Go to Jeff Salisbury LWGate Home Page.From: Bill Triffet <btriffet@earthlink.net>
Subject: Re: RE: [CANSLIM] Off topic Support - Resistance
Date: Thu, 19 Jun 2003 14:02:23 -0700 (PDT)
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Another important distinction is the level of knowlege/skill required for successful swingtrading. Last year while I sat out most of the market I started reading "Master Swingtrader" by Alan S. Farley. It's some heavy reading! Waaaay too many indicators, patterns, and setups for the average Joe/Jane who works a fulltime non-investing job. That said, it did reveal how many times when a breakout fails, it plays into the hands of the swingtrader. Interesting book but you better make a strong pot of coffee before reading it! (g)
- --
Bill
>>While one can use short term swing trading strategies (holding times a few days to a couple of weeks) on "CANSLIM quality" stocks, that is *far* different than employing "a CANSLIM strategy." For the newbies, that distinction, if misunderstood, can put you in a position where you are mixing and matching
short term entry strategies with intermediate term exit strategies or vice versa. Without a doubt, that's a formula for losing money.<<
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<DIV><SPAN class=484181520-19062003>Hi Eric,</SPAN></DIV>
<DIV><SPAN class=484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=484181520-19062003>I think you've brought up an important
distinction that folks newer to the CANSLIM methodology may not understand. That
is, CANSLIM is an intermediate term strategy. Mining methodologies, stock
selection strategies, entries and exits are designed for that specific time
period. Typical holdings are a few weeks to a few months, depending on the
strength of the market. When the market is very strong, that holding period can
extend even further, as one can hold a stock through a benign correction while
it absorbs its move and vaults higher.</SPAN></DIV>
<DIV><SPAN class=484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=484181520-19062003>While one can use short term swing trading
strategies (holding times a few days to a couple of weeks) on "CANSLIM
quality" stocks, that is *far* different than employing "a CANSLIM
strategy." </SPAN><SPAN class=484181520-19062003>For the newbies, that
distinction, if misunderstood, can put you in a position where you are mixing
and matching short term entry strategies with intermediate term exit strategies
or vice versa. Without a doubt, that's a formula for losing money. </SPAN></DIV>
<DIV><SPAN class=484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=484181520-19062003>As Eric has suggested, part or all of a
portfolio can be traded with swing/short term strategies short and long if
market conditions are conducive. </SPAN></DIV>
<DIV><SPAN class=484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=484181520-19062003>All in all, the secret to generating
consistent outperformance to the market is to be very clear on the rules of the
particular strategy utilized for that particular trade or investment, become a
master at it, and execute very well. Losing focus by mixing and matching rules
from one strategy to another and/or lacking the discipline it takes to develop
that mastery is a dangerous and costly game.</SPAN></DIV>
<DIV><SPAN class=484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=484181520-19062003>Katherine</SPAN></DIV>
<BLOCKQUOTE>
<DIV class=OutlookMessageHeader dir=ltr align=left><FONT face=Tahoma
size=2>-----Original Message-----<BR><B>From:</B>
owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Eric
Jaenike<BR><B>Sent:</B> Thursday, June 19, 2003 2:10 PM<BR><B>To:</B>
canslim@lists.xmission.com<BR><B>Subject:</B> Re: [CANSLIM] Off topic Support
- Resistance<BR><BR></FONT></DIV>
<DIV>I'll throw my 2 cents in here, as I've migrated toward swing trading in
addition to positional breakout trading (of which CANSLIM is a powerful
version).</DIV>
<DIV> </DIV>
<DIV>Swing trading is trading between support and resistance on the long side,
and resistance and support on the short side. In its purest form, it involves
trading a single, direct price thrust from support/resistance to
resistance/support. In the strictest definitions, this "swing" in price will
generally occur over 3-5 days, so you have fairly abbreviated holding periods.
One generally does not hold through retracements. This is in contrast to
CANSLIM trading, which advocates trading a breakout through resistance (the
pivot point), holding through (benign) pullbacks, and selling at major tops.
CANSLIM is a strategy to capture large, major moves. Swing trading is designed
to capture smaller and quicker moves.</DIV>
<DIV> </DIV>
<DIV><EM>The Master Swing Trader, </EM>by Alan Farley, was my introduction to
swing trading. It is an excellent book, but very advanced, and I would
definitely not recommend it for traders who are just starting out. He also
offers an online course, available at hardrightedge.com, and writes a
subscription newsletter (which I use and is excellent- available through
Realmoney.com). However, these services are not cheap, and require a lot of
work to employ effectively.</DIV>
<DIV> </DIV>
<DIV>Eric</DIV>
<DIV> </DIV>
<DIV><BR><BR><B><I>Gene Ricci <genr@swbell.net></I></B> wrote:</DIV>
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<DIV><FONT face="Comic Sans MS"><STRONG><FONT
color=#0000ff>|</FONT></STRONG><FONT face="Times New Roman">Can you say a
little more about "support and resistance" trading? Dave</FONT><FONT
face="Comic Sans MS" color=#0000ff><STRONG>|</STRONG></FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><STRONG><FONT
color=#0000ff></FONT></STRONG></FONT> </DIV>
<DIV><FONT face="Comic Sans MS">
<DIV><FONT size=2>Hi Dave, I </FONT><FONT size=2>believe it is key
to know what the trend is (sideways, up, down).</FONT></DIV>
<DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT color=#0000ff size=2><STRONG>If in Trading
Range:</STRONG></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2> </FONT>
<DIV><U><FONT size=2>Long </FONT></U></DIV>
<DIV><FONT size=2>a) when going long and the stock is rangebound - buy
at a prescribed amount above the support point. Place stop just
below support point.</FONT></DIV>
<DIV><FONT size=2>b) sell when stock price approaches
resistance.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><U><FONT size=2>Short </FONT></U></DIV>
<DIV><FONT size=2>a) when shorting and the stock is range bound -
short at a prescribed amount below the resistance point. Place
stop just above resistance point.</FONT></DIV>
<DIV><FONT size=2>b) cover when stock price
approaches support.</FONT></DIV>
<DIV><FONT size=3><FONT size=2></FONT> </DIV>
<DIV><FONT color=#0000ff><STRONG>For Pullback trading in Trending
market:</STRONG></FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial>
<DIV><FONT face="Comic Sans MS"><U>Long </U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when going long and the stock is
pulling back in an uptrend - buy at a prescribed amount above the
support point. Place stop just below support point.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) sell if price can not penetrate
previous high, otherwise let your profits run.</FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS"><U>Short </U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when shorting and the stock
is rising (correcting) in a downtrend - short at a prescribed
amount below the resistance point. Place stop just above
resistance point.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) cover if price can not penetrate next
support level, otherwise let your profits run.</FONT></DIV></FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial color=#0000ff><STRONG><FONT face="Comic Sans MS">For
Breakout strategies</FONT><FONT face=Arial>: (</FONT></STRONG></FONT><FONT
face=Arial>If support or resistance levels are broken or you anticipate they
will be broken):</FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV></FONT></DIV></FONT></DIV>
<DIV><FONT size=2>
<DIV><FONT face="Comic Sans MS"><U>Long</U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when going long and the stock is in an
uptrend - buy at a prescribed amount above the resistance point when price
penetrates resistance with stop just below resistance.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) sell if price can not penetrate next
resistance level otherwise let your profits run.</FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS"><U>Short</U></FONT></DIV>
<DIV><FONT face="Comic Sans MS">a) when shorting and the stock is in a
downtrend - short at a prescribed amount below the support point when price
penetrates support, with stop just above support.</FONT></DIV>
<DIV><FONT face="Comic Sans MS">b) cover when price can not penetrate
next support level, otherwise let your profits run. </FONT></DIV>
<DIV><FONT size=3></FONT></FONT> </DIV></DIV></DIV></FONT>
<DIV><FONT face="Comic Sans MS" size=2>Now it's time to get a bag of
freshly popped popcorn and check out some movies:</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" color=#000000 size=2><A
href="http://www.pring.com/movies.htm">http://www.pring.com/movies.htm</A></FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS">or got to StockCharts.com</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" size=2><A
href="http://stockcharts.com/education/What/ChartAnalysis/supportResistance.html">http://stockcharts.com/education/What/ChartAnalysis/supportResistance.html</A></FONT></DIV>
<DIV><FONT face="Comic Sans MS"></FONT> </DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2><FONT color=#800080>H</FONT>ere
is a list of my reference books:</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" size=2>1) Intro to Technical Analysis -
Martin Pring - $38.95 (comes with CD)</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>2) Breaking the Black Box - Martin
Pring - $39.95 (comes with CD)</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>
<DIV><FONT face="Comic Sans MS" size=2>3) Come Into My Trading Room - Dr.
Alexander Elder - $35.00</FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>4) Methods of a Wall Street Master -
Victor Sperandeo - $14.95</FONT></DIV></FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2>5) Secrets for Profiting in Bull and
Bear Markets - Stan Weinstein - $19.95</FONT></DIV>
<DIV>
<DIV><FONT face="Comic Sans MS"> </FONT><FONT
face="Comic Sans MS"><FONT size=2>We had Dallas workshop on Stan
Weinstein's Method at the end of 2001</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2> (gosh, it
doesn't seem like it was that long ago), I'll dig around my archives
</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS"><FONT size=2> to locate
the workshop notes and forward them to you at a later
date.</FONT></FONT></DIV>
<DIV><FONT face="Comic Sans MS" size=2></FONT> </DIV>
<DIV><FONT face="Comic Sans MS" size=2>Hope this helps,</FONT></DIV></DIV>
<DIV><FONT face="Comic Sans MS" size=2>Gene</FONT></DIV></BLOCKQUOTE>
<P>
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