From: canslim-owner@xmission.com (canslim Digest) To: canslim-digest@xmission.com Subject: canslim Digest V1 #155 Reply-To: canslim@xmission.com Sender: canslim-owner@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Sunday, April 27 1997 Volume 01 : Number 155 In this issue: [CANSLIM] Diversification [CANSLIM] Diversification Re: [CANSLIM] National get-together in Las Vegas Re: [CANSLIM] R. Rainwater on Louis Ruckeiser show [CANSLIM] Indexes Re: [CANSLIM] Re: INVX [CANSLIM] INVX [CANSLIM] Is INVX forming a cup-and-handle? Re: [CANSLIM] IBM (was LL to UR graphs) Re: [CANSLIM] R. Rainwater on Louis Ruckeiser show Re: [CANSLIM] National get-together in Las Vegas [CANSLIM] storage/memory device group Re: [CANSLIM] storage/memory device group [CANSLIM] May FOMC- Up? Hope NOT! Re: [CANSLIM] May FOMC- Up? Hope NOT! [CANSLIM] Charts [CANSLIM] Economic Report [CANSLIM] News you can use Re: [CANSLIM] storage/memory device group Re: [CANSLIM] May FOMC- Up? Hope NOT! Re: [CANSLIM] Economic Report Re: [CANSLIM] Cup-with-a-Handle Re: [CANSLIM] May FOMC- Up? Hope NOT! 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. ---------------------------------------------------------------------- Date: Sat, 26 Apr 1997 20:54:50 -0500 From: "Brenda" Subject: [CANSLIM] Diversification I "attempt" to diversify just a little as is possible. I may own several stocks but most of the time they will fall into the same group. Just what I "attempt" to do. All industries can not be "hot" at the same time and why would I want one that is going down to reduce my profits in the one going up. Why not just be in the one going up. If I were to diversify I would do it with Mutuals. This is a Peter Lynch SOLID philosophy that I concur with 100%. This is just one of the areas of investing that he POUNDS the table about. - ---------- > From: Hemant Rotithor > To: canslim@mail.xmission.com > Subject: [CANSLIM] R. Rainwater on Louis Ruckeiser show > Date: Saturday, April 26, 1997 11:18 PM > > I saw R. Rainwater on Ruckeiser(sp?) show on Friday. > It seems he does not beleive in diversification (he is only managing > personal assets of $1 Billion), 85% of assets in 6 holdings. > When someone pointed out to him how others support diversification his > reply was: > "diversification is good to STAY rich, but it does not help you to GET > rich, and you have to concentrate the assets to get rich". > This philosophy touches a nerve because it seems to be professied by > many of the rich investors that I have heard about, William O'Neill, > Warren Buffet etc. > What do people think here about diversification? is it good at all? > At what point (level of experience/success) should one start > concentrating rather than diversifying? Does anyone in the group NOT > diversify much and has been a successful investor (choose your > quantitative metric) for a sustained period of time? > Would love to hear people's experience/thoughts/opinions. > Thanks > -- > Disclaimer: Opinions expressed in this document are those of the author. > Digital Equipment Corp., 110 Spit Brook Rd, ZKO2-3/N30, Nashua, NH 03062 > ------------------------------ Date: Sat, 26 Apr 1997 20:54:50 -0500 From: "Brenda" Subject: [CANSLIM] Diversification I "attempt" to diversify just a little as is possible. I may own several stocks but most of the time they will fall into the same group. Just what I "attempt" to do. All industries can not be "hot" at the same time and why would I want one that is going down to reduce my profits in the one going up. Why not just be in the one going up. If I were to diversify I would do it with Mutuals. This is a Peter Lynch SOLID philosophy that I concur with 100%. This is just one of the areas of investing that he POUNDS the table about. - ---------- > From: Hemant Rotithor > To: canslim@mail.xmission.com > Subject: [CANSLIM] R. Rainwater on Louis Ruckeiser show > Date: Saturday, April 26, 1997 11:18 PM > > I saw R. Rainwater on Ruckeiser(sp?) show on Friday. > It seems he does not beleive in diversification (he is only managing > personal assets of $1 Billion), 85% of assets in 6 holdings. > When someone pointed out to him how others support diversification his > reply was: > "diversification is good to STAY rich, but it does not help you to GET > rich, and you have to concentrate the assets to get rich". > This philosophy touches a nerve because it seems to be professied by > many of the rich investors that I have heard about, William O'Neill, > Warren Buffet etc. > What do people think here about diversification? is it good at all? > At what point (level of experience/success) should one start > concentrating rather than diversifying? Does anyone in the group NOT > diversify much and has been a successful investor (choose your > quantitative metric) for a sustained period of time? > Would love to hear people's experience/thoughts/opinions. > Thanks > -- > Disclaimer: Opinions expressed in this document are those of the author. > Digital Equipment Corp., 110 Spit Brook Rd, ZKO2-3/N30, Nashua, NH 03062 > ------------------------------ Date: Sat, 26 Apr 1997 21:58:19 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] National get-together in Las Vegas I notice that neither WON nor Ryan are listed. Do they show up for the SF meeting (I would like an excuse to revisit that great city). What do you mean, "uncertainty of the May FOMC" meeting", I have no doubt, 25bp hike, and still maybe 50. tom w - ---------- > From: derek b > To: canslim@mail.xmission.com > Subject: [CANSLIM] National get-together in Las Vegas > Date: Saturday, April 26, 1997 9:02 PM > > can't see much up market action until the uncertainty of the May FOMC is > behind us. > > Derek > ------------------------------------------------- ------------------------------ Date: Sat, 26 Apr 1997 22:01:45 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] R. Rainwater on Louis Ruckeiser show I think the less you are willing or able to devote to your investing, the more you should be diversified (e.g. at one end of the scale are mutual funds for those not willing or able to do the research, altho they still need to do some to pick the right funds and families). At the other end, in a distinct minority, are the ones willing and able to study, research, examine, and stay in touch with their portfolio. tom w - ---------- > From: Hemant Rotithor > To: canslim@mail.xmission.com > Subject: [CANSLIM] R. Rainwater on Louis Ruckeiser show > Date: Sunday, April 27, 1997 12:18 AM > > "diversification is good to STAY rich, but it does not help you to GET > rich, and you have to concentrate the assets to get rich". > What do people think here about diversification? is it good at all? , NH 03062 ------------------------------ Date: Sat, 26 Apr 1997 23:09:12 -0400 From: "Tom Worley" Subject: [CANSLIM] Indexes have spent some time this weekend going over charts of various indexes, trying to assess where we are and where we are going. Consider following my response to all the posts on indexes, as well as my own thoughts. Understand that I do not routinely look at or follow the DJ Trans or Utility indexes, I look at them only to confirm or explain the broad condition and direction of the mkt and the economy. DJ Transportation: strong upward move during April, from low 2300 to 2600, probably some trans stocks that could have made some money here, I missed it. Closed Thu at the low of the day, and dropped further on Friday. Correction/consolidation? Maybe. May just be a move in sympathy with the S&P500. Keep in mind that trans gives a clue to the economy, as an expanding economy needs to move merchandise. The strong boost to the economy recently is reflected here. DJ Utility: Chart looks like I would expect, rising rates decreases the attractiveness of yields on utility stocks, better yields, less risk, more liquidity in Treasuries. This is what the chart on the long bond should look like, IMHO, and doesn't. At least utilities seem to be reflecting the reality of more rate hikes. DJ Industrials: After trading down to the 6300 level several weeks ago, this index has shown a "staircase" type pattern. That is, it has improved, with brief consolidation along the way. By no means does this create support, but at least it provides an exit for the short term trader. Friday's drop to 6738 still leaves it well over the 50dma at about 6680. The low on Friday tested the 50dma, the key short term is whether it can hold it next week. Very short term support in the mid 6600 range. RS compared to the S&P up last week. NYSE Composite: similiar report to the DJ Ind Index, comprising more stocks is better cross section of the NYSE exchange. As such, not as strong as the Dow Ind (30) chart, Friday's reversal to 400 took it below the 50dma at about 404 (it started the day right on the 50dma). RS is down slightly over the past two weeks and shows a flat pattern. Of all of the above, volume indications were a non-event except for DJ Ind where vol has been well over daily average for the past week, and DJ Trans where the past four sessions showed well over avg vol, three of which days were up, only the fourth was down, which looks to me like profit taking in the sector (keep in mind that several airlines "soared" last week, so taking profits and closing out a position on a Friday makes lots of sense). Now to the tough charts (shame we can't all be looking at the same chart, wonder if WON needs another 150 or so beta testers for DG Online?) NASDAQ Composite: 50dma around 1245. had held the closing level of 1200, critical support level, showing mild trend up from there (holding, then trending up being another of my reasons for calling an end to the correction). Friday's close of down nearly 19 points endanger's this apparent recovery attempt. The only good news on Friday was that vol was below average. Need to see this one hold or move up on Monday and get back over 1220 by Tuesday. S&P500: this one a lot more encouraging (esp to someone forecasting the end of the correction, albeit in a big cap mkt) than the NYSE Composite. Two straight weeks or solid and substantial gains. Vol not confirmatory, Friday's drop on lower vol, started the day at the 50dma of 770 and finished not that much lower at 765. MARKET INDICATOR CHARTS: NYSE: Despite Friday's drop, moved back mildly into the overbought category. 10 day moving avg of vol also showed a move to the upside and moved above the vol down line, surprises me, didn't expect this. New hi/low lines continue to move in parallel on a flat line, no indicator here. NASDAQ: moved from what I deem heavily oversold to only moderately oversold. Up vol line still tracking under down vol, but trending up while down vol trending down. However opposite occurring on the new hi/low lines - new lows increasing, new highs dropping, not encouraging at this point. All in all, a mixed bag. Am not so sure we are out of the woods yet, altho the forest is definitely thinning, definitely still expect to see many volatile days. This volatility will be increased, or at least maintained, by the degree of self-disillusionment over a May FOMC rate hike possibility. At least the Utilities stocks are tracking consistent with this probability, even if bonds aren't. tom w Any opinions are strictly my own and not that of my employer. My comments are based on a variety of sources and are intended strictly to assist and inform. In no way am I suggesting a buy, sell, or hold decision based on my comments or observations. I always urge an investor to do his or her own homework, and be sure the risk of the market can be tolerated and any losses accepted gracefully. ------------------------------ Date: Sat, 26 Apr 1997 23:22:32 -0700 From: GoldFish Subject: Re: [CANSLIM] Re: INVX Tom: Wonderful and complete research and analysis on this stock! I suggest that next time anyone who want to discuss a stock in this group should use Tom's report as a benchmark to give details analysis on fundamental as well as other CANSLIM criteria. I remember someone posted couple week ago, according to William O'Neil: "CANSLIM is a based on fundamental not momemtum". Folks! let's keep up the good work here. - -- GoldFish "Every stock is a bad stock..." Tom Worley wrote: > > Hi Patrick, > am including the group in my response since this is one worth > watching > > Just printed off the charts from DG Online, so this is what will be > in the books for next week as of Friday's close. > RS 99, EPS 99, GRS 70, A/D B, Timeliness B, U/D 1.6, 50dma at 25, > 200dma at 18.25, closed Friday at $26.00 > stock had formed something of a base around 29 > RS is trending down currently but still 99 so is simply moving > parallel to S&P500 > avg daily vol is 346,100, Friday it did 320,700. Last week you had > three days of normal vol, two were sharply down, one was sharply > up. The other two days were light and stock traded flat. Looking > back, for most of Feb and Mar stock traded below its 50dma. Right > now it may be trying to do a bounce off that line or even go under. > Earnings are excellent, its yr ends Sep, and has already reported > Q2 (up 214%). Q1 was up 121%, both huge increases over the 19% and > 17% of the last two qtrs of prior yr. Est for FY97 is 1.80 and has > done 1.08 in six months, well over half way there. Since there does > not appear to be sig cyclical swings in its sales or earnings, > suggests we will see further increases in earnings estimates. > Trailing PE is 18, so below s&P. has options on CBOE. Debt is 2%, > funds reported at 9% > Aside from the support created by a low PE and rapidly increasing > earnings, and the 50dma at 25, there does not appear to be any real > support till you get down to about 21-22. You could make an > argument that it was trying to form a c&h, and the handle kinda > melted (musta left it too close to the burner?) > With projected PE for this year already below 15, and approaching > 10 for next year, stock looks attractive for those willing to hold > longer term. Has lots of good CANSLIM characteristics, just not a > real good chart. > Other details: #1 in its group on both RS and EPS > Shares issued 14.2 mil, float is 12.8 mil > Short interest 2.1 days > Co is world's leading mfr of lead wire assemblies for the thin film > heads of hard disk drives > ROE 31% > Cash flow $1.18 > Inventory t/o 17.9 > small div, yield 0.5% > book value 7.65x > next earnings due July > > While my call on a possible b/o was clearly off the mark, I think > the fundamentals are too strong for a sig breakdown much past here. > Trouble is, may decide to go into a several month base in the low > to mid 20s, and just tie up capital. I've been watching it, glad > you asked cuz made me do a closer exam, I'm also thinking about > doing something on it next week, altho don't know if it will be on > Monday. May just buy calls, or may go long the stock and sell calls > if it moves up quickly. > > tom w > ---------- > > From: Patrick Toy > > To: stkguru@netside.net > > Subject: INVX > > Date: Saturday, April 26, 1997 2:44 PM > > > > Tom, > > > > You had sent a e-mail message on the 15th of April about a > possible > > breakout with INVX. I have been watching this stock closely > (even before > > you mentioned it) and have talked myself into buying it on > Monday. I know > > the market still looks bad and there are a lot of reports coming > out this > > week. What do you think??? > > > > Patrick ------------------------------ Date: Sat, 26 Apr 1997 23:43:59 -0700 From: GoldFish Subject: [CANSLIM] INVX Here is what I got about INVX. Vinik has reduce holding on INVX twice in January. I don't know why. Just to share it with you folks! - -- GoldFish "Every stock is a bad stock..." ================================================================== WASHINGTON, Jan 30 (Reuter) - A group led by former Fidelity Magellan Fund manager Jeffery Vinik said Thursday it reduced its stake in Innovex Inc to 578,100 common shares, or 4 percent, from 5.4 percent previously held. In a filing with the Securities and Exchange Commission, the group said its latest transactions include the sale of 185,000 common shares between January 17 and January 29 at prices ranging from $25.7291 and $31.9789 per share. Innovex, based in Hopkins, Minn., is a maker of precision electromagnetic products. ======================================================================= WASHINGTON, Jan 17 (Reuter) - A group led by former Fidelity Magellan Fund manager Jeffrey Vinik said Friday it cut its stake in Innovex Inc to 773,000 common shares or 5.4 percent from 6.7 percent previously held. In a filing with the Securities and Exchange Commission, the group said its latest transactions include a net of 186,900 common shares sold between January 7 and January 16 at prices ranging from $26.3750 to $34.6910 per share. The group holds the stake for investment purposes, the filing said. Innovex, based in Hopkins, Minn., is a maker of precision electromagnetic products. ------------------------------ Date: Sat, 26 Apr 1997 23:47:38 -0700 From: GoldFish Subject: [CANSLIM] Is INVX forming a cup-and-handle? Looking at the chart of INVX http://quote.yahoo.com/quotes?symbols=invx&detailed=1y Is it forming a cup-and-handle? - -- GoldFish "Every stock is a bad stock..." ------------------------------ Date: Sat, 26 Apr 1997 21:43:16 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] IBM (was LL to UR graphs) > From: "Tom Worley" > what I was seeing. As far as I was concerned, IBM was a legitimate > CANSLIM candidate except to a true purist CANSLIM. Posting my > comments was in part a test of my read on it, partly showing off, I agree. I think excluding a stock only because it has a large number of share outstanding is a mistake. A fast growing large company can have returns just as good as a small company. Intel and MSFT are two good examples. In the very strict sense, they are not CANSLIM stocks, but only because of the S. ------------------------------ Date: Sun, 27 Apr 1997 02:35:16 -0400 (EDT) From: Zoran Mitrovski Subject: Re: [CANSLIM] R. Rainwater on Louis Ruckeiser show Hemant wrote: > What do people think here about diversification? is it good at all? > At what point (level of experience/success) should one start > concentrating rather than diversifying? Does anyone in the group NOT > diversify much and has been a successful investor (choose your > quantitative metric) for a sustained period of time? > Would love to hear people's experience/thoughts/opinions. > Thanks Few rules that I follow: 1. Study the situation before each trade you make. 2. Build a set of probable hypotheses. 3. Let TA tell you: - when to enter, - when to exit if your winning hypothesis is wrong, - when to exit if your winning hypothesis is right. 4. When the decision time comes, enter with a position that would produce a loss of no more than 2% of your total trading assets if the hypothesis turns out to be wrong. (Don't risk more than 2% of your total money per one trade.) Diversification, or NO diversification, is not an issue. With the above rules you can enter ten different trades simultaneously with 10% of assets per trade (diversification along the "markets" axis), OR you can enter and exit ten different trades in a row, each with 100% of assets per trade (diversification along the "time" axis). The trick is to figure out the entry and the protective stop points that maximize your chances for winning on EACH trade, and then let the 2% rule decide how big your position should be. Quantitative measures of other people's success won't help you. There is no ONE ultimate answer to the question of successful trading. It is a highly individualistic endeavor, and by the nature of things, it cannot be taught to the crowd because the crowd's main purpose is to define the center of the bell-curve. You HAVE TO find your own way. (By "you" above I meant "one", "we", ...i.e. it was used figuratively.) Cheers, Zoran http://www.seas.rochester.edu:8080/ee/users/zmitrov/home.html ------------------------------ Date: Sun, 27 Apr 1997 07:23:51 -0400 From: derek b Subject: Re: [CANSLIM] National get-together in Las Vegas The Canslim meetings in Las Vegas this week and in SF in August are not "official," just users' groups of rabid canslimmers. Some are excellent stock pickers and enjoy sharing. Monthly Canslim meetings of these user groups occur in Houston, SF, and Wash. DC. These groups have put together the above referenced "national" Canslim meetings. I don't think they ever attracted WON or Ryan. These meetings and the annual dinner typically attract 40-50 canslimmers and are held in association with ISI Money Shows. You may be able to read Greenspan's intentions for May, but the Street appears adrift until the uncertainty of what actually occurs in May is behind us. I can see a possible "relief" rally at that point should the FOMC continue the 25bp trend. 50bp seem to me to beyond Greenspan's typical modus operandi. Derek Tom Worley wrote: > I notice that neither WON nor Ryan are listed. Do they show up for > the SF meeting (I would like an excuse to revisit that great city). > What do you mean, "uncertainty of the May FOMC" meeting", I have no > doubt, 25bp hike, and still maybe 50. > > tom w ------------------------------ Date: Sun, 27 Apr 1997 07:29:15 -0400 From: Charley Meng Subject: [CANSLIM] storage/memory device group I have SEG WDC QNTM in my portfolio. Earnings reports for the group have come out and have been very strong. One even mentioned that the sales were capacity constrained. Parts suppliers were not able to keep up with demand. P/E ratios are down to less than 15 for all of them. They have been selling off like the whole sector is going to get wiped out. I don't have a clue as to why this selloff is going on. With all of the increases in file sizes, graphics useage, etc., there will be a real expansion in drive space. Further, costs of storage have dropped at a fast rate. Tom W's comment about adding a drive being a cheap upgrade sounds correct to me. Let's see, better products, lower prices, high profits, continually expanding demand n a larger market. why does that lead to lower stock prices and p/e's of 12. Any suggestions? > Date: Sat, 26 Apr 1997 21:07:01 -0400 > From: "Tom Worley" > Subject: [CANSLIM] storage/memory device group > > Am rethinking my prior post suggesting that the memory device group > was rolling over since my review of INVX. Since it provides parts > for hard drives, and its sales are so strong and growing, now not > so sure that this group is in so much trouble. Also failed to > consider the nr of existing computers where a drive upgrade is done > without replacing the entire computer. > Bear in mind that INVX is in the Elec-Misc Components group which > has a GRS of 70 while the Computer-Memory Devices group has a GRS > of 45. > If you look at a chart of STK (Storage Tech) you will see one > example of why I am concerned about this group. On the other hand, > this group still has three of its five top stocks with RS and EPS > over 90 (SMOD, WDC, EMC) so it may be premature to rule this group > down and out. > (there's that SMOD again!) > > tom w - -- Regards Charley Meng Mailto:cmeng@uky.campus.mci.net ------------------------------ Date: Sun, 27 Apr 1997 08:45:51 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] storage/memory device group My original suggestion that this group might be in trouble was based, in part, on two different stories I had picked up (one was in connection with one co's earnings release) which together suggested slowing growth just as production capacity was picking up, which in turn could lead to further price cuts and hampering of profit growth. If industry wide they were capacity restrained, I wouldn't expect to see prices dropping so much. Trouble with this, we may not have the answer till next earnings cycles unless analysts start cutting the ratings and earnings estimates in the meantime. tom w - ---------- > From: Charley Meng > To: canslim@xmission.com > Subject: [CANSLIM] storage/memory device group > Date: Sunday, April 27, 1997 7:29 AM > > I have SEG WDC QNTM in my portfolio. Earnings reports for the group > have come out and have been very strong. One even mentioned that the > sales were capacity constrained. Parts suppliers were not able to keep ------------------------------ Date: Sun, 27 Apr 1997 08:00:32 -0500 From: "Brenda" Subject: [CANSLIM] May FOMC- Up? Hope NOT! In My Humble Opinion there is just about as much chance of him RAISING the interest rates 50 basis points as there is him doing the RIGHT thing and LOWERING the interest rate 50 basis points. I let me market tell me what it is doing and maybe, must maybe, for once, the market is going to hold Mr. Greenspan captive and not let him do what HE WANTS to do, "the wrong and improper thing" of raising the interest rates. If the market resumes it's upward path, which I am no longer convinced that it will do being as all indexes are in sync and headed south, but head north he will raise the rate. That sends the market back down. If the market stays where it is or heads south I do not think, even Greenspan is stupid enough to raise rates in the face of that. It is my opinion that Greenspan is the most powerful man in the world at this particular instant and moment in history and "could become" the most hated man in history since Hitler if he continues on his wayward path. Oh well, just my opinion. A shame that "the greatest barter place in all time is being manipulated and controlled" by one man who states in public that he does not think he has any influence over the market because one man could not do that. If he thinks that and makes statements like that in public how could one expect better in other areas? James - ---------- > From: derek b > To: canslim@mail.xmission.com > Subject: Re: [CANSLIM] National get-together in Las Vegas > Date: Sunday, April 27, 1997 6:23 AM > You may be able to read Greenspan's intentions for May, but the Street > appears adrift until the uncertainty of what actually occurs in May is > behind us. I can see a possible "relief" rally at that point should the > FOMC continue the 25bp trend. 50bp seem to me to beyond Greenspan's > typical modus operandi. > > Derek > > Tom Worley wrote: > > I notice that neither WON nor Ryan are listed. Do they show up for > > the SF meeting (I would like an excuse to revisit that great city). > > What do you mean, "uncertainty of the May FOMC" meeting", I have no > > doubt, 25bp hike, and still maybe 50. > > > > tom w > ------------------------------ Date: Sun, 27 Apr 1997 10:07:49 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] May FOMC- Up? Hope NOT! Careful James, you're getting rabid on this issue. And, as you well know, I disagree with you and support Greenspan's actions to date. I am not interested or willing to see us chase growing inflation like we did in the Carter years until interest rates are back at 18% or so, that destroys, not slows, the economy, and takes years to recover. I will shortly be posting my defense, an economic report. Hope your blood pressure (hummm, that's also bp, like basis point, any connection?) will have dropped a little by then :--). tom w - ---------- > From: Brenda > To: canslim@mail.xmission.com > Subject: [CANSLIM] May FOMC- Up? Hope NOT! > Date: Sunday, April 27, 1997 9:00 AM > > In My Humble Opinion there is just about as much chance of him RAISING the > interest rates 50 basis points as there is him doing the RIGHT thing and > LOWERING the interest rate 50 basis points. I let me market tell me what it > is doing and maybe, must maybe, for once, the market is going to hold Mr. > Greenspan captive and not let him do what HE WANTS to do, "the wrong and > improper thing" of raising the interest rates. If the market resumes it's ------------------------------ Date: Sun, 27 Apr 1997 11:23:11 -0400 From: "Tom Worley" Subject: [CANSLIM] Charts I'm just about charted out and ready to start studying for my Options Principal license. Don't know how many charts I looked at so far this weekend, and still not done, but haven't found one I like and willing to take money out of the bank for. Looked at stocks hitting new highs, stocks mentioned here, stocks due to report next week (dismal list), etc. If I find something, will post it. tom w Any opinions are strictly my own and not that of my employer. My comments are based on a variety of sources and are intended strictly to assist and inform. In no way am I suggesting a buy, sell, or hold decision based on my comments or observations. I always urge an investor to do his or her own homework, and be sure the risk of the market can be tolerated and any losses accepted gracefully. ------------------------------ Date: Sun, 27 Apr 1997 11:20:49 -0400 From: "Tom Worley" Subject: [CANSLIM] Economic Report Next week will be a light one for earnings reports and a busy one for economic reports. As a reminder, recall some of my past discussions on how I try to view these reports by examining not only the nrs themselves but how accurate the economists are in their forecasting, as well as how the data stands up in any subsequent review or update. Recently Commerce has screwed up a couple times, most recently double counting crude oil imports and inflating the trade deficit by over a billion dollars. But hey, what the heck, billion here, billion there, everntually you are talking real money. One report that was sharply revised upward last week was the March building permits. Originally estimated by Commerce as falling 1.5%, it was revised on final data received to up 0.6%. This is an important report as it is a precursor of future building activity. Coming on the heels of so much political criticism of the Fed's rate hike in March, and demands from some of the opponents up on the hill (who dislike any powerful agency not being under their control) for congressional hearings prior to any future rate hikes (could take years just to schedule the hearings), combined with reports that are initially reported as estimates, then updated later much higher in an inflationary direction, I am concerned that monetary policy is rapidly becoming politicized and may eventually become unreliable and unresponsive. Should that happen, I would expect to see us in a recession within several years, chasing inflation much like we did in the Carter years till interest rates approach 20%. I am not saying Commerce is actually deliberately skewing their estimates in the direction of non-inflationary indicators, however it is a political animal and subject to manipulation. I have seen criticism of Greenspan based on a belief that he is manipulating the mkt, I do not believe this, but his actions certainly affect the mkt and the media circus focuses a lot of attention on this. When he says anything about the mkt being overvalued, there is a frenzy of coverage. When he is asked about what he really meant and the mkt's reaction to his words, there is virtually no coverage. He is a free mkt economist, the value of the mkt is but one minor input to the Fed's decisionmaking process. Frankly, I think Greenspan may be the only person who is powerful enough to put some backbone into Congress and the White House so that we can (eventually) attain a balanced budget. Maybe then we can start talking about reducing the obscene nat'l debt. OK, editorial over with, had to get that out of my system. Reports due next week: Monday - March new homes sales - existing home sales reported last week down sharply (2.8%) altho total for qtr will still be very high and concensus was for a drop of 3.3% Tuesday - Q1 Employment Cost Index - due at 8:30AM, this is an important one. Of 35 economists surveyed, 18 expect a qtr'ly increase of 0.9%, economists at two wirehouses are expecting 1.1%, seven other economists are expecting 1.0%, and at least one is expecting 0.8%. Most, including myself, are expecting to continue to see benefits costs, esp health care, returning to their more historic (higher) levels than we have been seeing, thus further increasing future labor costs in an inflationary direction. This report may also be skewed higher as a lot of the end-of-year bonuses and promotions and raises were not included in Q4 report. Also expected to contribute to the increase in ECI are commissions resulting from the strong retail sales of the first qtr and factory overtime (remember my prior comments about inventory being at historic record lows and production having to ramp up if strong sales continued? This is one area where production increases will show up). Mar Durable Goods (watch out for this one, concensus seems to be expecting a low report around 0.3% increase Apr Consumer Confidence - slight drop recently, hope it holds, bearish sentiment favorable Wednesday - Q1 GDP initial report, don't know the concensus, but likely will be strong and inflationary Apr Chicago NAPM, could go either way but gives a hint at what the Feds will be looking at in May hope this helps put the week into perspective. tom w Any opinions are strictly my own and not that of my employer. My comments are based on a variety of sources and are intended strictly to assist and inform. In no way am I suggesting a buy, sell, or hold decision based on my comments or observations. I always urge an investor to do his or her own homework, and be sure the risk of the market can be tolerated and any losses accepted gracefully. ------------------------------ Date: Sun, 27 Apr 1997 11:50:33 -0400 From: "Tom Worley" Subject: [CANSLIM] News you can use First, you may not be aware of a website, NASD Regulations, where you can gain a lot of info about your broker, what he is supposed to do, and even file complaints online. It is at http://www.nasdr.com. It is for both the investing public as well as member firms and I was there to gather up some info for my continuing ed program. Secondly, at NASDAQ's site, http://www.nasdaq.com, a good one to bookmark, you can get the current lists of stocks now participating in the new SEC rules designed to tighten spreads, as well as read the results to date of this new rule. So far, the top (first, most liquid) 50 stocks showed a spread tightening from a prior spread of .20 to .15. Of the first 150 stocks involved, overall they showed spreads tightening from an average of 3/8 down to 1/4. Last week more stocks were added, and more are added tomorrow, so looks like it is working and being steadily implemented. Should help us all if this mkt ever gets its act together. tom w Any opinions are strictly my own and not that of my employer. My comments are based on a variety of sources and are intended strictly to assist and inform. In no way am I suggesting a buy, sell, or hold decision based on my comments or observations. I always urge an investor to do his or her own homework, and be sure the risk of the market can be tolerated and any losses accepted gracefully. ------------------------------ Date: Sun, 27 Apr 1997 15:02:05 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] storage/memory device group > From: Charley Meng > prices, high profits, continually expanding demand n a larger market. > why does that lead to lower stock prices and p/e's of 12. > > Any suggestions? Historically there has also been ferocious competition, short product cycles, low profit margins, and fairly sharp cyclical swings in that group. This may have lessened somewhat, but perhaps this is what is keeping the PE ratios low. ------------------------------ Date: Sun, 27 Apr 1997 15:02:05 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] May FOMC- Up? Hope NOT! > From: "Brenda" > In My Humble Opinion there is just about as much chance of him RAISING the > interest rates 50 basis points as there is him doing the RIGHT thing and > LOWERING the interest rate 50 basis points. I let me market tell me what it > is doing and maybe, must maybe, for once, the market is going to hold Mr. > Greenspan captive and not let him do what HE WANTS to do, "the wrong and > improper thing" of raising the interest rates. If the market resumes it's > upward path, which I am no longer convinced that it will do being as all I would like to hear the reasoning behind your statement that raising interest rates is the improper thing to do. The probable consequence of an interest rate hike causing a market sell off is not an argument against raising rates (just in case that is your reasoning). Personally, I think Greenspan is doing a pretty good job. Also, I would like to point out that in the bond market, market forces set interest rates based on what current inflationary expectations are, and the "vote" in that market is that rates should be higher, as seen by the rise in yields on the 30 year bond from something like 6.2% to 7.1% in the last 4-5 months. ------------------------------ Date: Sun, 27 Apr 1997 15:02:05 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] Economic Report > From: "Tom Worley" > Coming on the heels of so much political criticism of the Fed's > rate hike in March, and demands from some of the opponents up on > the hill (who dislike any powerful agency not being under their > control) for congressional hearings prior to any future rate hikes > (could take years just to schedule the hearings), combined with Yes, I saw that something like 63 Democratic Congressman are protesting Greenspan's policies. What a bunch of blockheads. Why a bunch of politicians think they have a better idea of where interest rates should be than a trained economist who spends his time trying to figure out the answer to that question is beyond me. (Actually, not beyond me, I think the mentality that goes into making a person a politician in the first place is that they think know better than everyone else and want to legislate everything they can get their hands on.) ------------------------------ Date: Sun, 27 Apr 1997 19:26:24 -0400 (EDT) From: OWENTIME@delphi.com Subject: Re: [CANSLIM] Cup-with-a-Handle RE: Overhead supply and chartist protocall. Seems that some of the good bases can be found in last Nov-Jan crunched up stocks. Sifting through them and CANSLIM -ing them could be a possibility after this "correction" occurs. T s a novice, I am trying to follow the "bending of the rules" in corrections and changing sectors. Cup and handle with little or no momentum seems only possible after a long tight base. ------------------------------ Date: Sun, 27 Apr 1997 18:29:02 -0500 From: "Brenda" Subject: Re: [CANSLIM] May FOMC- Up? Hope NOT! I've done this before ONCE, but you did ask. TOM DO NOT READ ANY FURTHER. Your blood pressure is high enough. TOM! I told you not to read any further!!!!! OK, Tom's been forewarned so here goes. Peter Lynch, known as THE guru of Wall Street, and earned the name through long hours of hard work, family neglect, making mostly right moves at the right time, and certainly knows and understands the market. He will tell you that when the interest rate is 8% he is OUT OF HERE as far a stocks go. Even, the great Peter Lynch, as great as he is refuses to fight interest rates of 8%. When all that bidding is done on the bond market they have to be guessing what the interest rate is going to be. If they buy bonds paying 7% and Mr. G. raises the rate to 8% they couldn't unload what they have by throwing in all the tea that was sunk in the Boston Harbor. As rates rise many things happen in our economy. The last time rates were raised you saw a MAD FURRY of prospective home buyers RUSHING out LOCKING down rates. Bidding for quarter and even half points HIGHER than prime. What do you see now? NOTHING. Take a ride into the neighborhoods and count the for sale signs and then count how many have the word SOLD on them. This tells an ENORMOUS story about the economy. Then to take it a step further, if you see a house that is sold check and see if it was not bought by one stepping DONW and not UP. As rates rise many things will happen in the economy that will "make" other things happen. Reagan understood ECONOMY 101. Even, John Kennedy understood ECONOMY 101. They knew and had good men beside them to help them and they both listened. They did not want "YES MEN". They wanted MEN! They wanted people who KNEW what they were talking about. And then, the important part. They listened. The story can go on and on and on. Watch what the experienced, those in the know, those who are not now in the limelight, our YES MAN BY MY SIDE has taken care of that. Watch what these people are saying.Names? They are abundant. THEY are ALL saying the same thing. And, Tom, if you are reading this - NONE of them are in agreement with you or Mr. Greenspan. I do not doubt that in his mind he is doing what he "thinks" to be right. Let's face it. He would not have his job this very instant if Clinton had not reappointed him. And, with not ONE man beside Clinton who is NOT a YES man, don't kid yourself for one instant that Clinton would have re-appointed somebody who did not answer to him. Sorry, but that's polotics. It would be out of character for Clinton to have around him somebody who stands for something. That's bad, but that's politics. The youngsters had the forum in Church today and it was refreshing to hear things put but into simple, easy to understand terms. They said that if you want to know what politics, Congress, and our country are going to look like 20 years from now take a look at the school classroom Any school classroom. What a scary thought! Even more sad, is that it is probably true. No real stands on anything, can't offend anybody about anything, loosey goosey, no prayer, etc., etc., etc. Oh well, group that's it for me - BUT I was asked to respond. I didn't even mention the most telling fact about interest. I haven't paid LIST PRICE on almost anything at the grocery store or anything that I can remember for that matter in a long, long time. Mr. Clinton will not mind telling you that he modeled his governcy of Ark after Mr. Jimmy Carter and then his Presidency. He could got out in a flurry with a repeat of just what ran Mr. Carter out on a rail. Sorry, Jimmy, but you got some bad advice. All those YES people just don't get the job done. Not the tough ones, anywyay. Ya'll all have a good rest of Sunday. I'm going back to watching the Bulls. James There is somebody who acts like a team, even though they have stars, and they get the job done. - ---------- > From: pwahl@postoffice.worldnet.att.net > To: canslim@mail.xmission.com > Subject: Re: [CANSLIM] May FOMC- Up? Hope NOT! > Date: Sunday, April 27, 1997 6:02 PM > > > From: "Brenda" > > > > In My Humble Opinion there is just about as much chance of him RAISING the > > interest rates 50 basis points as there is him doing the RIGHT thing and > > LOWERING the interest rate 50 basis points. I let me market tell me what it > > is doing and maybe, must maybe, for once, the market is going to hold Mr. > > Greenspan captive and not let him do what HE WANTS to do, "the wrong and > > improper thing" of raising the interest rates. If the market resumes it's > > upward path, which I am no longer convinced that it will do being as all > > I would like to hear the reasoning behind your statement that raising > interest rates is the improper thing to do. The probable consequence > of an interest rate hike causing a market sell off is not an argument > against raising rates (just in case that is your reasoning). > Personally, I think Greenspan is doing a pretty good job. > > Also, I would like to point out that in the bond market, market > forces set interest rates based on what current inflationary > expectations are, and the "vote" in that market is that rates should > be higher, as seen by the rise in yields on the 30 year bond from > something like 6.2% to 7.1% in the last 4-5 months. > > ------------------------------ End of canslim Digest V1 #155 ***************************** To subscribe to canslim Digest, send the command: subscribe canslim-digest in the body of a message to "majordomo@xmission.com". 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