Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] When to Sell
Date: Sat, 21 Jun 2003 17:02:43 -0500
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Hi Harold,
Looking at a chart of DT, I assume that you purchased it on 6/18/03, when it
staged a breakout on volume above the 15.22 pivot set 6/2/3. First, it's not
uncommon for a stock to "rest" after a breakout, especially in a weak market.
The last few market days haven't been particularly strong, but the current rally
is still intact.
That said, here are things I would consider:
(1) Was the base as sound as possible on purchase? The stronger the base, the
more tolerance you can afford to give something. Check things like symmetry in
the base, action of the RSLine, accumulation patterns on the right side of the
base, etc.
(2) Was the breakout day strong, i.e. did it close above the pivot on >=150%
ADV? If the breakout day is strong, then you have entered the stock at the
"optimal buy point" if purchased within 5% of the pivot.
(3) Did the breakout show additional strength after the breakout day by either
(a) showing follow-thru action in the days following (note: weak markets
will tend to hold back the follow-thru, so this should always be considered in
context)
(b) showing strength as confirmed in the volume on the breakout week vs.
prior week.
(4) What was your initial stop loss set *before* you purchased the stock? While
WON suggests 8%, each investor will set their own tolerance. For me, strong
breakout + weak market = midrange tolerance. Has the stock violated this mental
or hard stop? The reason I mention the stop set *before* purchase is that it
guarantees that the investor has considered all the risk factors and the
possible scenarios and has set their go/no go price as a result. That's very
important in preventing waffling and/or overthinking a position.
(5) How are the rest of the industry brethren and/or direct competitors
behaving? How are the leaders in the industry behaving? I'm talking about
leaders in a technical sense, because industry action is a summary of behavior
of the stocks in the group and it doesn't really matter if they are CANSLIM
stocks or not. A "strong" stock is a strong stock, regardless of the fundamental
characteristics. In other words, how is the market treating the leaders? Are
they selling them off or buying them?
(6) Is this a bottoming base or a base after a long series of rises? Rises off
of bottoming bases sometimes take a while to get going, because they are still
climbing through several years of disappointed investors.
Katherine
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Harold Josephson
Sent: Saturday, June 21, 2003 3:36 PM
To: canslim@lists.xmission.com
Subject: [CANSLIM] When to Sell
Hi Katherine,
Your advice, please. Prompted by my recent experience with DT, what criteria
would you apply to the sale of a stock bought in anticipation of a failed
breakout if the stock continues to languish pennies below your cost?
Thanks
Harold
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<DIV><SPAN class=3D859174621-21062003>Hi Harold,</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>Looking at a chart of DT, I assume =
that you=20
purchased it on 6/18/03, when it staged a breakout on volume above the =
15.22=20
pivot set 6/2/3. First, it's not uncommon for a stock to "rest" after a=20
breakout, especially in a weak market. The last few market days haven't =
been=20
particularly strong, but the current rally is still intact. =
</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>That said, here are things I would =
consider:</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>(1) Was the base as sound as =
possible on=20
purchase? The stronger the base, the more tolerance you can afford to =
give=20
something. Check things like symmetry in the base, action of the RSLine, =
accumulation patterns on the right side of the base, etc.</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>(2) Was the breakout day strong, =
i.e. did it=20
close above the pivot on >=3D150% ADV? If the breakout day is strong, =
then you=20
have entered the stock at the "optimal buy point" if purchased within 5% =
of the=20
pivot.</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>(3) Did the breakout show =
additional=20
strength after the breakout day by either </SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003> (a) =
showing=20
follow-thru action in the days following (note: weak markets will tend =
to hold=20
back the follow-thru, so this should always be considered in=20
context)</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003> (b) =
showing=20
strength as confirmed in the volume on the breakout week vs. prior=20
week.</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>(4) What was your initial stop =
loss set=20
*before* you purchased the stock? While WON suggests 8%, each investor =
will set=20
their own tolerance. For me, strong breakout + weak market =3D midrange =
tolerance.=20
Has the stock violated this mental or hard stop? The reason I mention =
the stop=20
set *before* purchase is that it guarantees that the investor has =
considered all=20
the risk factors and the possible scenarios and has set their go/no go =
price as=20
a result. That's very important in preventing waffling and/or =
overthinking a=20
position.</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>(5) How are the rest of the =
industry=20
brethren and/or direct competitors behaving? How are the leaders in the =
industry=20
behaving? I'm talking about leaders in a technical sense, because =
industry=20
action is a summary of behavior of the stocks in the group and it =
doesn't really=20
matter if they are CANSLIM stocks or not. A "strong" stock is a =
strong=20
stock, regardless of the fundamental characteristics. In other =
words, how=20
is the market treating the leaders? Are they selling them off or buying=20
them?</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>(6) Is this a bottoming base or a =
base after=20
a long series of rises? Rises off of bottoming bases sometimes take a =
while to=20
get going, because they are still climbing through several years of =
disappointed=20
investors.</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV><SPAN class=3D859174621-21062003>Katherine</SPAN></DIV>
<DIV><SPAN class=3D859174621-21062003></SPAN> </DIV>
<DIV> </DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<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>Harold=20
Josephson<BR><B>Sent:</B> Saturday, June 21, 2003 3:36 =
PM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> [CANSLIM] When to=20
Sell<BR><BR></FONT></DIV>
<DIV class=3DSection1>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial Black'">Hi=20
Katherine,</SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial =
Black'"></SPAN></FONT> </P>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial Black'">Your advice, =
please. =20
Prompted by my recent experience with DT, what criteria would you =
apply to the=20
</SPAN></FONT><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial =
Black'">sa</SPAN></FONT><FONT=20
face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial Black'">le of a stock =
bought in=20
anticipation of a failed breakout if the stock continues to languish =
pennies=20
below your cost?</SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial =
Black'"></SPAN></FONT> </P>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial =
Black'">Thanks</SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial =
Black'"></SPAN></FONT> </P>
<P class=3DMsoNormal><FONT face=3D"Arial Black" size=3D2><SPAN=20
style=3D"FONT-SIZE: 11pt; FONT-FAMILY: 'Arial =
Black'">Harold</SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3D"Times New Roman" size=3D3><SPAN=20
style=3D"FONT-SIZE: =
12pt"></SPAN></FONT> </P></DIV></BLOCKQUOTE></BODY></HTML>
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