RE: [CANSLIM] Market Trend Charts

From: Tomas <tomas986@yahoo.com>
Subject: RE: [CANSLIM] Market Trend Charts
Date: Wed, 16 Jul 2003 10:56:31 -0700 (PDT)
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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=^IXIC&d=c&k=c3&a=vm,m26-12-9,ss,fs&p=m20,b&t=6m&l=on&z=l&q=b
> 
> 
> 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=^DJI&d=c&k=c3&p=&t=my&l=on&z=l&q=l
> 
> 
> 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 cliché......... "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? 
=== message truncated ===


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