Re: [CANSLIM] Lessons Learned - 2 BO Failures Today

From: Tomas <tomas986@yahoo.com>
Subject: Re: [CANSLIM] Lessons Learned - 2 BO Failures Today
Date: Wed, 16 Jul 2003 10:38:15 -0700 (PDT)

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Kelly,

I also bought BSTE a few days ago.  However, I have to
disagree you on some of your analysis.  For instance,
you did not buy BSTE at BO (closing price $.10 above
PP and %150 volume).  On 7/14, BSTE tried to break out
but failed on both volume and price.  Plus, it was a
four days handle.  With such a short handle and not a
BO, your (and mine) buy of BSTE was not the minimum
risk entry point as defined by WON.  I am not sure
institutional ownership have anything to do with the
failed attempt, but I know that then entry point on
7/14 was risky.

Regards,
tomas

- --- Kelly Short <kelly.short@fw.us.neoris.com> wrote:
> For the group:
>  
> 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:
>  
> 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:
>  
> HUM: 
> Institutional Ownership = 68% 
> Chart action = High volume in handle
>  
> BSTE: 
> Institutional Ownership = 99%
> Chart action = Wedging action in handle
>  
> 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.
>  
> 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.
>  
> Kelly
> 


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