Re: [CANSLIM] Market Trend Charts

From: "Jonathan Lobatto" <jlobatto@nyc.rr.com>
Subject: Re: [CANSLIM] Market Trend Charts
Date: Wed, 16 Jul 2003 14:02:02 -0400
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Tomas,

I believe the 2% rule applies to your portfolio risk if you sell the
individual stock at an 8% loss. If the stock was 25% of your portfolio an=
d
you sold at an 8% loss, the portfolio would have suffered a 2% loss.


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- ----- Original Message -----
From: "Tomas" <tomas986@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, July 16, 2003 1:56 PM
Subject: RE: [CANSLIM] Market Trend Charts


> One comment on the 2% comment.  The whole idea using
> CS is to win big when you are right, as stated by WON.
>  So, with only an investment of 2%, how do you win BIG
> even if the one stock went up 100%?  Of course, you
> can pyramid up.  But if you do that then that
> stock/investment will be more then 2% of your
> portfolio.  I understand that capital preservation is
> very important, but I 2% is a bit much or too little.
>
> You have to put a lot of eggs in one basket to win
> big, right?  That 2% rule sounds like diworsification.
>
> just my $.02
> tomas
>
> --- Pritish Shah <pshah@lason.com> wrote:
> > Dave,
> >
> > You asked a good question on how to make money in
> > the range bound market. There in lies the answer
> > that I hope to use. If the stock market goes to the
> > bottom of the range, buy. If it goes to the top,
> > lock in your profits with a trailing stop so if a
> > stock goes higher, we would still be in.
> >
> > I am hoping to purchase breakouts in the top 40 or
> > 50 industries only and want to do legwork before
> > hand so I only have to make a "yes" or a "no"
> > decision when an alert occurs.
> >
> > I am still learning and the idea of "8% loss in a
> > stock should not be greater than 2% of total
> > portfolio" is a great. So at minimum, I should not
> > invest more than 1/12th of my total portfolio in any
> > individual stock.
> >
> > Pritish
> >
> >
> > >>> canslimdave2003@yahoo.com 07/15/03 23:11 PM >>>
> > Pritish --
> >
> > I agree with you exactly.  IMHO it will take 14
> > years before the markets really break to a new high.
> >  Well, 11 counting the three we've just been
> > through.  In the 1968-82 period, the 1000 point
> > barrier was called "The Graveyard in the Sky"
> > because of all the rallies that failed at that
> > point.
> >
> > I'm very interested in learning how to apply CANSLIM
> > in such a range bound market.  But I also want to
> > trade with the idea in mind that I may well be wrong
> > about my ideas on what the market will do.
> > Therefore, I'm looking for buy/sell rules that work
> > despite my opinions.  For example, SELL if a stock
> > breaks its 50 day moving average.
> >
> > On thing I have come up with is the idea of getting
> > into the market one profitable trade at a time.
> > Last year, I became convinced that a bull market was
> > beginning and bought 6 different stocks on
> > breakouts, convinced that surely 1-2 would remain
> > above their 7-8% stop loss and therefore bail me
> > out.  Instead, the market turned sharply against me
> > and I was quickly down 8+ % (because I bought some
> > on margin).
> >
> > This year, when the market started looking good to
> > me, I only put on one trade.  Once that proved
> > profitable, I raised my stop loss level to break
> > even and put on a second trade.  So, I've scaled my
> > way into the market.  I am hoping that approach will
> > keep me from taking too big a hit if I am wrong
> > about market direction in the future.
> >
> > Also, I am being vigilant about limiting my
> > purchases so that if my 7% stop is hit, the loss is
> > less than 1.5% of my total portfolio.  Over and over
> > in the Market Wizards books professional traders
> > talk about keeping the risk on any individual trade
> > to less than 2%.  I don't think WON stresses this
> > rule enough.
> >
> > Thanks for your post!
> >
> > Dave
> >
> > Pritish Shah <pshah@lason.com> wrote:
> > Hi Kelly,
> >
> > I have been studying where I am making mistakes. A
> > lot of my failures were bought when Nasdaq was
> > touching the upper bollinger bands. Checkout the
> > following chart. You will notice that Nasdaq is
> > currently toying with the upper bollinger bands and
> > has been bouncing from the 20dma. So the best time
> > to buy would be when Nasdaq again touches 20dma and
> > there are a flurry of breakouts.
> >
> >
>
http://finance.yahoo.com/q?s=3D^IXIC&d=3Dc&k=3Dc3&a=3Dvm,m26-12-9,ss,fs&p=
=3Dm20,b&t=3D6m
&l=3Don&z=3Dl&q=3Db
> >
> >
> > A lot of people have shown me charts that basically
> > predict that the market will churn for the next few
> > years and I believe that would be the trend. This is
> > where CANSLIM can do much better than any other
> > method of investing.
> >
> > Take a look at the following chart. You will notice
> > that from 1937 to 1950 (13 yrs), the market was
> > pretty much flat. From 1965 to 1983 also the market
> > was flat. There was also a flat period before 1930
> > but that is not shown on the graph.
> >
> >
> http://finance.yahoo.com/q?s=3D^DJI&d=3Dc&k=3Dc3&p=3D&t=3Dmy&l=3Don&z=3D=
l&q=3Dl
> >
> >
> > Basically after every major rise, the market pauses
> > for several years and then tries again. This has
> > happened 3 times on DJI. Nasdaq is currently
> > behaving exactly like DJI from 1930 to 1933. If it
> > continues to behave like DJI, for next year and
> > half, we are not going to go anywhere and then there
> > will be a major move upwards.
> >
> > I am open for discussions but not flames please.
> >
> > Thanks,
> > Pritish
> >
> >
> > >>> kelly.short@fw.us.neoris.com 07/15/03 02:40PM
> > >>>
> > Gene,
> >
> > What was in your patriotic Wheeties this morning?!
> > Thanks for the explanation though. Have you thought
> > about a career in politics because that answer was
> > perfectly on the middle ground.
> >
> > Okay, okay. I'll ride the trend. I'm just bitter:
> > three of my recent BO purchases have gotten SARS and
> > are in quarantine. I fear I may lose them to the
> > "disease", or the hurricane, or whatever ailment is
> > keeping them from soaring.
> >
> > That said- I did enjoy reading the information you
> > passed along- thanks!
> >
> > Kelly
> >
> > -----Original Message-----
> > From: Gene Ricci [ mailto:genr@swbell.net]
> > Sent: Tuesday, July 15, 2003 1:06 PM
> > To: canslim@lists.xmission.com
> > Subject: Re: [CANSLIM] Market Trend Charts
> >
> >
> > Kelly, forgive the clich=E9......... "The trend is
> > your friend".
> >
> > Now here's another profound statement "the trend is
> > up until proven otherwise".
> >
> > Many indicators are showing overbought, but they can
> > stay overbought for a long long time. Take last
> > year, they stayed oversold for a long long time.
> > Most likely there is a bit of consolidation going on
> > .... but who knows which way the break will occur.
> > One just has to decide at what point the trend has
> > changed from up to down (or sideways). And at what
> > point another breakout to the upside has occurred.
> > Each person must decide this on his/her own.
> >
> > We were told that there would not be a post war
> > rally - is that true?
> > We were told the new dividend law would not affect
> > stock prices - is that true?
> >
> > Although I don't see signs of a renewed bear.... I
> > hear them in the background.... moaning and groaning
> > as they try to save face after losing their
> > butts.... shorting this year.
> >
> > I feel that the market has to continue its upward
> > trend because the public wants it to (to say nothing
> > about the administration). When I attend meetings,
> > read user group email and talk to friends I'm
> > reminded of the Statue of Liberty....
> >
> > "give me your tired, your poor, your huddled masses
> > yearning to breathe free"
> >
> > translated to:
> >
> > We're tired (poor management, manipulation, lies,
> > cooked books), we're poor, your investors are
> > yearning to once again believe!!!! ... kind of corny
> > but what the heck!
> >
> > Gene
> >
> >
> >
> >
> > ----- Original Message -----
> > From: Kelly Short <
> > mailto:kelly.short@fw.us.neoris.com >
> > To: canslim@lists.xmission.com
> > Sent: Tuesday, July 15, 2003 10:53 AM
> > Subject: RE: [CANSLIM] Market Trend Charts
> >
> >
> > Gene,
> >
> > Do you have any opinions to offer regarding this
> > information?
> =3D=3D=3D message truncated =3D=3D=3D
>
>
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