Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] Intro and Q on CWH Application
Date: Wed, 2 Jul 2003 12:22:42 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_0097_01C34094.A2B51620 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Hi Kevin, Welcome to the group. As I understand your question, you are asking whether *any* stock that is breaking out of a cup with handle pattern is a "good CANSLIM candidate" and therefore, buyable. First a bit of clarification: (1) A cup with handle pattern is an intermediate term basing pattern. A stock which corrects in this pattern and then moves above the pivot point on volume is showing technical strength, as it indicates that the stock has found enough buyers to move the stock not only past this "last point of resistance" (pivot point), but also, potentially, above the left side of the cup and the entire consolidation area. That's what you want when you buy a stock, as this "ideal buy point" represents a relatively low risk entry point, allowing you to sit out minor pullbacks without being whipsawed out of the position on a protective 8% stop loss while the last of the buyers and sellers duke it out. (2) Not all cups with handle are "sound" basing patterns. While the pattern itself may trace a cwh formation, you have to look inside the cup and the handle portions of the formation to determine if there are flaws and/or warning signs. See the investors.com site and the following for a summary of sound bases and warning signs: http://www.cwhcharts.com/katherine/CwHBaseCharacteristics.JPG http://www.cwhcharts.com/katherine/HandleCharacteristics.txt http://www.cwhcharts.com/katherine/QualitiesGoodBase.JPG http://www.cwhcharts.com/katherine/TechWarningSignsBasing.JPG (3) Not all stocks that form cup with handle bases are "CANSLIM quality" stocks. That is, while they may be showing current technical strength, they may not necessarily display the desired characteristics of a stock with the growth characteristics favored by CANSLIM investors. This fundamental/due diligence part of the CANSLIM methodology is important, because future growth in earnings is the means of creating value in the stock, and therefore gives reason for investors to purchase it and continue to bid the price up. A fundamental review of the company's past ability to generate growth in earnings, growth in sales, return on equity, etc. gives evidence that they have what it takes to do so in the future. In short, all stocks breaking out of cup with handle patterns on volume are not necessarily CANSLIM stocks. The job of the CANSLIM investor is to find stocks that are technically *and* fundamentally desirable, look for evidence that one stock vs another is the "best" choice, then buy at when risk is lowest. Katherine -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Krueger, Kevin Sent: Wednesday, July 02, 2003 10:45 AM To: canslim@lists.xmission.com Subject: [CANSLIM] Intro and Q on CWH Application Hi, My name is Kevin Krueger. I am a newbie to CANSLIM (5 mos.). I am curious and skeptical. Not a great time to start learning CANSLIM either since I am learning late in the rally and missing the pivot points. :( I jumped in a few times after the pp's with mixed success. BTW - you all seem very intelligent and helpful!! That is great! I hope to contribute as well. My question to the group is about using the CWH to identify and potentially move into a position. This sounds like a dumb question, but would you potentially take a position in any stock that forms the CWH and moves up on above average volume. Just curious how others perceive and use this formation. Thanks, Kevin - ------=_NextPart_000_0097_01C34094.A2B51620 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 6.00.2800.1170" name=3DGENERATOR></HEAD> <BODY> <DIV><SPAN class=3D203000517-02072003>Hi Kevin,</SPAN></DIV> <DIV><SPAN class=3D203000517-02072003></SPAN> </DIV> <DIV><SPAN class=3D203000517-02072003>Welcome to the group.</SPAN></DIV> <DIV><SPAN class=3D203000517-02072003></SPAN> </DIV> <DIV><SPAN class=3D203000517-02072003>As I understand your question, you = are=20 asking whether *any* stock that is breaking out of a cup with handle = pattern is=20 a "good CANSLIM candidate" and therefore, buyable. First a bit of=20 clarification:</SPAN></DIV> <DIV><SPAN class=3D203000517-02072003></SPAN> </DIV> <DIV><SPAN class=3D203000517-02072003>(1) A cup with handle pattern is = an=20 intermediate term basing pattern. A stock which corrects in this pattern = and=20 then moves above the pivot point on volume is showing technical = strength, as it=20 indicates that the stock has found enough buyers to move the stock not = only past=20 this "last point of resistance" (pivot point), but also, potentially, = above the=20 left side of the cup and the entire consolidation area. That's what you = want=20 when you buy a stock, as this "ideal buy point" represents a relatively = low risk=20 entry point, allowing you to sit out minor pullbacks without being = whipsawed out=20 of the position on a protective 8% stop loss while the last of the = buyers and=20 sellers duke it out.</SPAN></DIV> <DIV><SPAN class=3D203000517-02072003></SPAN> </DIV> <DIV><SPAN class=3D203000517-02072003>(2) Not all cups with handle are = "sound"=20 basing patterns. While the pattern itself may trace a cwh formation, you = have to=20 look inside the cup and the handle portions of the formation to = determine if=20 there are flaws and/or warning signs. See the investors.com site and the = following for a summary of sound bases and warning signs:</SPAN><SPAN=20 class=3D203000517-02072003></DIV> <DIV><A=20 href=3D"http://www.cwhcharts.com/katherine/CwHBaseCharacteristics.JPG">ht= tp://www.cwhcharts.com/katherine/CwHBaseCharacteristics.JPG</A></DIV> <DIV><A=20 href=3D"http://www.cwhcharts.com/katherine/HandleCharacteristics.txt">htt= p://www.cwhcharts.com/katherine/HandleCharacteristics.tx<SPAN=20 class=3D203000517-02072003>t</A></SPAN></DIV> <DIV><FONT size=3D2><SPAN class=3D203000517-02072003><FONT size=3D2><A=20 href=3D"http://www.cwhcharts.com/katherine/QualitiesGoodBase.JPG"><FONT=20 size=3D3>http://www.cwhcharts.com/katherine/QualitiesGoodBase.JPG</FONT><= /A></DIV> <DIV><A=20 href=3D"http://www.cwhcharts.com/katherine/TechWarningSignsBasing.JPG"><F= ONT=20 size=3D3>http://www.cwhcharts.com/katherine/TechWarningSignsBasing.JPG</F= ONT></A></DIV> <DIV> <P><SPAN class=3D203000517-02072003><FONT size=3D3>(3) Not all stocks = that form cup=20 with handle bases are "CANSLIM quality" stocks. That is, while they may = be=20 showing current technical strength, they may not necessarily display the = desired=20 characteristics of a stock with the growth characteristics favored by = CANSLIM=20 investors. This fundamental/due diligence part of the CANSLIM = methodology is=20 important, because future growth in earnings is the means of creating = value in=20 the stock, and therefore gives reason for investors to purchase it and = continue=20 to bid the price up. A fundamental review of the company's past ability = to=20 generate growth in earnings, growth in sales, return on equity, etc. = gives=20 evidence that they have what it takes to do so in the = future.</FONT></SPAN></P> <P><SPAN class=3D203000517-02072003><FONT size=3D3>In short, all stocks = breaking out=20 of cup with handle patterns on volume are not necessarily CANSLIM = stocks.=20 The job of the CANSLIM investor is to find stocks that are technically = *and*=20 fundamentally desirable, look for evidence that one stock vs another is = the=20 "best" choice, then buy at when risk is lowest.</FONT></SPAN></P> <P><SPAN class=3D203000517-02072003><FONT=20 size=3D3>Katherine</FONT></SPAN></P></FONT></SPAN></FONT></SPAN></DIV> <DIV><SPAN class=3D203000517-02072003></SPAN> </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>Krueger,=20 Kevin<BR><B>Sent:</B> Wednesday, July 02, 2003 10:45 AM<BR><B>To:</B>=20 canslim@lists.xmission.com<BR><B>Subject:</B> [CANSLIM] Intro and Q on = CWH=20 Application<BR><BR></FONT></DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2>Hi,</FONT></SPAN></DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2></FONT></SPAN> </DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff size=3D2>My=20 name is Kevin Krueger. I am a newbie to CANSLIM (5 mos.). I am curious = and=20 skeptical. Not a great time to start learning CANSLIM either since I = am=20 learning late in the rally and missing the pivot points. :( I = jumped in=20 a few times after the pp's with mixed success. </FONT></SPAN></DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2></FONT></SPAN> </DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff size=3D2>BTW=20 - you all seem very intelligent and helpful!! That is great! I = hope to=20 contribute as well.</FONT></SPAN></DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2></FONT></SPAN> </DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff size=3D2>My=20 question to the group is about using the CWH to identify and = potentially move=20 into a position. This sounds like a dumb question, but would you = potentially=20 take a position in any stock that forms the CWH and moves up on = above=20 average volume. Just curious how others perceive and use this=20 formation.</FONT></SPAN></DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2></FONT></SPAN> </DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2>Thanks,</FONT></SPAN></DIV> <DIV><SPAN class=3D827393216-02072003><FONT face=3DArial = color=3D#0000ff=20 size=3D2>Kevin</FONT></SPAN></DIV></BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_0097_01C34094.A2B51620-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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