Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] Off topic Support - Resistance
Date: Thu, 19 Jun 2003 15:31:15 -0500
Next Article (by Date): Re: RE: [CANSLIM] Off topic Support - Resistance Bill Triffet
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Hi Eric,
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.
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.
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.
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.
Katherine
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Eric Jaenike
Sent: Thursday, June 19, 2003 2:10 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Off topic Support - Resistance
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).
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.
The Master Swing Trader, 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.
Eric
Gene Ricci <genr@swbell.net> wrote:
|Can you say a little more about "support and resistance" trading? Dave|
Hi Dave, I believe it is key to know what the trend is (sideways, up, down).
If in Trading Range:
Long
a) when going long and the stock is rangebound - buy at a prescribed amount
above the support point. Place stop just below support point.
b) sell when stock price approaches resistance.
Short
a) when shorting and the stock is range bound - short at a prescribed
amount below the resistance point. Place stop just above resistance point.
b) cover when stock price approaches support.
For Pullback trading in Trending market:
Long
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.
b) sell if price can not penetrate previous high, otherwise let your profits
run.
Short
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.
b) cover if price can not penetrate next support level, otherwise let your
profits run.
For Breakout strategies: (If support or resistance levels are broken or you
anticipate they will be broken):
Long
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.
b) sell if price can not penetrate next resistance level otherwise let your
profits run.
Short
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.
b) cover when price can not penetrate next support level, otherwise let
your profits run.
Now it's time to get a bag of freshly popped popcorn and check out some
movies:
http://www.pring.com/movies.htm
or got to StockCharts.com
http://stockcharts.com/education/What/ChartAnalysis/supportResistance.html
Here is a list of my reference books:
1) Intro to Technical Analysis - Martin Pring - $38.95 (comes with CD)
2) Breaking the Black Box - Martin Pring - $39.95 (comes with CD)
3) Come Into My Trading Room - Dr. Alexander Elder - $35.00
4) Methods of a Wall Street Master - Victor Sperandeo - $14.95
5) Secrets for Profiting in Bull and Bear Markets - Stan Weinstein - $19.95
We had Dallas workshop on Stan Weinstein's Method at the end of 2001
(gosh, it doesn't seem like it was that long ago), I'll dig around my
archives
to locate the workshop notes and forward them to you at a later date.
Hope this helps,
Gene
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<HTML><HEAD>
<META http-equiv=3DContent-Type content=3D"text/html; =
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<META content=3D"MSHTML 6.00.2800.1170" name=3DGENERATOR></HEAD>
<BODY>
<DIV><SPAN class=3D484181520-19062003>Hi Eric,</SPAN></DIV>
<DIV><SPAN class=3D484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=3D484181520-19062003>I think you've brought up an =
important=20
distinction that folks newer to the CANSLIM methodology may not =
understand. That=20
is, CANSLIM is an intermediate term strategy. Mining methodologies, =
stock=20
selection strategies, entries and exits are designed for that specific =
time=20
period. Typical holdings are a few weeks to a few months, depending on =
the=20
strength of the market. When the market is very strong, that holding =
period can=20
extend even further, as one can hold a stock through a benign correction =
while=20
it absorbs its move and vaults higher.</SPAN></DIV>
<DIV><SPAN class=3D484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=3D484181520-19062003>While one can use short term swing =
trading=20
strategies (holding times a few days to a couple of weeks) on =
"CANSLIM=20
quality" stocks, that is *far* different than employing "a CANSLIM=20
strategy." </SPAN><SPAN class=3D484181520-19062003>For the newbies, that =
distinction, if misunderstood, can put you in a position where you are =
mixing=20
and matching short term entry strategies with intermediate term exit =
strategies=20
or vice versa. Without a doubt, that's a formula for losing money. =
</SPAN></DIV>
<DIV><SPAN class=3D484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=3D484181520-19062003>As Eric has suggested, part or all =
of a=20
portfolio can be traded with swing/short term strategies short and long =
if=20
market conditions are conducive. </SPAN></DIV>
<DIV><SPAN class=3D484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=3D484181520-19062003>All in all, the secret to =
generating=20
consistent outperformance to the market is to be very clear on the rules =
of the=20
particular strategy utilized for that particular trade or investment, =
become a=20
master at it, and execute very well. Losing focus by mixing and matching =
rules=20
from one strategy to another and/or lacking the discipline it takes to =
develop=20
that mastery is a dangerous and costly game.</SPAN></DIV>
<DIV><SPAN class=3D484181520-19062003></SPAN> </DIV>
<DIV><SPAN class=3D484181520-19062003>Katherine</SPAN></DIV>
<BLOCKQUOTE>
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Eric=20
Jaenike<BR><B>Sent:</B> Thursday, June 19, 2003 2:10 PM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> Re: [CANSLIM] Off topic =
Support=20
- Resistance<BR><BR></FONT></DIV>
<DIV>I'll throw my 2 cents in here, as I've migrated toward swing =
trading in=20
addition to positional breakout trading (of which CANSLIM is a =
powerful=20
version).</DIV>
<DIV> </DIV>
<DIV>Swing trading is trading between support and resistance on the =
long side,=20
and resistance and support on the short side. In its purest form, it =
involves=20
trading a single, direct price thrust from support/resistance to=20
resistance/support. In the strictest definitions, this "swing" in =
price will=20
generally occur over 3-5 days, so you have fairly abbreviated holding =
periods.=20
One generally does not hold through retracements. This is in contrast =
to=20
CANSLIM trading, which advocates trading a breakout through resistance =
(the=20
pivot point), holding through (benign) pullbacks, and selling at major =
tops.=20
CANSLIM is a strategy to capture large, major moves. Swing trading is =
designed=20
to capture smaller and quicker moves.</DIV>
<DIV> </DIV>
<DIV><EM>The Master Swing Trader, </EM>by Alan Farley, was my =
introduction to=20
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=20
offers an online course, available at hardrightedge.com, and writes a=20
subscription newsletter (which I use and is excellent- available =
through=20
Realmoney.com). However, these services are not cheap, and require a =
lot of=20
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>
<BLOCKQUOTE=20
style=3D"PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px =
solid">
<META content=3D"MSHTML 6.00.2726.2500" name=3DGENERATOR>
<STYLE></STYLE>
<DIV><FONT face=3D"Comic Sans MS"><STRONG><FONT=20
color=3D#0000ff>|</FONT></STRONG><FONT face=3D"Times New Roman">Can =
you say a=20
little more about "support and resistance" trading? Dave</FONT><FONT =
face=3D"Comic Sans MS" =
color=3D#0000ff><STRONG>|</STRONG></FONT></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"><STRONG><FONT=20
color=3D#0000ff></FONT></STRONG></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS">
<DIV><FONT size=3D2>Hi Dave, I </FONT><FONT size=3D2>believe it =
is key=20
to know what the trend is (sideways, up, down).</FONT></DIV>
<DIV>
<DIV><FONT size=3D2></FONT> </DIV>
<DIV><FONT color=3D#0000ff size=3D2><STRONG>If in Trading=20
Range:</STRONG></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"><FONT size=3D2> </FONT>
<DIV><U><FONT size=3D2>Long </FONT></U></DIV>
<DIV><FONT size=3D2>a) when going long and the stock is rangebound =
- - buy=20
at a prescribed amount above the support point. Place =
stop just=20
below support point.</FONT></DIV>
<DIV><FONT size=3D2>b) sell when stock price approaches=20
resistance.</FONT></DIV>
<DIV><FONT size=3D2></FONT> </DIV>
<DIV><U><FONT size=3D2>Short </FONT></U></DIV>
<DIV><FONT size=3D2>a) when shorting and the stock is range =
bound -=20
short at a prescribed amount below the resistance point. =
Place=20
stop just above resistance point.</FONT></DIV>
<DIV><FONT size=3D2>b) cover when stock price=20
approaches support.</FONT></DIV>
<DIV><FONT size=3D3><FONT size=3D2></FONT> </DIV>
<DIV><FONT color=3D#0000ff><STRONG>For Pullback trading in Trending=20
market:</STRONG></FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>
<DIV><FONT face=3D"Comic Sans MS"><U>Long </U></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">a) when going long and the stock =
is =20
pulling back in an uptrend - buy at a prescribed amount above =
the=20
support point. Place stop just below support =
point.</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">b) sell if price can not =
penetrate=20
previous high, otherwise let your profits run.</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS"><U>Short </U></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">a) when shorting and the stock=20
is rising (correcting) in a downtrend - short at a =
prescribed=20
amount below the resistance point. Place stop just above =
resistance point.</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">b) cover if price can not =
penetrate next=20
support level, otherwise let your profits =
run.</FONT></DIV></FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial color=3D#0000ff><STRONG><FONT face=3D"Comic =
Sans MS">For=20
Breakout strategies</FONT><FONT face=3DArial>: =
(</FONT></STRONG></FONT><FONT=20
face=3DArial>If support or resistance levels are broken or you =
anticipate they=20
will be broken):</FONT></DIV>
<DIV><FONT =
face=3DArial></FONT> </DIV></FONT></DIV></FONT></DIV>
<DIV><FONT size=3D2>
<DIV><FONT face=3D"Comic Sans MS"><U>Long</U></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">a) when going long and the stock =
is in an=20
uptrend - buy at a prescribed amount above the resistance point when =
price=20
penetrates resistance with stop just below resistance.</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">b) sell if price can not penetrate =
next=20
resistance level otherwise let your profits run.</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS"><U>Short</U></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">a) when shorting and the stock is =
in a=20
downtrend - short at a prescribed amount below the support point =
when price=20
penetrates support, with stop just above support.</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS">b) cover when price can not =
penetrate=20
next support level, otherwise let your profits =
run. </FONT></DIV>
<DIV><FONT size=3D3></FONT></FONT> </DIV></DIV></DIV></FONT>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>Now it's time to get =
a bag of=20
freshly popped popcorn and check out some movies:</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS" color=3D#000000 size=3D2><A=20
=
href=3D"http://www.pring.com/movies.htm">http://www.pring.com/movies.htm<=
/A></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS">or got to =
StockCharts.com</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2><A=20
=
href=3D"http://stockcharts.com/education/What/ChartAnalysis/supportResist=
ance.html">http://stockcharts.com/education/What/ChartAnalysis/supportRes=
istance.html</A></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS"><FONT size=3D2><FONT =
color=3D#800080>H</FONT>ere=20
is a list of my reference books:</FONT></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>1) Intro to Technical =
Analysis -=20
Martin Pring - $38.95 (comes with CD)</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>2) Breaking the Black Box =
- - Martin=20
Pring - $39.95 (comes with CD)</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>3) Come Into My Trading =
Room - Dr.=20
Alexander Elder - $35.00</FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>4) Methods of a Wall =
Street Master -=20
Victor Sperandeo - $14.95</FONT></DIV></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>5) Secrets for Profiting =
in Bull and=20
Bear Markets - Stan Weinstein - $19.95</FONT></DIV>
<DIV>
<DIV><FONT face=3D"Comic Sans MS"> </FONT><FONT=20
face=3D"Comic Sans MS"><FONT size=3D2>We had Dallas workshop on =
Stan=20
Weinstein's Method at the end of 2001</FONT></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"><FONT size=3D2> =
(gosh, it=20
doesn't seem like it was that long ago), I'll dig around my archives =
</FONT></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS"><FONT size=3D2> =
to locate=20
the workshop notes and forward them to you at a later=20
date.</FONT></FONT></DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2></FONT> </DIV>
<DIV><FONT face=3D"Comic Sans MS" size=3D2>Hope this =
helps,</FONT></DIV></DIV>
<DIV><FONT face=3D"Comic Sans MS" =
size=3D2>Gene</FONT></DIV></BLOCKQUOTE>
<P>
<HR SIZE=3D1>
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Yahoo! DSL</A> - Now only $29.95 per month!</BLOCKQUOTE></BODY></HTML>
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Next Article (by Date): Re: RE: [CANSLIM] Off topic Support - Resistance Bill Triffet
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