RE: [CANSLIM] LF

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] LF
Date: Wed, 2 Jul 2003 22:21:58 -0500
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Top of Thread: [CANSLIM] LF Roger Tawa
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Hi Roger,

One of the disadvantages to ranking systems is that it forces some items to
rank "high" and others to rank "low." This can happen even if all items are
lousy or all items are strong. The slight differences between "good" and
"fairly good" will force one stock into 1st place and the other into 2nd. If
a lot of items are "good" then the "fairly good" item gets whacked down low
in the rankings. All that's just to say that it's important to look at ranks
in context.

Imagine a scenario where most stocks in the market are powering higher,
moving above their 200 day moving averages and nearing their 52 week highs
for the first time in 3 years. At the same time, stocks that are doing
"fairly well" by consolidating prior moves appear to be stalled while
everything else is moving. As a result, if all these stocks are in a
particular industry, the industry as a whole will fall hard in the rankings.
Now, that's not to say that what's happening in the Toys/Games industry
isn't a yellow flag, but it does take on a different context. Look at the
chart of MVL, for example, an notice how strongly it has moved since last
*November*. That move was well ahead of the rest of the market, so it
wouldn't be unusual for it to pause and consolidate the move. Look at LF and
notice that it has been forming a very solid consolidation during that same
time, it's first real base since going public. Look at other stocks in the
industry and see how they're doing. HAS, for example is quite healthy. MAT
is slogging sideways and could go either way. RCRC looks like it could be
rolling over for good. KDE is trying to come back from the dead, but looks
questionable. All in all, a mixed bag, and just food for thought.

A view of the industry in comparison to a typical "high rank" industry such
as Storage:
http://www.cwhcharts.com/katherine/LeisureToysGames062703.JPG

Katherine

>  -----Original Message-----
> From: 	owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com] 
> Sent:	Wednesday, July 02, 2003 7:49 PM
> To:	CANSLIM
> Subject:	[CANSLIM] LF
> 
> Hi all,
> 
> I am looking at LF.  It seems to be forming a nice CwH, left point in
> December 2002, and pivot in mid June 2003.  the handle action looks good,
> with nicely rising rsline during right side and handle.
> 
> My question has to do with the fundies though.  It seems to have pretty
> good fundies. It is a leader in its industry.  My kids have the leapfrog
> book, and I think it's a pretty amazing toy.  However, one exception to
> the fundies: the entire industry seems to be crashing.  Leaders like MVL
> seem to be running out of gas.  How much does this increase the risk of a
> failed b/o if it does b/o?  Thanks.
> 
> =================================================
> Roger Tawa
> http://tawacentral.net/
> [One thing about paradigms: shift happens.]
> [When you stop, you're done.]
> 

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