Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] stop losses and profits
Date: Tue, 17 Jun 2003 10:08:41 -0500
Previous Article (by Subject): RE: [CANSLIM] stop losses and profits michael_niemotka@baxter.com
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Hi Chris, (Normally I make these kinds of responses offlist, but email to your individual email address keep getting bounced back.) At any rate, thanks!! Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Dempsey, Chris Sent: Tuesday, June 17, 2003 7:20 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] stop losses and profits Excellent post Katherine! - -----Original Message----- From: Katherine Malm [mailto:kmalm@earthlink.net] Sent: Tuesday, June 17, 2003 8:02 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] stop losses and profits Hi Mike, I had to stretch my brain cells to remember back to this discussion from last year! Refining and redefining my sell rules has been a number one priority for me since early 2000, so you'll probably understand why I've modified these since last year. Part of what makes sell rules more complex is that the market will influence how breakouts behave, and therefore how much "tolerance" one would give a stock after the breakout. Last August, when this note was written, we were deep into the Bear. Very few stocks were breaking out and for those that were, the action was always very tentative. This "low tolerance" point of view was part of the responsiveness to market conditions. Now, I've developed a more sophisticated means of monitoring breakouts in addition to the general market health warnings that we can see from simply looking at the price/volume chart of the index averages, so the sell rules can be specific, but still adaptable to strong vs weak markets. From a market perspective, the initial tolerance is affecting by asking if this is a "strong" or "weak" market: (1) Is the market in a confirmed rally? (2) Are the number of breakouts increasing? (3) What percentage of the breakouts are up >=20% within the first 3 weeks after their breakout? For the stock itself, the intial tolerance is affected by asking if this was a "strong" or "weak" breakout: (1) Was the breakout on strong volume? (2) If the breakout was on strong volume, did it close above or slightly below the pivot? (3) Did the breakout follow through (i.e., show the ability to continue to move up, however small, after the breakout)? (4) Was the volume on the breakout week higher than the previous week? In simple terms you can then have 4 combinations: (1) Strong Market, Strong BO (highest tolerance) (2) Strong Market, Weak BO (midrange tolerance) (3) Weak Market, Strong BO (midrange tolerance) (4) Weak Market, Weak BO (lowest tolerance) The initial sell stop is set either at 8-10% below purchase (high tolerance), 4-5% below purchase (midrange tolerance) or at breakeven (low tolerance). You'll notice I'm more tolerant on the initial stop loss than WON, as some stocks exhibit a particular volatility pattern that would force you out unnecessarily. I also do not use hard stops unless I'm out of town and can't review my holdings. I use end of day prices to determine these points. Often, when a stock has a wide-bar range, it kicks in a sell stop unneccesarily. If the stock is weakening, hitting the stop intraday, but doesn't close below the stop, I will watch action on the next day and determine whether the stock is bouncing back on volume (showing strength) or wandering up on low volume (showing continued weakness). Regardless of market strength, after one of the following, the initial stop is moved to breakeven: (1) For high liquidity stocks (>=100K shares), did it rise >=20% after the BO? (2) For low liquidity stocks (<100K shares), did it rise >=15% after BO? (3) Has 3 weeks passed since the BO? Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of michael_niemotka@baxter.com Sent: Monday, June 16, 2003 11:25 AM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] stop losses and profits Katherine, A while back you shared the below sell rules with me, and I was wondering if you could provide a clarification on item #2. After a stock has been held 2 weeks, you stated that you move your stop loss to break even, and I was wondering if that was independent of the action of the stock. In particular, if you buy a stock that breaks out, and in the first couple of weeks moves down a little ( -1 to -3% from pivot), but then moves back up into a + terrritory, do you still move to break even, or do you keep the 7-8% stop loss in place, and if so, for how long? Thanks Mike - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
Previous Article (by Subject): RE: [CANSLIM] stop losses and profits michael_niemotka@baxter.com
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