Re: [CANSLIM] Break outs or pullbacks

From: Tomas <tomas986@yahoo.com>
Subject: Re: [CANSLIM] Break outs or pullbacks
Date: Fri, 11 Jul 2003 09:22:24 -0700 (PDT)
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Dave,

I understand your logical reasoning.  However, the
concern about that approach is that you may be missing
out on the "best" stock.  The best stock usually does
not pull back to give you a second entry point.  At
least that is what I see from my limited experience. 
Also, like you said, it heavily depends on the M (if
it is strong or weak bull).
 
Thus, your proposed approach is aim at the good stocks
but not great stocks.  Nothing with the approach if
you adjust your buy/sell rules accordingly.

just my $.02
tomas


- --- Mike Baudino <mike.baudino@zurichna.com> wrote:
> 
> 
> 
> 
> Waiting for the breakout to be tested, recover from
> the test, and rebreak
> higher is what investmenthouse.com recommends and it
> seems to do well for
> them.  Granted they look for other plays like tests
> against the MVA, flat
> bases, flying plateau patterns, etc.  But their take
> is that a break from a
> good cup with handle will very likely retest the MVA
> or the pivot point
> again before moving higher, especially if it breaks
> well initially.
> 
> Of course, some never retest so they miss the entry
> point altogether...
> 
> 
> Davellil5@aol.com@lists.xmission.com on 07/11/2003
> 07:26:29 AM
> 
> Please respond to canslim@lists.xmission.com
> 
> Sent by:    owner-canslim@lists.xmission.com
> 
> 
> To:    canslim@lists.xmission.com
> cc:
> 
> Subject:    Re: [CANSLIM] Break outs or pullbacks
> 
> 
> Re:  All the email about "Breakouts or Pullbacks".
> 
> According to O'Neil's research, 6 out of ten stocks
> that break out of
> "good-quality" bases (with good Company performance
> and/or prospects) rise.
> The
> other four drop below the 7% fail-safe rule.  So, if
> one sells the 4 at or
> around
> 7% loss and rides the other 6, he makes money.  But
> those are long-term
> odds
> under a variety of market conditions.
> 
> Suppose we're in a market where 8 out of 10 stocks
> suffer a correction in
> excess of 7%, instead of only 4.  Then, if one keeps
> buying on breakouts,
> he
> loses.
> 
> I haven't kept a statistical record, but believe,
> from much observatioon,
> that in the present rising (but still spooky)
> market, the number of stocks
> that
> correct after breakout is closer to 8 out of 10 than
> 4 out of 10.
> 
> If that's right, then doesn't it make sense not to
> buy on a breakout, but
> wait for the correction and buy on signs of recovery
> therefrom (while this
> behavior persists).
> 
> In these emails, some have called such behavior the
> "IBD curse", i.e.,
> smart-alecs taking advantage of CANSLIM-ers, buying
> into handles and
> selling on
> breakout.  Whether it's that or just investors
> taking profit quickly, why
> follow
> O'Neil's general rule blindly instead of adapting it
> to investors' behavior
> under current market conditions?
> 
> If one waits for initial recovery from post-breakout
> correction to buy a
> good
> CANSLIM stock, he may indeed miss some (the 2 out of
> 10) that keep rising
> after breakout even in these times.  So what --
> other fish in the sea!
> 
> Or maybe, after a flat base or very shallow saucer,
> one should buy at
> breakout -- even in this market -- because investors
> in such stocks haven't
> bought at
> much lower prices on the right wall of a cup or "W",
> and therefore are less
> likely to sell off.
> Observation would reveal if that's a sensible
> exception to the "Don't buy
> on
> breakout rule" for now.
> 
> Should we CANSLIM-ers be developing adaptations of
> WON rules like this,
> when
> market behavior so dictates?
> 
> What have y'all observed along these lines?  What do
> you think?
> 
> Regards, Dave
> 
> 
> 
> Any thoughts from others on this line of thinking.
> 
> 
> 
> 
> 
> Just because we have ageberal rule, doesn't mean
> that
> 
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