Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: [CANSLIM] TALX Breakout
Date: Wed, 4 Jun 2003 08:27:09 -0500
Previous Article (by Date): Re: Re: [CANSLIM] breakouts to come "Gene Ricci"
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Hi All,
Just an interesting observation given our recent discussion here on the IBD100
and Richard's "reverse due diligence" question yesterday on SCHN. From today's
Big Picture:
"Talx, (TALX) a new addition to the Investor's Business Daily 100, retreated
1.28 to 17.72. The employment services firm had rallied almost 41% since
breaking out May 23."
Interestingly, on the it was setting up for the breakout (5/22), it had an RS of
*52*. After the close on the breakout day (5/23), the RS rose to a still laggard
*65*. It wasn't until the next trading day (5/27) that the RS rose to a
non-laggard 79. As of yesterday's close (6/3), the RS is now 85. (All RS's are
IBD numbers) While this is a somewhat extreme example, it demonstrates a few
important principles:
(1) Ranking systems which slot one stock against another tend to be fairly
volatile from one day to the next.
(2) A stock will rise *very* quickly from a laggard (<70) to a non-laggard
(>=70) RS.
(3) Many "good" stocks will breakout with a relatively low RS.
(4) Once a stock appears in the IBD100, it will have a high RS, but there is no
indication as to *when* it achieved that RS nor how quickly it rose to get to
non-laggard and/or "leader" status.
I'm not suggesting one screen for stocks with and RS of 52, but it does show
that it's easy to miss an up and coming stock if the RS cutoff is set to a
restrictive interpretation of WON's guidelines, i.e. RS = 80 or 85.
Here's a chart showing the RSRank over time:
http://www.cwhcharts.com/katherine/TALX060303.JPG
(Note, our RSRanks tend to rise a bit faster than IBD's because we do not
include Canadian Stocks in our database, as does IBD/DGO. As a result, the
numbers you see in our chart are slightly higher than IBD's RS numbers I quoted
above).
Katherine
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<DIV><SPAN class=3D921403008-04062003>Hi All,</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>Just an interesting observation =
given our=20
recent discussion here on the IBD100 and Richard's "reverse due =
diligence"=20
question yesterday on SCHN. From today's Big Picture:</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>"Talx, (<A=20
href=3D"javascript:popup=3Dwindow.open('http://www.investors.com/smartsel=
ect/SmartSelect.asp?x=3DV3D4P5g6','SmartSelectPop','top=3D20,left=3D20,wi=
dth=3D610,height=3D510,directories=3Dno,status=3Dno,location=3Dno,toolbar=
=3Dno,scrollbars=3Dno,resizable=3Dyes,menubar=3Dno,copyhistory=3Dno,alway=
sRaised=3D0,dependent=3Dno');popup.focus();"><FONT=20
color=3D#336699>TALX</FONT></A>) a new addition to the Investor's =
Business Daily=20
100, retreated 1.28 to 17.72. The employment services firm had rallied =
almost=20
41% since breaking out May 23."</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>Interestingly, on the it was =
setting up for=20
the breakout (5/22), it had an RS of *52*. After the close on the =
breakout=20
day (5/23), the RS rose to a still laggard *65*. It wasn't until =
the next=20
trading day (5/27) that the RS rose to a non-laggard 79. As of =
yesterday's=20
close (6/3), the RS is now 85. (All RS's are IBD numbers) While this is =
a=20
somewhat extreme example, it demonstrates a few important=20
principles:</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>(1) Ranking systems which slot one =
stock=20
against another tend to be fairly volatile from one day to the=20
next.</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003>(2) A stock will rise *very* =
quickly from a=20
laggard (<70) to a non-laggard (>=3D70) RS.</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003>(3) Many "good" stocks will =
breakout with a=20
relatively low RS.</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003>(4) Once a stock appears in the =
IBD100, it=20
will have a high RS, but there is no indication as to *when* it achieved =
that RS=20
nor how quickly it rose to get to non-laggard and/or=20
"leader" status.</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>I'm not suggesting one screen for =
stocks=20
with and RS of 52, but it does show that it's easy to miss an up =
and=20
coming stock if the RS cutoff is set to a restrictive interpretation of =
WON's=20
guidelines, i.e. RS =3D 80 or 85.</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>Here's a chart showing the RSRank =
over=20
time:</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003><A=20
href=3D"http://www.cwhcharts.com/katherine/TALX060303.JPG">http://www.cwh=
charts.com/katherine/TALX060303.JPG</A> </SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>(Note, our RSRanks tend to rise a =
bit faster=20
than IBD's because we do not include Canadian Stocks in our database, as =
does=20
IBD/DGO. As a result, the numbers you see in our chart are slightly =
higher than=20
IBD's RS numbers I quoted above).</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003>Katherine</SPAN></DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=3D921403008-04062003></SPAN> </DIV></BODY></HTML>
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