shift happens.]
> [When you stop, you're done.]
> 
> 		 -----Original Message-----
> 		From: 	owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com] 
> 		Sent:	Friday, May 23, 2003 1:56 PM
> 		To:	canslim@lists.xmission.com
> 		Subject:	RE: [CANSLIM] ADVP
> 
> 		Hi Roger,
> 
> 		I think with a stock like ADVP, particularly where the base
> is lengthy, it's easiest to put the volume action in perspective when
> looking at the weekly chart. I don't think there's anything worrisome
> about an decreasing ADV line as it's simply summarizing action over the
> last 50 days and so will vary a bit, particularly if there were some very
> high volume days early in the 50 day period that then drop off the
> calculation as time marches on. That would be particularly true when much
> of the base falls outside that 50 day period. In this case, ADVP's base is
> more than a year. If there were high volume on the left side or near the
> bottom of the base as the stock pushed down and then made a high volume
> reversal at the bottom, then eventually, those volume bars fall outside
> the 50 days and action on the right side of the base takes over in the ADV
> calculation.
> 
> 		So, all in all, I'd put ADVP's base into perspective by
> looking at the weekly action:
> 		http://www.cwhcharts.com/katherine/ADVPWkly052303.JPG
> 
> 		and a close up of the action on the right side of the base
> and handle:
> 		http://www.cwhcharts.com/katherine/ADVP052303.JPG
> 
> 		Katherine
> 
> 			 -----Original Message-----
> 			From: 	owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com] 
> 			Sent:	Thursday, May 22, 2003 8:42 PM
> 			To:	CANSLIM
> 			Subject:	[CANSLIM] ADVP
> 
> 			Hi all,
> 
> 			I am looking at ADVP.  I do not own it at this time.
> It seems to have pretty good fundies.  As for the chart, the handle looks
> good, going down along the lows and volume drying up.  The rsline is
> making new highs at the pp.  the rsrank and ud volume are good.  Finally,
> the weekly chart also looks good, except it seems to have a downtrend in
> the ud volume.
> 
> 			The one thing I'm not sure about is the lack of
> volume in rhs of the cup.  In fact, the 50 day ADV actually goes down
> during the rhs of the cup, except for one spike near the pp.  Is this a
> big concern?  Thanks.
> 
> 			=================================================
> 			Roger Tawa
> 			http://tawacentral.net/
> 			[One thing about paradigms: shift happens.]
> 			[When you stop, you're done.]
> 

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