RE: [CANSLIM] Opportunity Cost

From: "Harold Josephson" <hj@hjosephson.com>
Subject: RE: [CANSLIM] Opportunity Cost
Date: Sun, 29 Jun 2003 00:58:09 -0700
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Hi Katherine,

The Trading Market techniques appear to be available only subscribers to
their various commentators' web sites.  Perhaps there are other links =
that
I'm missing.


Harold

Harold Josephson
Tel: 323.850.1333
Fax: 323.512.8968=20
hj@hjosephson.com

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm
Sent: Friday, June 27, 2003 6:34 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Opportunity Cost

Hi Harold,

RE: "How long is an intermediate term base?"

The distinction between short, intermediate, and long term time periods
themselves is sometimes fuzzy. The most common descriptions are that =
short
term is a few days to a few weeks. Intermediate term is a few weeks to a =
few
months. Long term is longer than that. When it comes to intermediate =
term
bases, this time period is very clear, however, as there are very =
specific
guidelines for the typical bases we see. The shortest is the flat base =
at 5
weeks. Other typical bases are generally 6-7 weeks. Here are some notes =
that
I've put together on CANSLIM-intermediate term bases (still handwritten, =
as
my technical writer got married and moved to Idaho about 5 years ago):

Some notes on types of intermediate term bases (Note, these are better
viewed by downloading to your computer and then using an image viewer, =
as
they are blown up beyond full screen size):
http://www.cwhcharts.com/katherine/TypesOfBases.JPG
http://www.cwhcharts.com/katherine/MiscBasesCharacteristics.JPG
http://www.cwhcharts.com/katherine/CwHBaseCharacteristics.JPG
http://www.cwhcharts.com/katherine/HandleCharacteristics.txt
http://www.cwhcharts.com/katherine/High+StdHandleR1.JPG

Notes on the basing process and technical signs of a healthy base:
http://www.cwhcharts.com/katherine/BasingProcess.JPG
http://www.cwhcharts.com/katherine/QualitiesGoodBase.JPG
http://www.cwhcharts.com/katherine/TechWarningSignsBasing.JPG
http://www.cwhcharts.com/katherine/HealthyRisingStock.JPG

re:"May I ask what data service you use to alert you to short candidate
price
action, or in general?  Real time?" and
"Finally, anything you can say about short candidate mining techniques =
that
won't give away the store?"

I use spreadsheet calculations that I've set up based on price/volume =
action
to find candidates, then use the alerts system available in Scwhab's
StreetSmartPro to monitor action. Generally, all the same technical =
warning
signs of failing basing action or failing action after a long or sudden =
rise
are prime candidates for shorting. That means you can use all the same
technical sensibilities you have developed on the long side to find =
short
bait. As shorting is off topic for the CANSLIM list, I'll leave the
discussion there. TradingMarkets.com is a terrific resource for short =
term
techniques, both long and short.

re: "Can you point me to an example of a pullback to logical support and =
at
what
point you might commit?"

There are two prime candidates for pullback entries:
(1) A stock which has recently broken out and has pulled back on light
volume to within 5% of its original pivot. This can happen because the =
stock
itself is pausing to gather steam for the next move up and/or because =
the
market itself is pausing to gather steam. Those are generally good =
things to
see after big runs up, because it shows sellers aren't that anxious to =
sell
into the rise.

(2) A stock which has been on a good run and is pulling back on light =
volume
to a logical area of support such as an upward trend line, well defined =
by a
channel (Tom used to call this a LLUR), or a stock that pulls to the
intermediate term 50 day moving average on light trade. Generally, if =
its
within about 5% of that MA, then it's prime territory.

With pullback techniques, you have to be *very* good at reading the
technical action of the stock and the market because you have to be able =
to
distinguish between "benign" and "malignant" <g> pullbacks when you take =
on
this type of risk.

Katherine


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Harold Josephson
Sent: Friday, June 27, 2003 1:33 AM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Opportunity Cost


Hi Katherine,

As always, thanks for the informative reply.

How long is an intermediate term base?

May I ask what data service you use to alert you to short candidate =
price
action, or in general?  Real time?

Can you point me to an example of a pullback to logical support and at =
what
point you might commit?

Finally, anything you can say about short candidate mining techniques =
that
won't give away the store?

Thanks

Harold


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm
Sent: Thursday, June 26, 2003 4:19 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Opportunity Cost

Hi Harold,

Yes, as I am a purist CANSLIM investor when making long trades, I look =
for
intermediate term bases and proof that the stock is breaking above the
resistance at the pivot set for each particular style of base. I also =
buy on
pullbacks when it's appropriate, as a pullback to logical support when
technicals are favorable is a valid entry point as well. Over the years,
this has proved to be an extraordinarily profitable methdology for me, =
so I
know from experience that it works.

I discontinued using Vectorvest for long positions last Fall after =
joining
Mike Gibbons at cwhcharts.com. Though, until fairly recently, I was =
still
using it for finding positions for shorting (not a CANSLIM methodology). =
As
I've developed a methodology using paricular price action that is more =
than
sufficient for  finding candidates, I no longer need it for that, =
either.

I used to use VV for mining for stocks, after beating it into submission =
for
use as a CANSLIM mining tool. There, I'd look for particular technical
action to determine whether the stock was showing some recent oomph to =
the
upside. VV has a proprietary indicator called RT, relative timing, which
acts as a summary proxy for technical action. If you can imagine a
rubberband attached to a 13 week EMA, RT is an indicator that tells =
whether
the price is above or below the EMA and how far it is stretched from =
that
line. Values are then set from 0 =3D high velocity (stretch) to the =
downside,
to 1 =3D neutral, to 2 =3D high velocity (stretch) to the upside. =
Unfortunately,
VV doesn't contain actual fundamental data (they use proprietary proxies
again), so it required that I use DGO for both preponderance of evidence
fundamental evaluation and, at the same time for determining an entry =
point.
The process that I used for determining fundamental health is now =
reflected
in our site's CEF (Canslim fundamental evaluation score).

Our methodologies at cwhcharts.com are significantly superior, as we =
don't
use proxies for basing action, but instead use computer algorithms to =
search
for actual basing patterns, so you can probably see why VV is no longer =
a
necessary tool for me.

Katherine


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Harold Josephson
Sent: Thursday, June 26, 2003 4:34 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Opportunity Cost


Hi Katherine,

Do you buy only breaking out or likely to breakout stocks?

Some time back, you mentioned VectorVest.  How do you use it?

Thanks

Harold

Harold Josephson
Tel: 323.850.1333
Fax: 323.512.8968
hj@hjosephson.com

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm
Sent: Thursday, June 26, 2003 3:09 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Opportunity Cost

Hi Scott,

This used to be a problem for me, but several years ago, I buckled down =
and
set a very clear set of guidelines for mining, buying and selling =
stocks.
When I sell, I do a post analysis to determine what I did right and what =
I
did wrong. That helps me continuously improve both my process and my
execution and removes the  emotional elements from the trade itself. At =
that
point, the market knows and remembers nothing of what I did on the =
previous
trade, so I figure both the pocketed money and the mental effort is best
spent on the next trade.

Katherine

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Logan, Scott L.
Sent: Thursday, June 26, 2003 3:50 PM
To: 'canslim@lists.xmission.com'
Subject: [CANSLIM] Opportunity Cost


I just make a great gain on a stock after being out of the market for a
while. My problem is that the thoughts of "what if" keep popping up in =
my
mind. Does any one else have a problem with letting go after selling a
stock?

Emotions need to be excluded from the process...

Thanks,
Scott

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