From: canslim-owner@xmission.com To: canslim-digest@xmission.com Subject: canslim Digest V1 #86 Reply-To: canslim@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Monday, 17 February 1997 Volume 01 : Number 086 In this issue: Re: [CANSLIM] The journal of a novice investor. [CANSLIM] Retail Store Chain group Re: [CANSLIM] The journal of a novice investor. Re: [CANSLIM] The journal of a novice investor. Re: [CANSLIM] The journal of a novice investor. Re: [CANSLIM] The journal of a novice investor. [CANSLIM] Food stocks and trucking and overnight package stocks Re: [CANSLIM] Food stocks and trucking and overnight package stocks Re: [CANSLIM] Stop Loss Strategy Re: [CANSLIM] AMES, NBTY, CMCI Re: [CANSLIM] The journal of a novice investor. Re: [CANSLIM] Stop Loss Strategy See the end of the digest for information on subscribing to the canslim or canslim-digest mailing lists and on how to retrieve back issues. ---------------------------------------------------------------------- From: "tom worley" Date: Sun, 16 Feb 1997 20:56:18 -0500 Subject: Re: [CANSLIM] The journal of a novice investor. Nice review, Craig. Hope everyone appreciates the insight and lessons learned. Good once again to see the value of DGs demonstrated. tom w - ---------- > From: Craig Griffin > To: canslim@xmission.com > Subject: Re: [CANSLIM] The journal of a novice investor. > Date: Sunday, February 16, 1997 1:34 PM > > Dan, > > Great post! Thank you for sharing your journal. I have had MANY similar > experiences. Your personal review of your trading is a valuable learning > tool. Amazing how similar it is to my own early trading experience. ------------------------------ From: "tom worley" Date: Sun, 16 Feb 1997 21:06:25 -0500 Subject: [CANSLIM] Retail Store Chain group Picked this up this weekend, consider it a warning to not expect strong Jan sales to necessarily translate into strong earnings: "The Christmas spirit wasn't enough to get consumers in the buying mood, but post-holiday clearance sales ignited spending last month at the nation's largest retailers. Many store owners on Thursday reported double-digit percentage increases for the typically slow month of January. Gains were also attributed to milder weather and a week of tax-free shopping in New York." tom w As always, just OMHO any opinions expressed, recommendations made, or advice given are strictly my own and do not represent my employer ------------------------------ From: Craig Griffin Date: Sun, 16 Feb 1997 22:33:12 -0500 Subject: Re: [CANSLIM] The journal of a novice investor. Dan, At 12:35 AM 2/17/97 GMT, you wrote: >What is dma? 10dma? 50dma? Could I get an explanation of bouncing? dma = day moving average, 10dma = 10 day moving average, 50dma = 50 day moving average. Many times these moving averages seem to form support/resistance for stock prices. The reason is probably that so many people using TA (technical analysis of charts) know this and it becomes a self fulfilling prophecy. Sometimes the price seems to "bounce" off of the moving average. I can't really speak to this, and it is a side issue with CANSLIM. But it helps to be aware of where your stock price is in relation to its 50 day and 200 day moving average. Even long term style stock investors will frequently sell when the price breaks the 200dma to the downside. >What is GRS? Group Relative Strength. This is listed as an A-F in Investor's Business Daily. Daily Graphs (DG) gives a more precise rating of a numerical score (01-99). It is the relative strength of the stock's group to all other groups (there are about 200 of them). Stocks in strong groups tend to perform better than a stock with similar fundamentals in weak group. >"DG (NASDAQ edition is best)" -- Are you referring to IBD's Daily >Graphs? Yes. Daily Graphs from IBD. >I am of little experience, but my common sense of it is that the above >advice is entirely sound! The one part that I am uncertain about is >"Don't buy stocks that are extended in price by more than 10% from a >valid base!" Isn't it possible that such a stock will still continue >to run up? Is it just that it is at that point not as likely to go up? Good question. Typically stocks move up in a stairstep fashion. A stock will go up 25% to 50% after breaking out of a base. It will then consolidate and form a new base (a new stairstep so to speak). During the basing action, the buyers and sellers are roughly in balance. If during the base, the buyers and holders of the stock become convinced that the company will continue to do well, then the selling will dry up. The buying will then accelerate and drive the stock out of the base (a breakout to new highs). If, on the other hand, the people holding and following the stock believe that the company's prospects are diminished, then the buyers will evaporate and the sellers will overwhelm demand for the stock. The stock will then fall through the lower range of its base and "roll over" or "collapse". 3Com collapsed. At the point when 3com collapsed it had broken out of a base with a pivot point of about $52 in Sept 96 and advanced 40%. If you use the theory that it might continue to go up and buy at that point, the results can be disaster. Oh, you say, buy I have my 8% stop. Well, that's the other point, after a stock is extended from its base by 30-40%, it will usually start to form a new base. During the forming of that new base, it will typically retrace at least half of its gains. If it only pulls back by 15%, this is normal basing action, in fact this would be considered rather tight. But, this would be plenty to stop you out. Of course sometimes they continue to surge by as much as 100% before forming a new base, but these are very rare. The norm is that they will go only about 30% from the last base before making a new stairstep. So, the odds are that if you buy a stock extended more than 10% from the base, you will get stopped out. On the other hand, a stock newly breaking out of a base, very rarely re-enters the base by more than 2 or 3%. So, if you can catch the breakout just as it clears the pivot point, you will rarely be stopped out. The closer you buy to the top of the old base, the more the odds are in your favor. >SpeedFam plans to build a new factory with the proceeds from the sales >of the new issue. It is thought that this will make them more >competitive in an area where the anticipated expansion in their market >is thought to be more than enough to accommodate all the competition >anyway. They probably have a good future. Everything in the above statement except for the plan to build a new factory is somebody's "thought" or "opinion". The stock acts as though the investors believe these opinions about "more competitive" and "anticipated market expansion" to be true at the moment. But, one can make one's decisions based on the price & volume action. The actual opinions underlying the price action are less important than that people are willing to vote with their money. In fact, none of those opinions may be driving the stock price. For example, the stock may be driven by a new invention that they are secretly rolling into production that will wipe out their competition. You can't know this. But someone buying the stock will and it will be reflected in the supply demand equation. Similarly, most people did not know about 3Com's approaching problems, but the price and volume action of the stock was flashing yellow and then red for several weeks prior to the stocks actual collapse. >Please explain to me a situation that is *too obvious*! I would think >that if everyone expects a stock to go up it will go up even more. Most of the time, by the time a situation is completely obvious, everyone who is going to buy the stock has bought. Then there are only sellers left. Other than this, I don't know how to quantify it. It is a "feel" thing. If you don't have a least a little fluttering of the butterfly in your stomach at the time you buy or sell, look out. O'Neil says for instance, to try to sell before it becomes completely obvious that it is time to do so (when your stock is not acting right, or it seems like you are about to be stopped out). Because by then, everyone will be doing it and the price will already be down. >I can follow most of what you are saying here, except I still don't >get the 50dma. Most charting packages (including the ones on the internet) will allow you to put in a 50 day moving average. Frequently, you can put in 2 or 3 moving averages with different colors. I typically like to have a 10dma, 50dma, and 200dma on my charts. No real reason for those numbers other than habit (O'Neil uses those three as well). But other people use 17dma's and 150dma's, etc. and do well with them. Stan Weinstein likes the 150dma, I beleive.). Best regards, Craig ------------------------------ From: pwahl@postoffice.worldnet.att.net Date: Sun, 16 Feb 1997 22:42:43 -0800 Subject: Re: [CANSLIM] The journal of a novice investor. > > 3com is one I am watching, really. It bottomed at 37 and went up > quickly to 40 and 41 and hasn't had a losing day since 40. I think > it's a fair bet to recover some more and substantially. But it is not > rebounding quickly. > 3 Com has now turned into a value play, if you buy it. Lots and lots of overhead supply. It may be fine, but buying it would have nothing to do with following the CANSLIM approach. > > I am of little experience, but my common sense of it is that the above > advice is entirely sound! The one part that I am uncertain about is > "Don't buy stocks that are extended in price by more than 10% from a > valid base!" Isn't it possible that such a stock will still continue > to run up? Is it just that it is at that point not as likely to go up? > You are trying to buy a stock not only when you have the best chance to make a quick gain, but also when you can manage risk most effectively. If you buy when a stock is extended from a base, a small pullback may not be meaningful, so you either need to give the stock more leeway, therefore increasing risk, or you still cut your losses quickly, but are knocked out of a stock more frequently because it is more likely to have an adverse price move once it has risen 10 or 20 percent from a recent base. > I see what you are saying. There is no substitute for confidence. > Confidence to kill is the *best kind*! Is it just a myth, or is that > level of investor confidence possible? Even O'Neil avows to being Knowing that if a stock goes sour I am going to get out with an 8-10% loss is one way I have the confidence to get into a stock in the first place. Further, if you are putting no more than 25% of your assets into a single stock, that 8% risk, say, is only only 2% of your total funds available for investing. You can be wrong quite a few times and still come back to play another day if you follow these two money management rules. ------------------------------ From: musicant@autobahn.org (Dan Musicant) Date: Mon, 17 Feb 1997 07:34:01 GMT Subject: Re: [CANSLIM] The journal of a novice investor. On Sun, 16 Feb 1997 20:08:42 GMT, you wrote: :On Sun, 16 Feb 1997 05:08:17 GMT, you wrote: : :>Please forgive what may seem to some of you as a self indulgence, but :>I would like to post the following journal account of my first week's :>investing. First a few words of explanation: :> :Dan, : :I enjoyed reading your account of trading escapades, it reminded me of :my own experiences a couple of years back when I started. Don't get :discouraged a lot of us lost on our first few trades. Just a couple :of comments and of course this is OMHO. : :I use E-Trade as well, and I have been satisfied with their service, :but I do not day trade (at least not intentionally). e-Trade has a :huge user base and I've read many accounts of difficulties with quick :executions, busy phone lines ect., they may not be the best choice for :day trading. I forget the exact estimate of the current number of users of E*Trade, however it is certainly the largest on-line brokerage, by a wide margin. On top of this, add the fact that they are adding users at a rate of 10% a month, and you can imagine the "growing pains" that they must be suffering. Misc.invest.stocks includes an amazing proportion of posts that simply address the issues involving and surounding E*Trade usage. : :Also, do NOT trust everything you read on the various web sites :regarding stocks. There is much good, bad and ugly advice populating :the investing world. Be a skeptic and verify your information. I have already gotten a fair sense of how misleading this information can be. I have not as yet gotten burned by any. Knock on wood. Yes, a healthy dose of skepticism is what I hope to bring to my sojourns in the aforementioned newsgroup and on Techstock's bulletin boards, and similar places. I have seen quite a few *hot tips* posted especially in the newsgroup. Most have performed much less rosily than portrayed. I have followed a great many of these, actually -- partly out of curiosity, partly thinking that they may blossom into an opportunity for me. I have seen stocks move ahead nicely and then collapse. Many of these are cheap stocks under $5, which O'Neil generally dismisses as generally so cheap because there is something fundamentally wrong with them. The thing of it is, it is difficult for me to research such a stock adequately to develop confidence in it. I do not want to buy a stock that is appreciating with no sense of when I should sell, which certain chart patterns can reveal. So I do not believe I will speculate on fools' gold. Like Tom and Craig have said, there are too many stocks that you can have some real confidence in to fool around with what feels like a gamble. :Good Luck Thanks. : :Roady@prostar.com :(Dale Schroeder) ------------------------------ From: musicant@autobahn.org (Dan Musicant) Date: Mon, 17 Feb 1997 07:35:10 GMT Subject: Re: [CANSLIM] The journal of a novice investor. Thanks to all who answered (and those who read) my post. I appreciate the support and am glad you could see yourselves in my observations. I want to make a few more comments at present. On Sun, 16 Feb 1997 07:47:42 -0500, you wrote: :Thanks for sharing the journal, Dan and good idea to keep a record of :your thoughts and why you did what you did at the time. Suggestion: :you mentioned looking at charts, but made no mention of reviewing the :CANSLIM criteria. Would suggest you do so and add them to your :journal so you can later review what worked and didn't. This is one :way to develop a feel for which pieces of data on the chart :(hopefully a DG) work and are most important for you. What is DG? Daily graph?? Yes, you are right. I did not do an adequate job of researching my stocks. It was certainly not systematic enough, in any case. This is partly due to the fact that although I have found many places on the Web where I can do research, I don't yet have a clear notion of where I can get the FACTS I need for differing types of stocks. Techstocks often says "NOT FOUND", StockMaster charts have proven hard for me to read, Yahoo charts not too much better.=20 My decision to buy SFAM was clearly not well founded. I had (the night before) visited AOL's CANSLIM contest message board and I systematically (at least in so far as looking at each chart) investigated each of the weekly winners since October. It seemed to me that SFAM was the clear winner of the winners, and figured that my odds of succeeding with it were pretty good. I was aware of the 2nd offering of 3 million shares but had not ascertained when the shares would hit the markets. :I have added some comments below regarding your thinking and strategy :following portions I snipped. : :good luck :tom w :---------- :From: Dan Musicant :To: canslim@xmission.com :Subject: [CANSLIM] The journal of a novice investor. :Date: Sunday, February 16, 1997 12:08 AM : :shot up about 12%!! Unforseen by me (certainly) or any of the many :many posts I read on SFAM in Techstocks' Stocktalk was the boost (!) :resulting from the release of 3 million new shares of the stock (on :top of their 11 million shares then current) effective Friday :(yesterday). The stock actually shot up 3 5/8 points! Company :management decided to guarantee the selling point of the new issue at :the then current market price of 32 7/8. : --- historically when a company announces a secondary, the stock :will falter. The secondary is typically priced at or near the bid the :day it goes effective. Assuming it is a reasonably strong offering, :once the secondary is completed the price will often, even usually, :recover lost ground. The point here is to be aware of the timing of :the secondary (I would never buy once one is announced, but would :wait until it is completed and I saw it trying to move back up). If I :am holding a stock which announces a secondary, I will usually sell :out immediately and wait in cash hoping for a better price, or else :see if I can find another trade of about a month's duration :(typically the time between announcement and completion of a :secondary). Yes. Such considerations figured into my selling my SFAM on Wednesday. By then I had learned that the secondary offering was to be released on Thursday and I was already at the critical loss point and I figured things were more likely to get worse than better. Seeing a downturn as the NASDAQ was rising sealed my decision. What I do not understand is the mechanics, psychology, or whatever was at play that drove the price up 4 points in the course of the day on Friday, to close up 3.625 points. The volume for the day was tremendous -- nearly the full 3 million shares of the 2nd offering, and obviously, the volume reported comprised largely those shares. I assume that the buyers of those shares (likely all institutional) bought at the guaranteed 32.875 per share price. I was taken by surprise. I would assume, however, that this sort of action is not unprecedented (?).=20 :E*Trade's stock itself (EGRP). I had noticed it dropping in the last :week or so from around 18 to under 14, and knew that it was very :likely a real bargain at this price, although I had no real way of :knowing when it would reach bottom. I had seen a post by David Stuart :(in the misc.invest.stocks newsgroup) about how he was making major :money on this stock, buying it at low points and selling it at high :points, and making a prediction about its immediate future. He had : --- When a stock is dropping, there is no trustworthy "real :bargain" unless it halts its drop in a logical support area and then :starts trending back up. Anything you read on a News Group, just like :the rest of the net, is worth what you paid for it. I'm glad this one :didn't bite you, but be careful. Study the charts, check the CANSLIM :nrs, do your own homework. I've seen you quoted, Tom, on this bulletin board as saying that catching a falling knife can be messy! It is this sort of thing that refers to, I'm sure. I was uncertain what a logical support area for this stock was. When I saw it turn back up I may have had adequate indication of what this was. I waited, a bit too long, it seems to me, but I was not hurt on that one. :opened on Thursday 2/13/97 and although my research showed the stock :at 15 7/8, my buy point worked out to be 16 1/8. Subsequent to that :it :was still trading at 15 7/8. I was showing a 2% loss already! The : --- I suspect your confusion is caused by getting a quote that :only showed "last trade" as opposed to showing both the bid and ask. :You obviously used a market order and bot at the ask, which was :probably 16 1/8, while the bid was still 15 7/8. : :have sold, but I watched and watched as it closed up 1/2 at 16 7/8 as :the NASDAQ closed down slightly, -3+ points. I am not happy about :this, since the stock has obviously lost its upward momentum (by all : --- with NASDAQ down all day, any stocks that could go up AND :close up have not lost their momentum. Be careful on Tuesday, but :open minded. Personally, I am looking for an up day at this point. : : --- One final comment, when setting your sell point to protect :your capital, don't simply use a straight 8% or so. Study the chart :and see where support lies. If a stock falls thru support, get out of :it. But if you were late on the pivot point, you may want to use a :looser stop. And remember, O'Neill lets a stock run up a full 15% :before he moves his initial stop loss point up to start protecting :profits. You mean that he's willing to watch it sink back to the original -8% limit before selling in such an event? I am a little amazed. I remember him saying (I think) that he would generally be out of the stock if it goes up 20% in about an 8 week period, but hang on if it makes it in less than 8 weeks if it's still CANSLIM (as long as their was no indication of any loss of support, of course). ------------------------------ From: OWENTIME@delphi.com Date: Mon, 17 Feb 1997 02:43:49 -0500 (EST) Subject: [CANSLIM] Food stocks and trucking and overnight package stocks O'Neil has mentioned in his tapes and book that bear signs can show gradually upon the listed performers in DG when they begin to pour on performance, indicating a possible change toward a bearish market chemistry. Granted no one writing major stock analysis columns is totally bearish now, but I am curious as a complete novice to O'Neil and the DG if it is worth watching closely, the appearance of food stocks (like Tyson Foods) and trucking stocks that are looking stronger, and air freight stocks. I need to know if this is a mix that always appears throughout any given DG or is it a rare signal indicating something? ------------------------------ From: "Michael R. Jeffers" Date: Mon, 17 Feb 97 01:13:52 PST Subject: Re: [CANSLIM] Food stocks and trucking and overnight package stocks At 02:43 AM 2/17/97 -0500, you wrote: >O'Neil has mentioned in his tapes and book that bear signs can show >gradually upon the listed performers in DG when they begin to pour >on performance, indicating a possible change toward a bearish market >chemistry. Whew, I thought I was the only one who noticed it. I listen to CNBC and hear about how this bull market can go on through 1997, 98, and who knows how long. Yet I look at the charts on the IBD Industry Prices page, and only the Defensive and consumer sectors look good to me. If the Defensive sector is looking great, what do the big money people think they need to be defended against? I would say the sky is falling, but I just finished part one of "Asteroid" and you might call me chicken. Just Little 'Ole Me, Michael R. Jeffers ------------------------------ From: robert@cybernex.net Date: Mon, 17 Feb 1997 06:17:49 -0500 Subject: Re: [CANSLIM] Stop Loss Strategy If you want to maintain >control in these kinds of conditions, try a stop limit. This involves >two prices, one for the stop, and the other for what then becomes a >sell limit. Tom, Once your stop get's hit get out, that's what stops are for. How many times have you seen a stock gap down & then continue down? I don't use anything at all A E/moving average crossover (5/30 day) with out stops is what I use FWIW. I sometimes use stops to buy (Dr Elder's triple screen). All IMHO of course, Bob ------------------------------ From: robert@cybernex.net Date: Mon, 17 Feb 1997 06:22:49 -0500 Subject: Re: [CANSLIM] AMES, NBTY, CMCI > >So from now on I'll use the definition you presented above. Small cap: >market cap between 50 - 100 million. Every one agree with this? I've been using <25M microcap >25M <500M smallcap >500 <1B midcap >1B large cap. ------------------------------ From: "tom worley" Date: Mon, 17 Feb 1997 06:30:42 -0500 Subject: Re: [CANSLIM] The journal of a novice investor. Keep in mind, Dan, that this discussion group/forum is based on O'Neill's CANSLIM principles. Those of us that have used this for enough years finds that it provides a discipline and guidance which aids in our stock selection as well as in our timing. It's not perfect, even when perfectly applied. Nor is it an ultimate decision-maker, that's our job. But it is a very good tool to help tilt the odds a little more in our favor. If you have not already read O'Neill's book at least two or three times, with many hi-lites and margin notes, then you should do so, it will make what you read here far more useful. In addition, you should try at least the trial subscription to the Daily Graphs, you will be amazed at how much "research" info is contained in each chart. You can spend more time studying the charts and less time searching the net for info and opinion. As to what drove SFAM up, my opinion is the completion of the secondary, secondarily the overall mkt conditions. This again demonstrates the importance of doing your homework combined, in this example, with enough mkt experience to know not to buy in the face of an announced secondary. As to the volume, as I have mentioned before, NASDAQ volume is suspect, as dealer to dealer trades to fill client orders are counted twice, once in the BD to BD transaction, then again in the BD to client trade. I consider a BD to BD or trader/BD trade where they are trading for their own acct to be legitimate and should be counted, but those who disagree contend at least as much as 60% of the NASDAQ vol is "phony". Personally I allow for as much as 40% to be true duplicate counting. Also, one correction, in a secondary there is no "guaranteed" price, the price is set when the deal is declared effective. This happens after the SEC has approved the offering (including the prospectus), and is done in discussions between the company and the underwriters (in other words, they may hold off a day or so if they don't like the market or current closing price). One reason a stock "droops" after a secondary is announced is that the underwriters (who are usually the strongest supporters of the stock) are required to stop their market making activities in the stock (they are considered insiders during that period). Until the deal goes effective, they cannot resume making a mkt. The second reason is the ole self fullfilling prophecy, too many like me that expect a price drop will sell, thereby usually guaranteeing a drop in the absence of the primary mkt makers (altho they usually work out other support mechanisms, they aren't as good). On O'Neill, if he had a stock that moved up 15% then retrenched into the base, I don't know that he would wait for an 8% loss before he would sell, he might settle for a breakeven or small gain/loss and conclude it was a failed breakout. On the other hand, he wants to maximize his gains and not be shaken out of a potential big winner, and his entire strategy is based on being right only 3 times out of 10. On the 7 times he is wrong, he wants to limit his losses to a few percentage points, but on the 3 times he is right he is looking for 100% or more. This is why the system works, to give your portfolio (not any one stock) such overall performance (net profits) that you can do better than anywhere else. Right now, IMHO, this mkt is very volatile and more subject to quick "hit and run" plays as I am seeing mentioned here. Should this mkt settle down into a more obviously consistent bull, then these plays may result in leaving a lot of money on the table as the stock continues ever higher from a sell point. O'Neill will normally hold a stock so long as the CANSLIM characteristics remain intact (this is one reason why you should write them down when you buy, so you can monitor any changes). You will find in O'Neill's book a discussion on stocks that move up fast and his experience in how they continued to move up even more. tom w - ---------- From: Dan Musicant To: canslim@xmission.com Cc: canslim@xmission.com Subject: Re: [CANSLIM] The journal of a novice investor. Date: Monday, February 17, 1997 2:35 AM Yes, you are right. I did not do an adequate job of researching my stocks. It was certainly not systematic enough, in any case. This is partly due to the fact that although I have found many places on the Web where I can do research, What I do not understand is the mechanics, psychology, or whatever was at play that drove the price up 4 points in the course of the day on Friday, to close up 3.625 points. The volume for the day was tremendous -- nearly the full 3 million shares of the 2nd offering, and obviously, the volume reported comprised largely those shares. I assume that the buyers of those shares (likely all institutional) bought at the guaranteed 32.875 per share price. I was taken by surprise. I would assume, however, that this sort of action is not unprecedented (?). refers to, I'm sure. I was uncertain what a logical support area for this stock was. :looser stop. And remember, O'Neill lets a stock run up a full 15% :before he moves his initial stop loss point up to start protecting :profits. You mean that he's willing to watch it sink back to the original -8% limit before selling in such an event? I am a little amazed. I remember him saying (I think) that he would generally be out of the stock if it goes up 20% in about an 8 week period, but hang on if it makes it in less than 8 weeks if it's still CANSLIM (as long as their was no indication of any loss of support, of course). - ---------- ------------------------------ From: "tom worley" Date: Mon, 17 Feb 1997 06:49:36 -0500 Subject: Re: [CANSLIM] Stop Loss Strategy I have seen a lot of good quality stocks be oversold in times of surprising info because the investing community didn't understand, misinterpreted, or didn't care (just wanted out). In those cases, the "gap down" often marked the low end of trading for that day with the stock still closing down but often several pts higher than the day's low. Probably because I am a control freak, I like to stay in charge and apply my own personal blend of knowledge and experience. I don't usually use stops since I am so connected to the live mkt, but do set limit minders on my computer to remind me where my "mental stops" are, then evaluate the situation on a case by case basis if/when a "mental stop" is hit. A stop limit is primarily useful in a severe "gap down" when everyone is rushing for the exit with mkt orders, and you are at the mercy of the mkt makers, who respond appropriately to 10,000 sell orders and only 22 buy orders (mostly good til cancelled limit buys that didn't get cancelled in time). In these cases, the stock often will open/reopen at its low of the day, then bounce up some as the value buyers say "this is a great company, I can't believe it's this cheap, I never thought I would get to buy it here again, it's got to go up, after all it's been as high as ___, etc. That's when I will change my limit sell to a mkt sell and bail, since over the next few days it may well go below that day's low trade. In the meantime, I had control, either I sold at my limit for X dollar loss, or else I chose my sell pt based on the news and how the stock is subsequently trading and my knowledge of its fundamentals and CANSLIM characteristics and group and mkt conditions. This is better for me since I am dealing in real time, but the principle still applies to those who only check their portfolio each night. tom w - ---------- > From: robert@cybernex.net > To: canslim@xmission.com > Subject: Re: [CANSLIM] Stop Loss Strategy > Date: Monday, February 17, 1997 6:17 AM > > If you want to maintain > >control in these kinds of conditions, try a stop limit. > > Once your stop get's hit get out, that's what stops are for. How many times > have you > seen a stock gap down & then continue down? I don't use anything at all A > E/moving average crossover (5/30 day) with out stops is what I use FWIW. I > sometimes use stops > to buy (Dr Elder's triple screen). ------------------------------ End of canslim Digest V1 #86 **************************** To subscribe to canslim Digest, send the command: subscribe canslim-digest in the body of a message to "majordomo@xmission.com". If you want to subscribe something other than the account the mail is coming from, such as a local redistribution list, then append that address to the "subscribe" command; for example, to subscribe "local-canslim": subscribe canslim-digest local-canslim@your.domain.net A non-digest (direct mail) version of this list is also available; to subscribe to that instead, replace all instances of "canslim-digest" in the commands above with "canslim". Back issues are available for anonymous FTP from ftp.xmission.com, in pub/lists/canslim/archive. These are organized by date.