RE: [CANSLIM] Low Volume Pullback Below Pivot

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] Low Volume Pullback Below Pivot
Date: Fri, 18 Jul 2003 19:48:47 -0500
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Hi Marc,

I realized just a moment ago that in my haste to answer your email, I didn't
address the second part of your question. In general, if there is a new
intraday high set while the stock is attempting to form a handle, this sets
a new pivot point.

But, just to make this slightly more complicated, there are times where
stocks breakout above an existing pivot on low volume. By definition, a
breakout is simply a close above the existing pivot. However, this is not an
"strong breakout" or an "optimal buy point" when not accompanied by volume
140-150% of average. What can and does happen on occasion, however, will be
that the stock will rush past the pivot on volume that is projected to be
very high while trading intraday, but by day's end bolume may actually be
too low. In the next day or two, there will then be the rush of volume that
one would have expected on the breakout day. I call this a "slow breakout"
and these can definitely work, as I've made some nice trades in situations
like this.

The pivot in May is set at 9.23 as you suggest. On 5/27 and 5/28, as you
suggest, this low volume move above the pivot essentially invalidates the
pivot. One could certainly argue, however, that the action on 5/30 would
then qualify as a "slow breakout" against the original 9.23 pivot, but I
think that might be stretching it a bit.


Katherine


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Marc Deiter
Sent: Friday, July 18, 2003 1:41 PM
To: canslim@lists.xmission.com
Subject: RE: [CANSLIM] Low Volume Pullback Below Pivot


Thanks Katherine.

Why would May 30th not be considered a breakout?  The stock passed
the pivot of 9.23 on 2x average daily volume?  Then during the next 2
weeks the price comes down close to the pivot point before gradually
moving up.

On 5/27 and 5/28 the intra-day high's were above the pivot, but the
closing price was below 9.23.  Does this "dis-qualify" 9.23 as a
pivot point?

Thanks,
Marc


- --- Katherine Malm <kmalm@earthlink.net> wrote:
> Hi Dave & John,
>
> Here's how I see BE's chart. In all cases, the basing formation is
> a
> bottoming base, which requires more interpretive action than do
> bases formed
> after long uptrends.
>
> Here is BE 5/23/03. The problem is not with the base itself, but
> with the
> severely laggard RSRank of 35:
>
> http://www.breakoutwatch.com/katherine/BE052303.JPG
>
> Here is BE 6/23/03. It's continued to climb up and now has a
> non-laggard
> RSRank = 75, but it never had a convincing move above the pivot at
> 10.80
> (set 6/16). That is usually an indication that the stock is still
> building
> the RHS of the base, rising and falling and potentially setting a
> fresh
> pivot.
>
> http://www.breakoutwatch.com/katherine/BE062303.JPG
>
> Here is BE as of today. The lack of a convincing move above the
> previous
> pivot set a fresh pivot at 11.04 (set 7/15/03), but the base itself
> has some
> problems, particularly a lack of convincing volume build up on the
> RHS.
>
> http://www.breakoutwatch.com/katherine/BE071803.JPG
>
> While BE provided entry points closer to its bottom, I don't think
> it's
> provided a comfortable CANSLIM intermediate/term entry point just
> yet.
> Entries on pullbacks would then be a riskier venture, though highly
> do-able.
> If willing to take on the risk, I would look to the general price
> action
> itself to find a pullback entry much closer to the bottom of a
> logical
> support area if entering while the stock's still forming a more
> convincing
> RHS. If the market rolls over, then an entry here makes it easier
> to
> determine if the stock is going to roll over by itself or in
> response to
> generally weak market action.
>
> http://www.breakoutwatch.com/katherine/BEFallZone.JPG
>
> Katherine
>
> -----Original Message-----
> From: owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com]On Behalf Of
> Davellil5@aol.com
> Sent: Friday, July 18, 2003 8:23 AM
> To: canslim@lists.xmission.com
> Subject: Re: [CANSLIM] Low Volume Pullback Below Pivot
>
>
> What pivot last Tuesday on BE?
>
> Seems to me that BE broke out late April, early May, without
> bothering to
> form a handle.
>
> There has been no secondary base since then that lasted the 7-8
> weeks
> suggested by WON as a minimum.
>
> The question of buying a stock post-breakout should interest
> CANSLIM-ers as
> we so often become aware of a stock only after it has broken out
> and is over
> the 5% "chase-limit" suggested by WON.
>
> DAVE
>
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