RE: [CANSLIM] TSCO

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] TSCO
Date: Wed, 18 Jun 2003 07:56:18 -0500

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Hi Harold,

In the context of the discussion, a stock that is *already* rising from a
previous consolidation affords no low-risk entry point. With TSCO, an entry
here puts you at risk of sitting out another pullback to the previous
logical area of support. In this case, that can be all the way back to the
previous pivot, slightly below (as that wide bar during the last pullback
just after the last BO suggests), or somewhere around the 50dMA. The slight
wedging action in recent weeks suggests that the probability of a pullback
is very high, and particularly if one uses an 8% stop loss, the probability
of being shaken out is therefore very high.

 If one really likes this stock, then it's a lot smarter to wait for a
benign pullback and take your chances that it begins to move up again from
the pullback, as your odds of making money on the trade are considerably
higher. This is precisely what Fred has done for a couple of years,
purchasing on pullbacks and selling TSCO many times since 12/01.

I think the lesson with something like TSCO is that the 8% stop loss is a
protective mechanism for entry at the ideal buy point (a strong BO on volume
from a base), as the pullback here tends not to be much deeper if the BO is
strong. However, using an 8% stop when entering an extended stock is just
and excuse to loose 8%. There are plenty of good stocks out there, but one
can purcase "a very good stock" and still lose their shirt 8% at a time.
When a stock is extended, the 8% stop has no logic, because the next logical
area of support is generally much, much lower than 8% below the extended
entry. Even if one were to set a stop well below the 8% and back at logical
support, then the risk is that the stock not only pulls back but *fails*
outright, falling back into the base. At that point, a stop would force you
out at a much bigger loss than 8%. Oooh...makes me shiver to think about it.

Katherine

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Harold Josephson
Sent: Wednesday, June 18, 2003 1:09 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] TSCO



Hi Katherine,

What do you conclude from this chart?

Thanks

Harold

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm
Sent: Monday, June 16, 2003 11:07 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] TSCO

Hi Treb,

Here's the chart as I see it:

http://www.cwhcharts.com/katherine/TSCO061603.JPG

Katherine

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Treb Courie
Sent: Monday, June 16, 2003 11:48 AM
To: canslim@lists.xmission.com
Subject: [CANSLIM] TSCO


Is TSCO breaking out today?  It's got good fundamentals and is on my watch
list.  However, I think I'm going to stay off of it--it looks to me like it
broke out of a sloppy handle on 2 June and is too extended now.

Regards,
Treb

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