Re: [CANSLIM] Another mystery plunge

From: "DMC197807" <dmc197807@comcast.net>
Subject: Re: [CANSLIM] Another mystery plunge
Date: Fri, 25 Jul 2003 12:27:42 -0700
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Katherine,

Thank you for your response.  As I noted, I know nothing about the breakout
site except what one visit to it could tell me, and I'm not here to tell
people what they should/should not pay for.  For some people who are out and
about getting a cell phone message may be key, for others not.  It may be,
after a few more years of development myself that I will find the breakout
site to be just the ticket.  I put off paying for data for several years and
traded almost completely off Stockcharts.com's scans and charts until early
this year.

By a blackbox, I was simply referring (as I noted in a later note to
Pritish) a blackbox type of technical rating for a stock, in this case OSTE:
6.8 out of 7.0.  Clearly a good rating, perhaps one of the best; better than
a 6.4, much better than a 5.7, one supposes.  An investor who was over
relying on a system which rated a stock might tend to overlook other, more
important elements in protecting her capital.

(Another investor asked me recently what I thought of RRI, since it had a
target price of $5.  Who produced the target price, I asked.  Zack's, was
the answer.  To tell the truth, I was surprised that anyone paid any
attention to Zack's numbers for anything at all.  I've traded RRI several
times in the last 9 months, never made less than 50%, and made up to 150% on
the positions, but none of them had to do with a formula target price.  The
charts indicated to careful students that the sellers were done, and that no
one remained except buyers and sideliners.  That, to me, is the best
technical indication there can be (although I realize it's afield from the
CANSLIM approach).   For something like OSTE, even putting aside the
condition of the markets, its technicals were waving flags.   It seemed
clear that the buyers were weakening, and that there were many openings for
sellers.  That was my sole point.)

One ignores at one's peril the vitally important M of CANSLIM.  The market.
The truth is, the acronym should be MILSCAN, and put the MARKET first, since
the stay in cash/take a position is clearly the most important digitalized
decision (0/1) that an investor can make.

Btw, my annual cost for IBD and TC2K is only about $410 (IBD is 170 and TC2K
is $238).

Good luck to you,

DMC


- ----- Original Message -----
From: "Katherine Malm" <kmalm@earthlink.net>
To: <canslim@lists.xmission.com>
Sent: Friday, July 25, 2003 10:06 AM
Subject: RE: [CANSLIM] Another mystery plunge


> Hi DMC,
>
> While I fully understand that not all services and/or software packages
are
> for everyone, I believe that you have not accurately represented
> BreakoutWatch when you suggest that it is a black box. In fact, the CE
> scores are designed specifically to be transparent, something that is not
> done with IBD's proprietary rankings such as SMR/EPS/AD/Timeliness, etc.
> Stocks are not selected for inclusion on a watchlist based on CE scores,
> instead this is based only on the price pattern of the stock.
>
> I agree with you that TA systems cannot be fully tested, but that would
hold
> for the entire CANSLIM arsenal of intermediate term patterns and therefore
> would assume that one should not or cannot trade these patterns at all,
> whether one uses TC2000, metastock or any other technical analysis
program.
> A subscription to a combination of DGO/IBD/TC2000 would run you annually
> $1000 for the full DGO package + $300 for IBD + $350 TC2000 (not sure of
> exact number).  In the end, trading is about choices and services run the
> full spectrum from the most generalized TA application plus fundamental
> research (for full-bore analysis and an all-things-possible approach) to
the
> opposite end of the spectrum which includes stock picking services that
hand
> feed the user on what and when to buy and sell (for a highly specific
> approach to a highly specific trading methodology). BreakoutWatch is at
> neither end of this extreme spectrum. Each service has their place, each
has
> their tradeoffs, each has their strengths/weaknesses and each fits a
> different sytle of user. That's why there are so many choices at each end
> and throughout the entire spectrum.
>
> Please see my separate posting with links to the CE score help file which
> addresses your specific comment on the CET.
>
> Katherine
>
> -----Original Message-----
> From: owner-canslim@lists.xmission.com
> [mailto:owner-canslim@lists.xmission.com]On Behalf Of DMC197807
> Sent: Friday, July 25, 2003 10:30 AM
> To: canslim@lists.xmission.com
> Subject: Re: [CANSLIM] Another mystery plunge
>
>
> Hong,
>
> I'm not familiar with breakoutwatch.com's service (although I did just
visit
> their site).  It looks pretty pricey for something you can probably
program
> pretty well with TC2K and a subscription to IBD.  $900 per year for the
> "platinum" service?
>
> In general I don't think black boxes or canned trading systems work.  What
> works is careful screening, careful analysis, disciplined trading and
> disciplined money and position management.  Of  these four, the most
> important are the latter two.
>
> Academics (business schools) like to point out that no TA system has been
> successfully backtested to perform over lengthy periods of time.  True
> enough, because it is impossible to put in enough general market and proof
> of trend indicators to reach a "scientific answer."  Further proof of
> failure of black box systems was the LTCM debacle.  Also, as Steve Nison
> likes to point out in analyzing candlesticks, unless you can define the
> trend, you don't have a candlestick.
>
> The big question here, the first question, is what is the condition of the
> market.
>
> Finally, as for the CET thing on OSTE, with a rating of 6.8 out of 7.0 and
a
> big plunge, what does that tell you about the infallibility of their
rating
> system?
>
> DMC
>
>
> ----- Original Message -----
> From: "Hong Hsu" <honghsu@bellatlantic.net>
> To: <canslim@lists.xmission.com>
> Sent: Friday, July 25, 2003 9:12 AM
> Subject: Re: [CANSLIM] Another mystery plunge
>
>
> >      DMC,
> >
> >     For OSTE, the total TA score  (CET) from breakoutwatch.com is 6.8
> > out of 7.  With that score I will tend to believe it has solid TA.  Does
> > it?   Maybe Katherine could share her insight.
> >
> >     -Hong
> >
> >
> >
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