Go to Jeff Salisbury LWGate Home Page.From: "DMC197807" <dmc197807@comcast.net>
Subject: Re: [CANSLIM] for Short Selling
Date: Sat, 9 Aug 2003 16:41:36 -0700
Previous Article (by Date): Re: [CANSLIM] short selling (WEBX) "Charles & Lois Layne"
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Rolf & Mark, My vote (if I get a vote) is why not discuss how to use canslim ideas to generate potential shorts? It's not like this little epistolary group hasn't gone off the track since I've been here (about 10 trading days), and it's not like it takes a lifetime to figure out Canslim in any event. It's really rather simple, and with the help of computers it's almost too easy. The real difficulty lies in disciplining oneself to limit or get rid of longs in sideways and topping markets, and be willing to reenter when the market's correction has ended and stocks are ready to rise again. You can find the names of candidates very easily for a little coin paid for a subscription to IBD and/or a subscription to canslim.net. For short discussions, let's just use the above referenced subject line "Re: [CANSLIM] for Short Selling" and the purists like Fanus et al (so far it seems to be all Fanus) can either eyeball them and delete them, or even program their Outlook Express to pre-delete all messages on the peripheral topic. I think it would be helpful to understand what kind of screen would generate the opposite of good longs in a bad market, if only for academic, mind-sharpening purposes. After all, if in traditional canslim technique you are looking for 1 or 2 stocks to buy per week in a good (M!) market, then why not reverse the order in a bad (M!) market. With that in mind, I'd like to explore what kinds of things people think would indicate a dangerous market, knowing in advance that calling a top is one of the hardest things to do BUT that falls tend to be so much more precipitous than climbs that there's gold in those hills if you can time it right and buy a put to get into position. In any event, VTO has provided a very handy site with lots of sentiment indicators: http://www.vtoreport.com/sentiment/cot.htm If you click on Sentiment and Bull/Bear you can see a very wide gap between bullish and bearish advisors, the kind which indicates a correction is coming. I'd say anytime you see a gap of 25% or more (with the bulls on top) you are looking at a dangerous situation. The Put/Call ratio has been very low and is now climbing. Again danger. The VIX has been unnaturally low for a long time, another coiled spring. For COTS, I prefer to use the Quasimodos.com site: http://www.quasimodos.com/marketrider/technical.php The articles are interesting, and to get the reports and COTs page, click here: http://www.quasimodos.com/marketrider/charts.php You can't paste the sites, but the first 3 on the right, for the Dow, the Naz and the SPX have a very interesting graphic display of the traders' positions. I don't know exactly what the timing is on these but the smart money seems to be betting against this market continuing, while the small speculators keep piling on the positions. Good bull markets (like the one we had from March to June) often begin with very small bars. DMC From: "Mark Kerson" <mkerson@dplus.net> To: <canslim@lists.xmission.com> Sent: Saturday, August 09, 2003 11:13 AM Subject: RE: [CANSLIM] short selling (WEBX) > I don't know. > > It does not seem inappropriate to discuss using CANSLIM to short on this > site. > > > In IBD, Thursday, August 7, 2003, on the front page of B1, in Investor's > Corner, the last line of the box under "Advanced Study" says, "Learn to > sell shares short during a market decline (see Feb. 14 Corner)" > > It seems possible (at least logical, I certainly can't claim that I have > done it or know anyone who has) to reverse the principles and choose > shorts. Therefore if someone is interested in exploring it, well, I > don't see why we can't. > > At any rate I would like too follow such a discussion. > > Mark > > > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com] On Behalf Of Fanus > Sent: Saturday, August 09, 2003 1:16 PM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] short selling (WEBX) > > Rolf > > Yes, WON spent about 3 pages on short selling in his > book of about 270 pages. And in these three pages he > showed two chart patterns and doesn't mention any of > the CANSLIM attributes, or reverse of them for > shorting. HTTMIS mentioned lots of other things also, > but this isn't a group to discuss HTTMIS. It is a > group to discuss CANSLIM. > > Just because he mentioned short selling in the book, > doesn't make it CANSLIM. He also mentioned daytrading > and swingtrading in his book. Also not CANSLIM. If you > decide to use reverse CANSLIM criteria to pick shorts > then it is fine. But this doesn't make it CANSLIM and > is not mentioned by WON at all as shorting criteria. > Any rules you use for shorting is your rules and not > WON's rules for CANSLIM. > > To use the criteria below, where in CANSLIM, or HTTMIS > for that matter, is the "ANI" criteria mentioned as > valid shorting criteria? > > If you want to learn more about selling short, why not > find a discussion group which main goal is to discuss > shorting methods and criteria? I sell short stocks > too and I am not against shorting. I am just against > discussing it out of place. > > Best Regards > - Fanus > > --- Rolf Hertenstein <rolfh@mindspring.com> wrote: > > ----- Original Message ----- > > From: "Fanus" <fanus13@yahoo.com> > > > > > CANLSIM is a long strategy and according to the > > rules, > > > you get out if you are in a bear market. > > > I think this type of discussions are > > > better suited for a different discussion group. > > > > I disagree. Though WON spends almost all of his > > HTMMIS pages on long > > techniques, he does discuss short selling in > > correcting or beginning bear > > markets. He even gives a couple of chart pattern > > examples, like the Head > > and Shoulders Top. I would welcome any discussion > > here from the more > > experienced members on their short techniques. If > > we are (or even if we > > aren't) at the beginning of a multi-year, mostly > > sideways market, with > > occassional bull runs, seems like effective shorting > > could really help > > overall returns. > > > > Some specific thoughts on DMC's post (see below): > > A (annual earnings): Seems like a change in earnings > > (for the worse) would > > be more important a specific number like 15%. > > N (new something): My two thoughts are 1. a new > > product that *doesn't* live > > up to expectations, or 2. new 52-week low. > > I (institutional): If there are large institutional > > positions, and they > > begin to dumpp the stock, might this not drive the > > price more aggressively > > downward? > > > > Rolf > > > > > > > > --- DMC197807 <dmc197807@comcast.net> wrote: > > > > P.S. [prescript]: I can't see any reason to > > > > establish (or keep) a long > > > > position on WEBX here. Too much risk for me. > > > > > > > > Mark, > > > > > > > > Welcome to the thread. I don't have any problem > > > > with you posting your > > > > website location here; it looked pretty good to > > me. > > > > > > > > On the subject of using canslim to find > > breakdown > > > > rather than breakout > > > > candidates, I think that's a good idea. I'm not > > > > sure how we properly tweak > > > > the criteria, but I think it's an excellent > > topic > > > > for education here. Why? > > > > Because the M in Milscan is very, very > > precarious > > > > here and I think shorts > > > > and puts are going to smash longs and calls over > > the > > > > next several weeks. I > > > > don't see a lot more upside to the market at > > this > > > > point. Just pulling up an > > > > SPX chart shows a very very tired market, and > > the > > > > path of least resistance > > > > looks to be southeast-, and not northeastward > > bound. > > > > > > > > With that in mind, how would be alter CANSLIM to > > > > look for breakdowns? [I'll > > > > put commentary in brackets for breakdown] > > > > > > > > C = Current quarterly earnings per share (should > > > > show a major percentage > > > > increase compared to the prior year's same > > quarter) > > > > [Here I think you take > > > > all earnings up to, say 10% positive. Why? > > What we > > > > are looking for are > > > > stocks which have risen with the tide in spite > > of > > > > lukewarm or poor earnings, > > > > but earnings up to 30% seem too robust to > > produce a > > > > good short.] > > > > > > > > A = Annual earnings (the company should be > > > > experiencing meaningful growth > > > > over the past five years) [Perhaps the cap on > > annual > > > > earnings growth should > > > > be 15%??] > > > > > > > > N = New products, new management, new high > > prices [I > > > > don't see how to apply > > > > this one; I don't want to exclude new high > > prices, > > > > because we're looking for > > > > overvalued stocks. Other ideas?] > > > > > > > > S = Supply and demand (small capitalization > > stocks > > > > with high trading volume) > > > > [Here, having large cap elephants could be a > > great > > > > idea > > > > > > > > L = Leader in the industry, not a laggard [here, > > use > > > > a relative strength > > > > rating of 60 or below?] > > > > > > > > I = Institutional sponsorship (a little goes a > > long > > > > way) [Hmmmm. Do we want > > > > high institutional ownership, or is this factor > > one > > > > to be left out > > > > > > > > M = Market direction (should be headed up). > > [This > > > > one goes first. For me, > > > > the market is facing a lot more easy downside > > right > > > > here than upside. > > > > Chances of a SPX in the 600, 700, 800 range in > > the > > > > next 3-4 months is much > > > > greater, to me, than a SPX move to 1100, 1200, > > > > 1300.] > > > > > > > > Now comes the difficulty of establishing a > > pivot, > > > > and selling at the > > > > breakdown of that point. > > > > > > > > > > > > > > > > DMC > > > > > > > > > > > > > > > > > > > > > > > > ----- Original Message ----- > > > > From: "Mark Crisp" > > > > <stressfreetrader@btopenworld.com> > > > > To: <canslim@lists.xmission.com> > > > > Sent: Wednesday, August 06, 2003 8:17 AM > > > > Subject: Re: [CANSLIM] WEBX > > > > > > > > > > > > > What about using CANSLIM in reverse to find > > > > shorting candidates? > > > > > > > > > > I ran this scan on my filter and came up with > > > > some nice looking shorting > > > > > candidates: > > > > > > > > > > 1 year low > > > > > RS <30 > > > > > E.P.S. <30 > > > > > Price >$30 > > > > > Volume >250,000 > > > > > Cap. >2.0bn > > > > > > > > > > Looking for poor fundamental stocks that are > > > > falling in price. Reverese > > > > > CANSLIM if you like. Trade the breakouts. > > > > > > > > > > What do you say? > > > > > > > > > > Mark Crisp > > > > > http://www.stressfreetrading.com > > > > > > > > > > ----- Original Message ----- > > > > > From: "Jiehui" <ddloyilbshrb@iartdesign.com> > > > > > To: <canslim@lists.xmission.com> > > > > > Sent: Wednesday, August 06, 2003 5:42 AM > > > > > Subject: [CANSLIM] WEBX > > > > > > > > > > > > > > > > Hi all, > > > > > > > > > > > > I'm a beginner in this and is still a little > > > > unsure of how to read > > > > charts. > > > > > I hope some of the more experienced chart > > readers > > > > on this group can help > > > > me. > > > === message truncated === > > > __________________________________ > Do you Yahoo!? > Yahoo! SiteBuilder - Free, easy-to-use web site design software > http://sitebuilder.yahoo.com > > - > -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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