Go to Jeff Salisbury LWGate Home Page.From: "Katherine Malm" <kmalm@earthlink.net>
Subject: RE: [CANSLIM] short selling (WEBX)
Date: Mon, 11 Aug 2003 06:08:11 -0500
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Hi Harold (and all), Let's do this for the sake of discussion on the subject. Instead of me simply listing how one (or I) would go about screening for failed tops, let me ask of the group a preliminary question: What does a stock look like technically when it is *at* a top? Add your thoughts....everything that you know about the technicals of a stock that may be at its peak. Again, the underlying assumption is that for the purposes of screening, fundamentals do not matter. These signals are all technical. After that discussion is exhausted, then I'll ask a follow-on question. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Harold Josephson Sent: Monday, August 11, 2003 1:34 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] short selling (WEBX) Hi Katherine, How does one screen for "failed tops"? Thanks, Harold Harold Josephson hj@hjosephson.com - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm Sent: Sunday, August 10, 2003 7:48 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] short selling (WEBX) Hi Tomas, I think you've made a good point in saying "may be that you are using the wrong tool (CS) for the job (shorting)." Break CANSLIM into its component parts and you can take one or two of them to find short candidates, but CANSLIM is what it is because it represents a collective set of criteria for finding fundamentally attractive stocks at the right time for purchasing long positions. When it comes to shorting, there's only one thing that matters to me....technicals and a market that's heading South. The only thing "CANSLIM" about that is that I'll use the RSRank to help me find candidates. I do two things: (1) Look for failed tops (high RS), a subsequent rise that falls short of that failed top, and a continuation move down. Bingo, short candidate. (2) Look for lousy stocks that are in downtrends (low RS) that rise on low volume to the downtrend line and then make a continuation move down. Bingo, short candidate number 2. I could care less what the fundamentals were in either case, good or bad, because they don't have influence in the short term. That is, the price action of the stock in the short term (which a shorting methodology represents) is all that matters. The move isn't over a significant enough period for fundamentals to affect the price action. All in all, IMHO, trying to make a complex shorting methodology based on any of the letters in CANSLIM other than maybe I or M is a lot of unnecessary complexity for very little payback. Best resources on shorting: Dave Landry's "On Swing Trading" and Stan Weinstein's "Secrets for Profiting in Bull and Bear Markets." Keep it simple. Katherine - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tomas Sent: Sunday, August 10, 2003 8:35 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] short selling (WEBX) Just want to put my two bits in. I currently do not short or plan to do it until I am comfortable with CS long (maybe another year). However, I would not mind at all if there is discussions on this mailing list about shorting leverage/using CS information. Having said that, I am not sure if you can use any CS information to implement a short strategy. It may be that you are using the wrong tool (CS) for the job (shorting). Or maybe not. I always try to have an open mind. Regards, tomas - --- Fanus <fanus13@yahoo.com> wrote: > 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. > > > > > > > > > > > > > === 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". 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