RE: [CANSLIM] Question on CS Evaluator

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] Question on CS Evaluator
Date: Tue, 3 Jun 2003 07:47:01 -0500
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Hi Tomas,

I understood you were looking at ENDP as a watchlist addition. I probably
wasn't clear enough as to why "institutional" accumumlation/distribution
wasn't included in a score like the CE. The same holds true for
EPS/SMR/RS/Composite scores from the IBD. That is, they are each looking at
a specific view of the the fundamentals and/or technicals of the stock. But
even the IBD's Composite score, which includes a component called the
"Technical Ranking" does not include the A/D score. Institutional interests
(whether they are buying or selling shares generally over the last quarter)
are taken into account in our fundamental score, as this is considered a
*driver* of price/volume action, not a statement of the stock's current
technical condition.

When assessing the attractiveness of a stock for purposes of considering a
future buy, i.e. a personal watchlist candidate, I don't see the A/D as
particularly critical. At the time it sets up, it gives another viewpoint of
the price/volume action, but beyond that it doesn't always tell much more
than a the price/volume graph itself tells you. This is because, for the
most part, the money that's pushing around prices *is* institutional money!
In place of something like the A/D score, we use a more comprehensive score
that is calculated only at the time the stock sets up in its base, called
the Chart Quality (CQ) score. This quantifies the accumulation on the right
side of the cup and the price/volume action within the handle to determine
the chart's soundness.

Katherine

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tomas
Sent: Monday, June 02, 2003 11:56 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Question on CS Evaluator


Katherine,

Your second paragraph answered my question.  Thank You
very much.

As for your first paragraph, I was just looking to add
the stock to my watchlist.  I do not intend to buy it
now.  Of course, I have to wait for a good base and BO
before I buy it.

Regards,
tomas

- --- Katherine Malm <kmalm@earthlink.net> wrote:
> Hi Tomas,
>
> Remember that the CE score tells you the current
> fundamental and technical
> condition of the stock in broad terms. A good CEF
> (fundamental) score tells
> you that it meets most of the desired fundamental
> requirements of a CANSLIM
> stock. A good CET (technical) score tells you that
> the stock is technically
> sound. However, take a look at the chart for ENDP
> and you'll see that it
> offers no technical entry point, having already
> broken out 3/25. In the same
> vein, a stock could have an IBD composite score of
> 99, an RS of 99 and an
> EPS of 99, thus a good "score" but that doesn't mean
> that it has a low-risk
> entry point and is therefore buyable. Another way to
> say it is, you don't
> buy a stock because it has a good score, you buy a
> stock because it is
> setting up for a breakout and has a very good score
> relative to other stocks
> that are also setting up.
>
> The IBD's proprietary A/D ranking looks at the prior
> 13 weeks of
> "institutional" buys and sells to derive the score.
> I think it's a useful
> tool for getting a feel for the buy/sell action at
> the time the stock is
> setting for a potential breakout, but it's a
> secondary or tertiary indicator
> in my view because of its lagging nature. All else
> being equal, I would
> choose the stock with the better A/D, but I would
> never use it to mine for
> candidates.
>
> Katherine
>
> -----Original Message-----
> From: owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com]On Behalf
> Of Tomas
> Sent: Monday, June 02, 2003 10:19 PM
> To: canslim canslim
> Subject: [CANSLIM] Question on CS Evaluator
>
>
> Katherine,
>
> I looked up ENDP on the CE and it got very high
> score.
>  6.61(CET)  9.19(CEF)  15.80(total).  However, when
> I
> check the CS rating, it has a D+ for acc/dist.  I
> guess your CE does not put too much weight the
> institutional selling?  If I am a CS purest, I would
> not consider this stock.  However, everything else
> looks great, and I would hate to not add this stock
> to
> my watch list.  Can you comment on this issue?
>
> Thanks,
> tomas
>
>
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