Go to Jeff Salisbury LWGate Home Page.From: Bill Triffet <btriffet@earthlink.net>
Subject: Re: [CANSLIM] TALX Breakout
Date: Wed, 4 Jun 2003 12:34:47 -0700 (PDT)
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Katherine,
Your last chart speaks volumes about RS and how it can rapidly change. I particularly like the various RS indicators on the CWH.com charts. This is somthing that has been missing on the IBD charts.
I think if one were to go back through some the the WR or SITN charts in the IBD paper you'd find more than a few successful breakouts in the 60-70 range. They just don't publish them till they are "safe". (g)
I for one allow an RS around 60 as long as it's rising.
- --
Bill
- -----------------------------------------------------------------
>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=921403008-04062003>Hi All,</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>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:</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>"Talx, (<A
href="javascript:popup=window.open('http://www.investors.com/smartselect/SmartSelect.asp?x=V3D4P5g6','SmartSelectPop','top=20,left=20,width=610,height=510,directories=no,status=no,location=no,toolbar=no,scrollbars=no,resizable=yes,menubar=no,copyhistory=no,alwaysRaised=0,dependent=no');popup.focus();"><FONT
color=#336699>TALX</FONT></A>) 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."</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>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:</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>(1) Ranking systems which slot one stock
against another tend to be fairly volatile from one day to the
next.</SPAN></DIV>
<DIV><SPAN class=921403008-04062003>(2) A stock will rise *very* quickly from a
laggard (<70) to a non-laggard (>=70) RS.</SPAN></DIV>
<DIV><SPAN class=921403008-04062003>(3) Many "good" stocks will breakout with a
relatively low RS.</SPAN></DIV>
<DIV><SPAN class=921403008-04062003>(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.</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>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.</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>Here's a chart showing the RSRank over
time:</SPAN></DIV>
<DIV><SPAN class=921403008-04062003><A
href="http://www.cwhcharts.com/katherine/TALX060303.JPG">http://www.cwhcharts.com/katherine/TALX060303.JPG</A> </SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>(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).</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003>Katherine</SPAN></DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV>
<DIV><SPAN class=921403008-04062003></SPAN> </DIV></BODY></HTML>
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