[CANSLIM] Lessons Learned - 2 BO Failures Today

From: "Kelly Short" <kelly.short@fw.us.neoris.com>
Subject: [CANSLIM] Lessons Learned - 2 BO Failures Today
Date: Wed, 16 Jul 2003 11:01:54 -0500
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For the group:
=20
I got stopped out today on two BO purchases: HUM and BSTE. I'll share my =
"lessons learned" with the group so that hopefully someone will benefit =
from my loss:
=20
I had done my usual due diligence on both stocks and had given them a =
"green light with reservations". Turns out I should have given more =
credence to the "with reservations" part. Upon further examination, I =
see that high institutional ownership and strange action in the handle =
are common in both stocks as shown below:
=20
HUM:=20
Institutional Ownership =3D 68%=20
Chart action =3D High volume in handle
=20
BSTE:=20
Institutional Ownership =3D 99%
Chart action =3D Wedging action in handle
=20
High institutional ownership places an equity at the mercy of =
institutions who can sell of huge chunks at any given time and therefore =
put your purchase in a free fall. High volume in the handle does not =
prove the sellers are "drying up" to allow the stock to move upward. The =
wedging action in the handle is a sell signal - a bad signal just before =
an expected breakout.
=20
These are my observations from my post-mortem of these two purchases. If =
anyone else sees additional items, or disagrees with my reasoning above, =
I'd love to hear your comments.
=20
Kelly

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<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>For =
the=20
group:</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>I got =
stopped out=20
today on&nbsp;two BO purchases: HUM and BSTE. I'll share my "lessons =
learned"=20
with the group so that hopefully someone will benefit from my=20
loss:</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>I had =
done my usual=20
due diligence on both stocks and had given them a "green light with=20
reservations". Turns out I should have given more credence to the "with=20
reservations" part. Upon further examination, I see that high =
institutional=20
ownership and strange action in the handle are common in both stocks as =
shown=20
below:</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>HUM:=20
</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial =
size=3D2>Institutional=20
Ownership =3D 68% </FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>Chart =
action =3D High=20
volume in handle</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>BSTE:=20
</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial =
size=3D2>Institutional=20
Ownership =3D 99%</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>Chart =
action =3D=20
Wedging action in handle</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>High =
institutional=20
ownership places an equity at the mercy of institutions who can sell of =
huge=20
chunks at any given time and therefore put your purchase in a free fall. =
High=20
volume in the handle does not prove the sellers are "drying up" to allow =
the=20
stock to move upward. The wedging action in the handle is a sell signal =
- - a bad=20
signal just before an expected breakout.</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial size=3D2>These =
are my=20
observations from my post-mortem of these two purchases. If anyone else =
sees=20
additional items, or disagrees with my reasoning above, I'd love to hear =
your=20
comments.</FONT></SPAN></DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2></FONT></SPAN>&nbsp;</DIV>
<DIV><SPAN class=3D713304115-16072003><FONT face=3DArial=20
size=3D2>Kelly</FONT></SPAN></DIV></BODY></HTML>

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