Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] CLZR
Date: Thu, 7 Aug 2003 19:44:09 -0500
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Hi Fabio, Here are a couple of charts so that you can see the technical action. First, a weekly chart that shows how CLZR rose from it's double bottom late last year: http://www.breakoutwatch.com/katherine/CLZR080103Wkly.JPG Notice where the latest valid base formed and where CLZR made a definite move above it at about $10: http://www.breakoutwatch.com/katherine/CLZR080703.JPG As you can see, your entry on 7/22 was at a price that was significantly extended from the prior base, meaning that the risk that the stock could easily fall back was extremely high. In other words, you had no wiggle room. Notice also, that when you entered on 7/22 that the stock's 50 and 200 day moving averages had diverged significantly. That's another visual clue to let you know that the stock is extended. I call it the "rubberband effect." In other words, you don't really know how long these kinds of moves can go on, but once the stock is extended too far to the upside, the rubberband snaps and the price returns to a more normal pattern of ascent. That pullback in this case could easily take the stock as low as $10 (back to the top of the previous valid base), or could snap it back to an intermediate term area of support (the 50 day moving average). There's really no way to know how far it will snap, but the psychology of the market (profit taking) will most certainly see the stock fall before rising further. Given that the market as a whole has had more than it's share of distribution days, the liklihood that it would happen was even higher. I'd say the very best lesson learned on this one is to be more diligent about reading the chart and finding an optimal entry point. For example, if you'd entered this stock on 4/30 when it broke out at about $10, worse case, you'd have been able to exit the stock with a modest gain. Next lesson is to be sure to look at the chart and be sure you understand where your exit point will be if the price action moves against you. Whether you use a 7-8% stop loss or something more technically driven, you'll know when to pull the plug next time before it gets away from you. As a side note, the 7-8% stop loss is optimized for entries *at the breakout* not at extended prices, so beware! One can still lose their shirt 8% at a time, it just takes longer. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Callegher, Fabio Sent: Thursday, August 07, 2003 6:49 PM To: kmalm@earthlink.net Cc: canslim@lists.xmission.com Subject: RE: [CANSLIM] CLZR Hi Katherine and Hi all,, Thanks a lot for the constructive feedback. To answer Katherine's question I had bought CLZR shares on the 22 of july. I will be more careful next time and cut the loss at 7-8%. Simply I didn't expect CLZR to fall so sharply in such a short time. Thanks again and best regards Fabio - -----Original Message----- From: Katherine Malm [mailto:kmalm@earthlink.net] Sent: 07 August 2003 23:52 To: canslim@lists.xmission.com Subject: RE: [CANSLIM] CLZR Hi Fabio, You mentioned that you bought CLZR a couple of days ago. If you don't mind, would you tell us exactly what date? I think the easiest way to "explain" CLZR is for us to show your entry vs. an "optimal" entry and then show why an "optimal" entry would have provided some "wiggle room" for your position. That should also help explain why it is far less important to know the "reason" for the drop than the explanation as to what can happen technically to a stock. For the most part, nobody ever knows the reason until after the fact, so this might be a good chance to learn why good entries are so important. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Callegher, Fabio Sent: Thursday, August 07, 2003 3:25 PM To: canslim@lists.xmission.com Subject: [CANSLIM] CLZR Hello,, I'm a newbie to CANSLIM. I bought CLZR (Candela Inc.) shares a few days ago after studying WON book a while but they have dropped about 20% between today and yesterday. I tried to find some "bad news" around the company but couldn't find any. Do you think it's just institutional investors pulling out or is there any other underlying reason for that that you can spot ? Thanks a lot for any feedack Best regards Fabio - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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