RE: [CANSLIM] Sidewall Breakouts

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] Sidewall Breakouts
Date: Sun, 29 Jun 2003 09:19:19 -0500

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Hi Dave,

I understood what you were asking, but what struck me when looking through a
lot of charts was that, though the handles (pullbacks) were often extremely
short (5 days or so), most of the charts I saw did have handles. Part of the
difference in what you and I are seeing is probably that I'm not looking all
the way back to the multi-year high that marks the beginning of the overall
correction, but instead am looking at "cups in a bigger cup," something that
WON does talk about. In other words, a stock might have started a correction
in March 2000, but after falling for quite a while, it stopped falling, rose
30% or more, then fell back into a fresh correction. Sometimes this forms a
double bottom, sometimes a fresh cup with handle. That would make the
difference in how we viewed a chart as to whether it had a handle at the
normal midpoint, or whether it looked like a "sidewall."

Another way one can catch these is by looking for a stage 1 breakout a la
Stan Weinstein. There, he's looking for the bottom of the base (stage 1),
sideways action for a while, then a surge in volume just ahead of the strong
upward breakout that begins the move up (sidewall in your case, stage 2 in
his case). This often happens at a convergence point where the stock is
tracking just below a sideways moving 30 wk MA, then breaks out above it.

Katherine

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Davellil5@aol.com
Sent: Sunday, June 29, 2003 6:35 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Sidewall Breakouts


Katherine, thanks for your response.

I wasn't talking about cups with low handles.  A report on that came out a
couple of years ago, pointing out opportunities for gain when handles form
even
lower than the "2/3-up-from-bottom" criterion of the CANSLIM system.

I was referring to breakouts on high volume, sometimes up-gaps that occur
along the right walls of cups -- without benefit of handles -- and sometimes
do
it repetitively while price climbs up the wall.  Admittedly, this is not a
pattern studied by WON.  But my (unstatistical) observation indicates that
this
pattern offers an additional opportunity for gain, mainly perhaps in a
recovering market as we now have.

Purpose of calling this to CANSLIM-ers attention was to find out if any
others have observed the same behavior and have thoughts on the
possibilities.

Regards, Dave

B

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