From: canslim-owner@xmission.com (canslim Digest) To: canslim-digest@xmission.com Subject: canslim Digest V1 #220 Reply-To: canslim@xmission.com Sender: canslim-owner@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Wednesday, June 11 1997 Volume 01 : Number 220 In this issue: Re: [CANSLIM] ATI [CANSLIM] DRL Re: [CANSLIM] ATI Re: [CANSLIM] DRL Re: [CANSLIM] AHM Re: [CANSLIM] DRL Re: [CANSLIM] DRL Re: [CANSLIM] A Few Questions/SZA/JTAX Re: [CANSLIM] ATI Re: [CANSLIM] DRL Re: [CANSLIM] AHM Re: [CANSLIM] ATI Re: [CANSLIM] DRL Re: [CANSLIM] DRL [CANSLIM] Thoughts on DWSN Re: [CANSLIM] DRL Re: [CANSLIM] DRL Re: [CANSLIM] AXAS Re: [CANSLIM] A Few Questions Re: [CANSLIM] AXAS Re: [CANSLIM] A Few Questions/SZA/JTAX Re: [CANSLIM] AHM Re: [CANSLIM] A Few Questions Re: [CANSLIM] One worth watching (BS) Re: [CANSLIM] ATI 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: Wed, 11 Jun 1997 11:33:09 -0400 (EDT) From: Dbphoenix@aol.com Subject: Re: [CANSLIM] ATI In a message dated 97-06-11 07:47:28 EDT, you write: << I don't see a cup even vaguely here. I might call it a double bottom, with the lows of 23.125 in mid-Jan and 22 in late Mar (altho not an encouraging dbl bottom at that), but definitely no c&h forming. I find too many CANSLIMer in particular, and TA investors in general, far too hung up on finding c&h patterns. Come on, it's only one of many TA patterns, granted it tends to be the strongest when it's right, but if you try to force a chart into this pattern, it increases your odds of losing money. >> Very true. Even though BigO goes into a variety of profitable chart patterns, CSers often focus on this one, perhaps because he uses it, along with the rectangular base formation, as his most frequently used chart pattern example in the chart illustrations. Even though BigO addresses the volume issue, I find that many CSers don't pay much attention to it, particularly newbies. This may be because even though BigO, as I said, addresses the issue, he doesn't really explain it. I find volume patterns to be just as important as price patterns. If you don't use them, you may as well base your decisions on point-and-figure. For the most part, the volume pattern in a cup ought to parallel the cup--high volume somewhere on the downleg, a dryup at the bottom, a gradual resurgence on the upside tapering off into the handle, another dryup (prefereably with a shakeout), then the final breakout. Including the volume pattern in one's analysis helps to avoid forcing the price pattern into a cup when it really isn't. It also prompts one to realize at some point that the most profitable time to buy these stocks is when they're coming off the bottom of the cup, not when they're breaking out of the handle, but the results of trying to do this without evaluating the volume pattern properly leads to less than satisfactory results. If anyone is wondering why so many handle breakouts fail, consider those who bought when the stock broke out of the bottom of the cup. They already have a 20 or 30 or even higher percentage profit before the handle is even formed. It's only reasonable to expect that they'd take some profits at the handle breakout. Only when you get through that supply is any subsequent attempt at a rally going to succeed. - -----Db ------------------------------ Date: Wed, 11 Jun 1997 18:00:21 +0200 From: Johan Van Houtven Subject: [CANSLIM] DRL DRL breaking out @ 4 x Av Vol RS: 97 EPS: 60 Acc: A Lower than 12$ so not for every-one! Currently 3 13/16 3 7/8 (up 1/2!) - --- Johan Van Houtven ------------------------------ Date: Wed, 11 Jun 1997 12:11:02 -0400 From: Hemant Rotithor Subject: Re: [CANSLIM] ATI Dbphoenix@aol.com wrote: > > > For the most part, the volume pattern in a cup ought to parallel the > cup--high volume somewhere on the downleg, a dryup at the bottom, a gradual > resurgence on the upside tapering off into the handle, another dryup > (prefereably with a shakeout), then the final breakout. Including the volume > pattern in one's analysis helps to avoid forcing the price pattern into a cup > when it really isn't. It also prompts one to realize at some point that the > most profitable time to buy these stocks is when they're coming off the > bottom of the cup, not when they're breaking out of the handle, but the > results of trying to do this without evaluating the volume pattern properly > leads to less than satisfactory results. Are you saying that if one did evaluate volume pattern properly there is a method to trade atthe bottom of the cup that will work successfully with a high probablity? If so what is it? WHen it is at the bottom of the cup the only sign for the trader would be to buy when the upward part starts building on a higher volume, but that is so failure prone that I doubt it will work very well. Please point me to a ref which says that it can be done. If anyone is wondering why so many > handle breakouts fail, consider those who bought when the stock broke out of > the bottom of the cup. They already have a 20 or 30 or even higher > percentage profit before the handle is even formed. It's only reasonable to > expect that they'd take some profits at the handle breakout. Only when you > get through that supply is any subsequent attempt at a rally going to > succeed. > > -----Db But isn't the formation of the handle itself indicative of those people taking profits plus the overhead breaking even? Otherwise if there is not much overhead in the cup the stock will go up and not form a handle. Would be interesting to know the relationship between length of the handle, volume in the handle, and the overhead supply. - -- 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: Wed, 11 Jun 1997 12:46:22 -0400 (EDT) From: Dbphoenix@aol.com Subject: Re: [CANSLIM] DRL In a message dated 97-06-11 12:27:01 EDT, you write: << DRL breaking out @ 4 x Av Vol RS: 97 EPS: 60 Acc: A Lower than 12$ so not for every-one! Currently 3 13/16 3 7/8 (up 1/2!) --- Johan Van Houtven >> Johan, What is it about this stock and/or company that interests you? My computer crashed last week and I was off for 5 days, so if you've already provided this info, my apologies. - ----Db ------------------------------ Date: Wed, 11 Jun 1997 12:58:44 -0400 (EDT) From: Dbphoenix@aol.com Subject: Re: [CANSLIM] AHM In a message dated 97-06-11 12:43:03 EDT, you write: << Appears to be a nice C&H pattern that broke last Thurs/Fri, pivot/buy point (terminology?) at about 42.25, closed Tues @ 44 3/8, still within 8% of pivot/buy point (?), however, haven't checked it this morning. Negatives: not alot of insider holdings, growth rate could be better, sales in last two Q's are stagnant, Vol increased the day before break and backed off on Thurs/Fri, possibly due to resistance around 45 (?), I probably don't know what the heck I'm talking about yet! Since I'm still in my learning curve, I'm not thinking about buying it -- but would this be a good buy? >> You answered your own questions with your negatives, George. And you do know what you're talking about. You've obviously put a lot of thought into this and gone through all the right steps. Notice that the volume was not very urgent on the upside of the cup. Also notice the falloff in volume after 6/4. This indicates a lack of conviction on the part of buyers at the very least. Part of whether this is a buy or not depends on what kind of investor you are. Some companies will "correct" as this one has, recover, then begin a slow (sometimes agonizingly slow) climb upward. Or they'll segue into a base that seems to last forever. Utilities, for example. If you're not a roller coaster enthusiast, these kinds of companies may be just the right thing. But they'd drive other people crazy with the waiting, particularly when they see so many stocks going up 20% in a day (though the latter may be pure hype, and lousy investments for other reasons). The number of shares can work against you as well, though it's worth noting that among the stocks BigO valued so highly in his book were PanAm, Boeing, Merck, and Ford, not exactly what you would call small-cap companies. There's room for everybody in CS. - -----Db ------------------------------ Date: Wed, 11 Jun 1997 19:09:34 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] DRL >In a message dated 97-06-11 12:27:01 EDT, you write: > ><< DRL breaking out @ 4 x Av Vol > > RS: 97 > EPS: 60 > Acc: A > > Lower than 12$ so not for every-one! > > Currently 3 13/16 3 7/8 (up 1/2!) > > > > --- Johan Van Houtven >> > >Johan, > >What is it about this stock and/or company that interests you? It has CANSLIM numbers. Not perfect, but reasonable. It is breaking out now. Av vol = 194400 Vol today thusfar: 1038800. So 500% av vol. Up approx 15% today. Cup with super-mini handle. To small a handle for me to buy. But worth watching. Earnings getting better. EPS esp 1998: + 150% > My computer >crashed last week and I was off for 5 days, so if you've already provided >this info, my apologies. > >----Db > > Johan Van Houtven CLICK! N.V. / Wilrijk, Belgium ------------------------------ Date: Wed, 11 Jun 1997 19:28:23 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] DRL Just checked the news: Forget DRL. Up because of upgrade. Wednesday June 11 11:03 AM EDT RESEARCH ALERT - DI Industries started NEW YORK, June 11 (Reuter) - Lehman Brothers said it initiated coverage of DI Industries Inc (DRL) with a buy rating. - - said DI Industries is an ``under-followed'' small capitalization land driller that deserves a closer look. - - said DI Industries is expected to move from negative cash flow in 1996 to an estimated $96 million in EBITDA for 1998. - - said DI Industries has put together an excellant management team and board of directors. Johan Van Houtven CLICK! N.V. / Wilrijk, Belgium ------------------------------ Date: Wed, 11 Jun 1997 12:28:45 -0500 From: George Subject: Re: [CANSLIM] A Few Questions/SZA/JTAX Tom, Thanks for the welcome and for taking the time to answer my questions. George ------------------------------ Date: Wed, 11 Jun 1997 13:30:21 -0400 (EDT) From: Dbphoenix@aol.com Subject: Re: [CANSLIM] ATI In a message dated 97-06-11 13:01:27 EDT, you write: << Are you saying that if one did evaluate volume pattern properly there is a method to trade atthe bottom of the cup that will work successfully with a high probablity? If so what is it? WHen it is at the bottom of the cup the only sign for the trader would be to buy when the upward part starts building on a higher volume, but that is so failure prone that I doubt it will work very well. Please point me to a ref which says that it can be done. >> OK. >>>>>>>>>>> ;-) Seriously, though, whether or not one has evaluated a volume pattern properly depends entirely on whether or not he turns out to be right, as with everything else. How many of us feel we interpreted a handle breakout improperly simply because the rally stalls or fails? The fault need not lie with us but with market realities, one of which is the unpredictability of the investor (by unpredictable I mean that one can't always be sure of what buyers and sellers are going to do, only what they are doing and have done). We all tend to look for C&H patterns after they've formed, but it's instructive to look at them in sections, like reconstructing the Baby Book you never got around to until the "baby" was in high school. If you have a charting program, scroll back to where the uptrend first breaks. If you're using a book, cover the chart back to this point with a piece of paper. Notice the nature of the break. Is it severe or lackadaisical? Does the stock correct into what looks like a laundry chute or does it just sort of drift downward in a ho-hum way? When it hits bottom, does it bounce back as with a V bottom, or does it seque into a rectangular base? Are there rally attempts along the way or does it take a long nap? Or does it look like a ping-pong ball making smaller and smaller bounces until it finally comes to rest? When it comes out of this base, is it urgent or does it just sort of poke its head out of the weeds to see what's going on in the outside world? All of this is going on long before a handle is ever formed (if, in fact, you ever get to that point). There's absolutely nothing wrong with waiting for the C&H to form. However, there are opportunities to buy before that point if you have the time and interest to monitor your selections and the discipline to keep your stops tight. What makes volume analysis important is that it can help you decide whether, for example, a stock is merely taking a rest before plunging further or is settling into a base from which it can gather momentum for a subsequent rally and move upward. Using volume and price alone without any sort of technical indicators whatsoever--such as moving averages--makes this dicey, but it is possible. This whole area is rather complicated. I'm not being patronizing here, but I don't know how many people are interested in the subject and I don't want to take up a whole lot of space on it. But, for example, if a stock is "breaking out" on piddling volume, what's going to keep it up? The stock market is a market like any other market in which prices are not fixed. Every transaction is a negotiation, if there are only two principals involved. When there are more than two, it becomes an auction. That's what "bidding" for a stock is all about--you're trying to find someone who'll sell it to you for that price. And vice-versa when you want to sell. If there are more buyers than sellers (more demand than supply), the price goes up. If the opposite, the price goes down. How far it goes down depends entirely on what the sellers are willing to take for their stock. This is why you often see a falling stock come to a screeching halt--the sellers aren't willing to take anything less. If the members of this group want to go into this, I'll be happy to share what little I know, though I'm still learning. Believe me, I'm still learning. If not, check a book called Charting the Stock Market by the editors of Stocks and Commodities Magazine. Also available from Amazon.com or can be ordered from any bookstore. Or your library may have it. It's only $14.95. It parallels HTM to a great degree in terms of what BigO says about volume, accumulation and distribution, chart patterns, etc., but analyzes all this in terms of supply and demand and the behavior of buyers and sellers. For me, it was the opening of a very large window. - -----Db ------------------------------ Date: Wed, 11 Jun 1997 13:46:39 -0400 (EDT) From: investor@yvv.com (Trader Jack) Subject: Re: [CANSLIM] DRL >DRL breaking out @ 4 x Av Vol > >RS: 97 >EPS: 60 >Acc: A > >Lower than 12$ so not for every-one! > >Currently 3 13/16 3 7/8 (up 1/2!) News on this one: Lehman Bros started DRL with a "buy" rating. No EPS estimates given. ------------------------------ Date: Wed, 11 Jun 1997 12:48:02 -0500 From: George Subject: Re: [CANSLIM] AHM Dbphoenix@aol.com wrote: > > You answered your own questions with your negatives, George. And you do know > what you're talking about. You've obviously put a lot of thought into this > and gone through all the right steps. > > [snip] Thanks for the positive words, it always helps. Thanks, also, for taking the time to help educate those of us that need it! George ------------------------------ Date: Wed, 11 Jun 1997 12:54:31 -0500 From: George Subject: Re: [CANSLIM] ATI Dbphoenix@aol.com wrote: > > [snip] > > This whole area is rather complicated. I'm not being patronizing here, but I > don't know how many people are interested in the subject and I don't want to > take up a whole lot of space on it. > > [snip] > > If the members of this group want to go into this, I'll be happy to share > what little I know, though I'm still learning. Understanding the volume/price relationship is something I am very interested in. Speak... we will listen... or at least, I will! How fortunate to find a group where so many are willing to share their knowledge. George ------------------------------ Date: Wed, 11 Jun 1997 14:01:28 -0400 (EDT) From: Dbphoenix@aol.com Subject: Re: [CANSLIM] DRL In a message dated 97-06-11 13:58:10 EDT, you write: << Just checked the news: Forget DRL. Up because of upgrade. >> Sounds like they bought a lot of it and are trying to talk the price up, Johan. But then, who knows? Maybe it's worth keeping an eye on, particularly if there's follow-through interest. - -----Db ------------------------------ Date: Wed, 11 Jun 1997 14:10:20 -0400 (EDT) From: investor@yvv.com (Trader Jack) Subject: Re: [CANSLIM] DRL >Cup with super-mini handle. To small a handle for me to buy. But worth >watching. > >Earnings getting better. EPS esp 1998: + 150% > This one might not need much of a handle. Check out the "scare-the-crapola outta da longs" day yesterday coupled with the gap up reversal today. I call this a "vertical" handle. It's a fakeout prior to the breakout. Volume on the b/o today is exceedingly impressive. Take note, however, that the gap on the open arose from a large block traded first thing this morning. Sure as heck wasn't my grandmother buying at the open today, even if the stock price is only $3.75/share. There has been follow-on volume, but not anything approaching what traded at the opening bell. In general, vertical handle stocks which have a nice, well-behaved basing pattern like this one often move nicely on breakouts. Gotta be quick to catch 'em tho. Trader Jack ------------------------------ Date: Wed, 11 Jun 1997 11:17:01 -0700 From: Brian Nash Subject: [CANSLIM] Thoughts on DWSN Any thoughts on: DWSN (Dawson Geophysical) - processes 2-D and 3-D seismic data for petroleum companies. Historical revenues, income and earnings have been: Income Rev EPS 1992 $900K $12M .31 1993 $1.9M $17M .62 1994 $2.3M $23M .74 1995 $2.2M $28M .54 1996 $1.9M $34M .45 1997e .96 1998e 1.26 L4Q EPS: .70 EPS 92/RS 86 4.168M shares, mgt owns 31%. 11 funds own. '96 EPS: .45, '97 Est: .96, '98 Est 1.26, last revised 05/28/97. 2 of 3 analysts revised estimates upward in the last 60 days. Next quarter estimate (Q3 '97 - reporting date 07/21) is for .26 (+116.7% over Q3 '96). V-shaped cup with 2 weeks handle. Up yesterday 1/2 on volume about 40K (versus 13.5K ADV). I've been watching this since an earnings estimate screen pointed it out last fall. Tom, I know you don't like the oil service stocks. ------------------------------ Date: Wed, 11 Jun 1997 13:46:20 -0500 From: "Richard Estes" Subject: Re: [CANSLIM] DRL This is a multi-part message in MIME format. - ------=_NextPart_000_01BC766D.D828DA00 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: quoted-printable Breakout was at the 3.00 level short term. Yes it will have more legs on = it. Richard Estes ---- From: Trader Jack To: canslim@mail.xmission.com Date: Wednesday, June 11, 1997 1:38 PM Subject: Re: [CANSLIM] DRL >Cup with super-mini handle. To small a handle for me to buy. But worth >watching. > >Earnings getting better. EPS esp 1998: + 150% > This one might not need much of a handle. Check out the = "scare-the-crapola outta da longs" day yesterday coupled with the gap up reversal today. I call = this a "vertical" handle. It's a fakeout prior to the breakout. Volume on the b/o today = is exceedingly impressive. Take note, however, that the gap on the open arose from a = large block traded first thing this morning. Sure as heck wasn't my grandmother = buying at the open today, even if the stock price is only $3.75/share. There has been = follow-on volume, but not anything approaching what traded at the opening bell. In general, vertical handle stocks which have a nice, well-behaved = basing pattern like this one often move nicely on breakouts. Gotta be quick to catch = 'em tho. Trader Jack - ------=_NextPart_000_01BC766D.D828DA00 Content-Type: text/html; charset="us-ascii" Content-Transfer-Encoding: quoted-printable

Breakout = was at the 3.00=20 level short term. Yes it will have more legs on it.

Richard = Estes

----
From: Trader Jack <investor@yvv.com>
To: canslim@mail.xmission.com
Date: Wednesday, June 11, 1997 1:38 PM
Subject: Re: [CANSLIM] DRL

>Cup with super-mini handle. To small a = handle for=20 me to buy. But worth
>watching.
>
>Earnings getting better. EPS esp 1998: + 150%
>

This one might not need much of a handle.  Check out the=20 "scare-the-crapola outta da
longs" day yesterday coupled with the gap up reversal today.  = I call=20 this a "vertical"
handle.  It's a fakeout prior to the breakout.   Volume = on the=20 b/o today is exceedingly
impressive.  Take note, however,  that the gap on the open = arose from=20 a large block
traded first thing this morning.   Sure as heck wasn't my = grandmother=20 buying at the
open today, even if the stock price is only $3.75/share.  There has = been=20 follow-on
volume, but not anything approaching what  traded at the opening = bell.

In general, vertical handle stocks which have a nice, well-behaved  = basing=20 pattern
like this one often move nicely on  breakouts.  Gotta be quick = to=20 catch 'em tho.

Trader Jack

 - ------=_NextPart_000_01BC766D.D828DA00-- ------------------------------ Date: Wed, 11 Jun 1997 15:09:08 -0400 (EDT) From: Zoran Mitrovski Subject: Re: [CANSLIM] DRL Trader Jack wrote on DRL: > This one might not need much of a handle. Check out the > "scare-the-crapola outta da longs" day yesterday coupled > with the gap up reversal today. TJ, I always wondered how those days were called. Thanks for providing the proper expert nomenclature for the event. ;^) Now seriously... Isn't it too much of a coincidence for these three events to occur in a chain and in such a short period: 1. Huge shakeout that picked up every imaginable TA stop-loss. 2. A huge block buying the next morning 3. The upgrade news following the block buys Hmmm... When I grow up I wanna be one of those guys who are doing these sort of things. I have this little theory that says the following: Every market at every point in time has a so called sensitivity to both upward and downward avalanches. In other words, for every market and at each point in time there is a certain critical amount of buying/selling power needed to push it into a further buying/selling avalanche. The masters of the trade are the ones who are able to (mathematically or instinctively) come up with these values (for critical power) as the market changes. If they want to go long in a thin market relative to their size, they would enter the market on the short side with a position of the aforementioned critical size; the market would go into the downward avalanche mode caused by the critical push; and while the poor guys like you and me are running for the exits to at least save our underware, the masters are more than glad to accept our shirts and to hold the doors for us. Suma-sumarum in a day or so: The masters have the stock for a price even cheaper than this scenario started, while a bunch of little guys are out there in the cold holding their underware and bitching about how tough the markets are. Jesse Livermore was one of the masters, I believe. Cheers, Zoran http://www.seas.rochester.edu:8080/ee/users/zmitrov/home.html ------------------------------ Date: Wed, 11 Jun 1997 12:50:52 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] AXAS > From: "Tom Worley" > Patrick, I suspect the "something is up" has already happened, and > the analysts are expecting the company to resume its "normal" > process of losing money. In 1995, it lost 34 cents, in 1996 (year > ends Dec) it made a net of 24 cents, primarily to the final six > months earnings, in 1997 it is forecast to lose 85 cents, worst > since 1993, and even for 1998 it is forecast to lose 15 cents. > Revenues have increased sharply in the past two qtrs, however when > you are comparing to prior yr qtrs of only $3 mil or so, it is > relatively easy to show huge percentage increases. I also noted > that its debt is 603% (yeah, that's what DG shows, six hundred plus > percent debt). Even for this group (oil exploration) that's REALLY > high, the other top five all show about 40-50% debt. Thanks, I am so used to looking at high tech companies that have no debt that I tend to forget to look at that item these days. The reason I asked someone about the earnings (I also saw those forecasted losses) is I figure that a very small company can be lost track of, and if something changes, perhaps no analyst upgrades earnings for several months after the change in fortunes. However, you and Zoran have sufficiently warned me off of this one. Something about small oil companies makes me nervous anyway, which is why I asked for further info on this one in the first place. Patrick Wahl ------------------------------ Date: Wed, 11 Jun 1997 12:50:52 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] A Few Questions > From: George > 1. I only subscribed to the NYSE part of DG because the book says to > avoid OTC/AMEX until you've traded for awhile. However, it seems like > most of the players are traded on the OTC. Does the group recommend > this, as well? What are the pitfalls (besides the bigger spreads) of > trading OTC stocks? Smaller companies, more volatile high tech stocks that can get clobbered in a matter of one day, even a market leader like Ascend yesterday lost 6 points. Advantages are that many of the fastest growing companies are traded there. > 3. What does "LL-UR" mean and what does it refer to? This is a term invented by a former member of this group, meaning a stock that moves from the Lower Left of the chart to the Upper Right, with a minimum of volatility. Idea is if you buy such a stock, you are unlikely to buy it at the absolute top, it is more likely to continue to go in the direction it has been going. > > 4. The book seems to indicate that you shouldn't buy stocks at or under > the $10 mark. Does the group recommend this, as well? This varies from canlimser to canslimer. I wouldn't touch the stuff under 15 or so a share, but others are happy to buy lower priced stocks and probably do ok with them. I have seen O'Neil repeatedly warn people to stay away from such low priced stocks however. There seem to be more than enough stocks to choose from priced at 15 and above that I don't see any need to look through those lower priced stocks. ------------------------------ Date: Wed, 11 Jun 1997 12:50:52 -0800 From: pwahl@postoffice.worldnet.att.net Subject: Re: [CANSLIM] AXAS > From: "Tom Worley" > We are now into the summer "travel" season, when gas prices > traditionally increase. So far I have not seen this happen, tho. > And of course there is no demand for heating oil, and less demand > for LPG. I think crude prices may stabilize, or even increase For what this is worth, maybe nothing, I flipped through the seasonal charts I have (futures stuff by Jake Bernstein, the long haired guy doing all those infomercials late at night), and crude oil shows weakness for the next two months before appearing to pick up steam in August. Also, maybe more pertinent here, the S&P seasonals show the market being pretty much flat for the next two months before turning up in August. ------------------------------ Date: Wed, 11 Jun 1997 20:39:08 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] A Few Questions/SZA/JTAX That's what this group is all about, if one of us is too busy, it's likely two or three others will jump in and help. tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. - ---------- > From: George > To: canslim@mail.xmission.com > Subject: Re: [CANSLIM] A Few Questions/SZA/JTAX > Date: Wednesday, June 11, 1997 1:28 PM > > Tom, > > Thanks for the welcome and for taking the time to answer my questions. > > George > ------------------------------ Date: Wed, 11 Jun 1997 21:05:03 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] AHM One factor not mentioned is their attempt to do a hostile takeover of Great Western. Great Western wasn't interested, and even tho they sweetened the price, GW found another suitor. There was a fear that AHM (Sav of Am) would overpay just to succeed, which directly contributed to the selloff (most acquiring cos go down on announcements of major acquisitions while most "acquired" cos go up). They just announced several days ago that they had given up the effort and conceded defeat, which probably accounts for a lot of the recovery. Thus, a lot of the action in this stock over the past three months or so is news related, vice technical. That has to be weighed in the equation. By the way, I have my mortgage thru Sav of Am, and am most pleased with them. Unlike most banks, they hold their own mortgage, rather then selling them off to FNMA or GNMA, thus their income comes the old fashioned way, from interest payments, not all the up front fees and pts charged on every loan. After I suffered a $25K loss from Hurricane Andrew, they worked well with me with an escrow acct in providing funds as I needed it to pay contractors. I have found their service to be excellent. So, in terms of the quality of their "product", I rate them highly. I don't have my savings and checking with them only because I get a much better deal than any bank can offer thru the credit union. Once again, I am going to disagree and say that I do not see any vague resemblance to a cup and handle. There is too much focus on trying to find this rare chart pattern, there are many others that occur much more often, and are nearly as good. I have seen a lot of "potential" c&h formations end up being a short term LL UR chart, and had you waited for the handle to form, you never would have bot it. But if you saw some other patterns there, like channels, bases, etc., and the rest of the CS nrs were right, you could have enjoyed some healthy profits. Everyone should spend some time doing some reading on Technical Analysis. Doesn't have to be CS based, seems that is one area where there is a lot of agreement on interpretation. Nor do you have to be an "expert" on TA, just be able to recognize some of the more common patterns as well as to understand there are a lot more than the ole C&H! tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. - ---------- > From: George > To: canslim@mail.xmission.com > Subject: [CANSLIM] AHM > Date: Wednesday, June 11, 1997 10:36 AM > > This is my first attempt at trying to identify a stock with good CANSLIM > criteria, so if I blow it, go easy on me! > > Ahmanson, HF & Co. (AHM) > > EPS:94, RS:90, GRS:72, Growth:+16%, Stability:12, Timeliness:A, U/D:1.6, > Shr/Flt:105.5/104.4, ADV:571K, Funds:24%. > > Top five in the group have excellent EPS/RS, Q4Y6 is +90% and Q1Y7 is > +89% with a slight increase in earnings from Q4Y6 to Q1Y7, RS line is in > a slight uptrend. > > Appears to be a nice C&H pattern that broke last Thurs/Fri, pivot/buy > point (terminology?) at about 42.25, closed Tues @ 44 3/8, still within > 8% of pivot/buy point (?), however, haven't checked it this morning. > > Negatives: not alot of insider holdings, growth rate could be better, > sales in last two Q's are stagnant, Vol increased the day before break > and backed off on Thurs/Fri, possibly due to resistance around 45 (?), I > probably don't know what the heck I'm talking about yet! > > Since I'm still in my learning curve, I'm not thinking about buying it > -- but would this be a good buy? > > George > ------------------------------ Date: Wed, 11 Jun 1997 19:43:14 -0500 From: George Subject: Re: [CANSLIM] A Few Questions pwahl@postoffice.worldnet.att.net wrote: > > > From: George > > > 1. I only subscribed to the NYSE part of DG because the book says to > > avoid OTC/AMEX until you've traded for awhile. However, it seems like > > most of the players are traded on the OTC. Does the group recommend > > this, as well? What are the pitfalls (besides the bigger spreads) of > > trading OTC stocks? > > Smaller companies, more volatile high tech stocks that can get > clobbered in a matter of one day, even a market leader like Ascend > yesterday lost 6 points. Advantages are that many of the fastest > growing companies are traded there. > Well, I decided to go ahead and subscribe to the weekly OTC/AMEX charts, as well as the NYSE. Might as well have them here, just in case. May not be able to stand you guys having all the fun! What's this I've heard about the OTC MM's taking forever to answer their phones, if at all, when that market is heading south? Is that still the case? Is this where the bad rep of the OTC comes from? > > 4. The book seems to indicate that you shouldn't buy stocks at or under > > the $10 mark. Does the group recommend this, as well? > > This varies from canlimser to canslimer. I wouldn't touch the stuff > under 15 or so a share, but others are happy to buy lower priced > stocks and probably do ok with them. I have seen O'Neil repeatedly > warn people to stay away from such low priced stocks however. There > seem to be more than enough stocks to choose from priced at 15 and > above that I don't see any need to look through those lower priced > stocks. I think I'm going to set my price parameters from $15 to $50, at least in the beginning. Thanks for the input, George ------------------------------ Date: Wed, 11 Jun 1997 19:26:44 -0500 From: George Subject: Re: [CANSLIM] One worth watching (BS) Jim Adams wrote: > > Tom Worley wrote: > >Bethlehem Steel (BS) has now consolidated its recent gains. I first > >mentioned this one at 8.5 after it reported its best earnings in > >two years, beating estimates handily. It's not a perfect CANSLIM by > >any means but for anyone looking for a low priced, "big cap, big > >name" for a buy and hold, it looks decent. > > Tom, I agree the "big cap, big name" stocks appear to be leading the dow > right now, but at 3.27 edt, i find BS down 1/8, but it has been up as much > as 1/8 as well intraday. Looking at the chart, it appears to be forming a > classic cup and handle, consolidating in this handle, which if memory > serves correctly isn't ideal but at least it is falling out of it. I'm > itching to buy this one, but shouldn't I wait for a sign of a breakout that > sustains for a day or so? I'm not familiar with how fast big caps "move up" > this is one train I would like to be on, I think 1 to 2 points isn't out of > the question in the near future. Of course FOMC in July might put a wrench > in that monkey. > > Peace, Now I'm a little confused about all this BS talk... no, not that kind of BS! How do you get around the CANSLIM negatives: virtually no insider holdings, EPS:49, Growth:-4%, Price: under $12, Time:C, big drop in '96-EPS, '97-EPS estimates will not top '95 (thereby failing to set a new high), sales are pretty much flat???? Just trying to learn here, George ------------------------------ Date: Wed, 11 Jun 1997 21:17:06 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] ATI Volume compared to price movement is very important as it gives you a snapshot view of what is happening. High vol, no price change says distribution, low vol with big price gains suggests short covering (unless there is no short position, then it suggests an unreliable price move). High vol with good price gain suggests breakout. Point is, if you ignore volume indicators, you miss a big part of the signal. In response to another post, you should never be buying in the bottom of the cup, even if you are a value investor. Stocks basing, which is what the bottom of the cup typically is, can continue to base for a LOOOONNNNNNGGGGG period, tying up your capital with no return. If you are using CS, you want to at least wait till the stock is in an uptrend with volume, at a minimum. tom w Any statements or opinions are strictly my own and not that of my employer. My comments should not be intrepreted as a recommendation of any kind. I am a licensed (inactive) broker and an active investor. All investors should do their own research prior to any investment, especially one learned about on the Internet. - ---------- > From: Dbphoenix@aol.com > To: canslim@mail.xmission.com > Subject: Re: [CANSLIM] ATI > Date: Wednesday, June 11, 1997 11:33 AM > > In a message dated 97-06-11 07:47:28 EDT, you write: > > << I don't see a cup even vaguely here. I might call it a double > bottom, with the lows of 23.125 in mid-Jan and 22 in late Mar > (altho not an encouraging dbl bottom at that), but definitely no > c&h forming. I find too many CANSLIMer in particular, and TA > investors in general, far too hung up on finding c&h patterns. Come > > Very true. Even though BigO goes into a variety of profitable chart > patterns, CSers often focus on this one, perhaps because he uses it, along > > Even though BigO addresses the volume issue, I find that many CSers don't pay > much attention to it, particularly newbies. This may be because even though > BigO, as I said, addresses the issue, he doesn't really explain it. I find > volume patterns to be just as important as price patterns. If you don't use > them, you may as well base your decisions on point-and-figure. > ------------------------------ End of canslim Digest V1 #220 ***************************** 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.