Go to Jeff Salisbury LWGate Home Page.From: "Gene Ricci" <genr@swbell.net>
Subject: Re: [CANSLIM] Break outs or pullbacks
Date: Fri, 11 Jul 2003 13:28:04 -0500
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This is a multi-part message in MIME format. - ------=_NextPart_000_00E1_01C347B0.422C94E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Dave, yes, we need to adapt our trading to the ever-changing market = conditions.=20 My trade journal supports the numerous books and articles that teach = buying pullbacks is a lot less risky and more profitable than buying = breakouts. My data may well be flawed because I'm not a by-the-book = CANSLIM trader, I use my interpretation of CANSLIM ... something that's = taken me 2-1/2 years to become comfortable with.... and my holding = period is days-weeks versus weeks-months.=20 I prefer buying pullbacks because these stocks show me renewed strength = versus a possible fad.... and most of the 'leg work' is already done... = it's easier to determine why they broke out by reading the news.... = instead of doing all of the time consuming due diligence (if they = weren't already on my watchlist).... what better way to buy victims of = the IBD curse....... Now there will be those that will say that I'll miss out on the 'great = ones'. While I'm sure that might be true, nothing prevents me from = buying these great stocks anytime I want to, is there? I certainly can = use my buy strong stocks to get stronger criteria: - -> EPS+RS >/=3D 190; A/D =3D A. Of course if the Bull returns, sustained breakouts may once again = rule.... only time will tell. I use a proprietary MetaStock scan to look at my watchlist on a daily = basis.=20 I use the following criteria in HGSI to generate this watchlist: Price >/=3D 5.00 AvgVol >/=3D 200,000 RS & EPS >/=3D 84 If EPS >/=3D 97-99; RS>/=3D83 If EPS >/=3D 76-83; RS>/89 If EPS < 76; RS 94 Gene ----- Original Message -----=20 From: Davellil5@aol.com=20 To: canslim@lists.xmission.com=20 Sent: Friday, July 11, 2003 7:26 AM 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=20 "good-quality" bases (with good Company performance and/or prospects) = rise. The=20 other four drop below the 7% fail-safe rule. So, if one sells the 4 = at or around=20 7% loss and rides the other 6, he makes money. But those are = long-term odds=20 under a variety of market conditions. Suppose we're in a market where 8 out of 10 stocks suffer a correction = in=20 excess of 7%, instead of only 4. Then, if one keeps buying on = breakouts, he=20 loses. I haven't kept a statistical record, but believe, from much = observatioon,=20 that in the present rising (but still spooky) market, the number of = stocks that=20 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=20 wait for the correction and buy on signs of recovery therefrom (while = this=20 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=20 breakout. Whether it's that or just investors taking profit quickly, = why follow=20 O'Neil's general rule blindly instead of adapting it to investors' = behavior=20 under current market conditions? If one waits for initial recovery from post-breakout correction to buy = a good=20 CANSLIM stock, he may indeed miss some (the 2 out of 10) that keep = rising=20 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=20 breakout -- even in this market -- because investors in such stocks = haven't bought at=20 much lower prices on the right wall of a cup or "W", and therefore are = less=20 likely to sell off. Observation would reveal if that's a sensible exception to the "Don't = buy on=20 breakout rule" for now. Should we CANSLIM-ers be developing adaptations of WON rules like = this, when=20 market behavior so dictates? =20 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 - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - ------=_NextPart_000_00E1_01C347B0.422C94E0 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 6.00.2800.1106" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=3D#ffffff> <DIV><FONT face=3D"Comic Sans MS">Dave, yes, we need to adapt our = trading to the=20 ever-changing market conditions. </FONT></DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <DIV><FONT face=3D"Comic Sans MS">My trade journal supports the = numerous=20 books and articles that teach buying pullbacks is a lot less risky = and more=20 profitable than buying breakouts. My data may well be flawed because I'm = not a=20 by-the-book CANSLIM trader, I use my interpretation of CANSLIM ...=20 something that's taken me 2-1/2 years to become comfortable = with.... and my=20 holding period is days-weeks versus weeks-months. </FONT></DIV> <DIV> </DIV> <DIV><FONT face=3D"Comic Sans MS">I prefer buying pullbacks because = these=20 stocks show me renewed strength versus a possible fad.... = and most of=20 the 'leg work' is already done... it's easier to determine why they = broke out by=20 reading the news.... instead of doing all of the time consuming = due=20 diligence (if they weren't already on my watchlist).... what = better=20 way to buy victims of the IBD curse.......</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <DIV><FONT face=3D"Comic Sans MS">Now there will be those that will = say that=20 I'll miss out on the 'great ones'. While I'm sure that might be true, = nothing=20 prevents me from buying these great stocks anytime I want to, is there? = I=20 certainly can use my buy strong stocks to get=20 stronger criteria:</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">-> EPS+RS >/=3D 190; A/D = =3D=20 A.</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <DIV><FONT face=3D"Comic Sans MS">Of course if the Bull = returns, sustained=20 breakouts may once again rule.... only time will tell.</FONT></DIV> <DIV> </DIV> <DIV><FONT face=3D"Comic Sans MS">I use a proprietary MetaStock = scan to=20 look at my watchlist on a daily basis. </FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">I use the following = criteria in HGSI=20 to generate this watchlist:</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <DIV><FONT face=3D"Comic Sans MS">Price >/=3D 5.00</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">AvgVol >/=3D 200,000</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">RS & EPS >/=3D 84</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">If EPS >/=3D 97-99; = RS>/=3D83</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">If EPS >/=3D 76-83; = RS>/89</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS">If EPS < 76; RS 94</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <DIV><FONT face=3D"Comic Sans MS">Gene</FONT></DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT> </DIV> <BLOCKQUOTE=20 style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; = BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px"> <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV> <DIV=20 style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: = black"><B>From:</B>=20 <A title=3DDavellil5@aol.com=20 href=3D"mailto:Davellil5@aol.com">Davellil5@aol.com</A> </DIV> <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A = title=3Dcanslim@lists.xmission.com=20 = href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= </DIV> <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Friday, July 11, 2003 = 7:26 AM</DIV> <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Break = outs or=20 pullbacks</DIV> <DIV><FONT face=3D"Comic Sans MS"></FONT><FONT=20 face=3D"Comic Sans MS"></FONT><BR></DIV>Re: All the email about = "Breakouts=20 or Pullbacks".<BR><BR>According to O'Neil's research, 6 out of ten = stocks that=20 break out of <BR>"good-quality" bases (with good Company performance = and/or=20 prospects) rise. The <BR>other four drop below the 7% fail-safe=20 rule. So, if one sells the 4 at or around <BR>7% loss and rides = the=20 other 6, he makes money. But those are long-term odds <BR>under = a=20 variety of market conditions.<BR><BR>Suppose we're in a market where 8 = out of=20 10 stocks suffer a correction in <BR>excess of 7%, instead of only = 4. =20 Then, if one keeps buying on breakouts, he <BR>loses.<BR><BR>I haven't = kept a=20 statistical record, but believe, from much observatioon, <BR>that in = the=20 present rising (but still spooky) market, the number of stocks that=20 <BR>correct after breakout is closer to 8 out of 10 than 4 out of=20 10.<BR><BR>If that's right, then doesn't it make sense not to buy on a = breakout, but <BR>wait for the correction and buy on signs of recovery = therefrom (while this <BR>behavior persists).<BR><BR>In these emails, = some=20 have called such behavior the "IBD curse", i.e., <BR>smart-alecs = taking=20 advantage of CANSLIM-ers, buying into handles and selling on=20 <BR>breakout. Whether it's that or just investors taking profit = quickly,=20 why follow <BR>O'Neil's general rule blindly instead of adapting it to = investors' behavior <BR>under current market conditions?<BR><BR>If one = waits=20 for initial recovery from post-breakout correction to buy a good = <BR>CANSLIM=20 stock, he may indeed miss some (the 2 out of 10) that keep rising = <BR>after=20 breakout even in these times. So what -- other fish in the=20 sea!<BR><BR>Or maybe, after a flat base or very shallow saucer, one = should buy=20 at <BR>breakout -- even in this market -- because investors in such = stocks=20 haven't bought at <BR>much lower prices on the right wall of a cup or = "W", and=20 therefore are less <BR>likely to sell off.<BR>Observation would reveal = if=20 that's a sensible exception to the "Don't buy on <BR>breakout rule" = for=20 now.<BR><BR>Should we CANSLIM-ers be developing adaptations of WON = rules like=20 this, when <BR>market behavior so dictates? <BR><BR>What have = y'all=20 observed along these lines? What do you think?<BR><BR>Regards,=20 Dave<BR><BR><BR><BR>Any thoughts from others on this line of=20 thinking.<BR><BR><BR><BR><BR><BR>Just because we have ageberal rule, = doesn't=20 mean that<BR><BR>-<BR>-To subscribe/unsubscribe, email "<A=20 = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In= the=20 email body, write "subscribe canslim" or<BR>-"unsubscribe = canslim". Do=20 not use quotes in your email.<BR></BLOCKQUOTE></BODY></HTML> - ------=_NextPart_000_00E1_01C347B0.422C94E0-- - - - -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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