From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #156 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk X-No-Archive: yes canslim-digest Friday, March 20 1998 Volume 02 : Number 156 In this issue: Re: [CANSLIM] NASDAQ distribution day Re: [CANSLIM] Pivot Point (2 of 2) - Repost from Feb 2 1997 Re: [CANSLIM] TWLB and ANEN Re: [CANSLIM] DG online Re: [CANSLIM] NON CANSLIM - US Fiscal Payments Re: [CANSLIM] NON CANSLIM - US Fiscal Payments Re: [CANSLIM] TWLB and ANEN Re: [CANSLIM] Pivot Point (2 of 2) - Repost from Feb 2 1997 Re: [CANSLIM] TWLB and ANEN [CANSLIM] Examples of Pivot Points on Recent Breakouts Re: [CANSLIM] Examples of Pivot Points on Recent Breakouts Re: [CANSLIM] TWLB and ANEN [CANSLIM] Re: canslim-digest V2 #155 [CANSLIM] Re. Acceleration RE: [CANSLIM] NASDAQ distribution day Re: [CANSLIM] Examples of Pivot Points on Recent Breakouts RE: [CANSLIM] NASDAQ distribution day Re: [CANSLIM] Examples of Pivot Points on Recent Breakouts Re: [CANSLIM] Re: canslim-digest V2 #155 ---------------------------------------------------------------------- Date: Thu, 19 Mar 1998 19:26:42 -0500 From: "Frank V. Wolynski" Subject: Re: [CANSLIM] NASDAQ distribution day At 19:18 3/18/98 -0500, Tom Worley wrote: >Some quotes I read today: ...snipped.... >Keep in mind that most funds have to be nearly fully invested at the end of >the qtr... ...snipped... >But by the last week of March, I suspect the flow >will measurably diminish. Watch the upside volume, I think that will be the >clue. Tom, if I may ask for your indulgence, I'm assuming that this would also be true of end of June, September, and December. Is that correct? Is this because of the way withholdings are processed by employers or by the institutions? Just curious what the motivation and explanation is for the requirement. Thanks, Frank Wolynski - - ------------------------------ Date: Thu, 19 Mar 1998 19:44:39 -0600 From: "Joe Scott" Subject: Re: [CANSLIM] Pivot Point (2 of 2) - Repost from Feb 2 1997 This is a multi-part message in MIME format. - ------=_NextPart_000_001A_01BD536F.74682720 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Thanks Craig, I also was ignorant on this "pivot" meaning. I was = thinking it was the highest price you would want to get in at, on a = break out. Informative post, thx. don't know a thing joe btw, bot GSMS today @ 38.5, little late, but not to far extended for my = 7% stop lose. Any thoughts? Nice run on INFM today, have been in it for 3 days now. - ------=_NextPart_000_001A_01BD536F.74682720 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Thanks Craig, I also was ignorant on this=20 "pivot" meaning. I was thinking it was the highest price you = would=20 want to get in at, on a break out.

Informative post, thx.

don't know a thing

joe

btw, bot GSMS today @ 38.5, little late, but = not to far=20 extended for my 7% stop lose. Any thoughts?

Nice run on INFM today, have been in it for 3 = days=20 now.

- ------=_NextPart_000_001A_01BD536F.74682720-- - - ------------------------------ Date: Thu, 19 Mar 1998 17:47:45 -0800 From: "John Iding" Subject: Re: [CANSLIM] TWLB and ANEN Thanks to all for the suggestions ... I will be selling TWLB tomorrow and holding ANEN for a bit longer .... John - - ------------------------------ Date: Thu, 19 Mar 1998 20:55:53 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] DG online Don't know the exact update times, but I believe from observation that the closing price and volume is updated by 5-6 EST, and the RS later in the evening. The up/down is updated sometime overnight. Most of the other data is updated each weekend, either late Friday night or sometime Sat morning. Any statements or opinions are strictly my own and not that of my employer. My comments should not be interpreted 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. Hopefully my comments will better inform and educate all investors. tom w - -----Original Message----- From: Robert Miller To: Canslim Date: Thursday, March 19, 1998 5:51 PM Subject: [CANSLIM] DG online Anyone know exactly what time the DG online prices are updated each day? Thanks - - ------------------------------ Date: Thu, 19 Mar 1998 20:57:40 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] NON CANSLIM - US Fiscal Payments Pensions and the like (monthly payments) I believe are all as of the first of the month, and usually received if sent by mail by the 2nd or 3rd. Govt employees are paid on the 15th and 30th, or the last working day before if these dates fall on a holiday or weekend. Any statements or opinions are strictly my own and not that of my employer. My comments should not be interpreted 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. Hopefully my comments will better inform and educate all investors. tom w - -----Original Message----- From: Dean Edwards To: canslim Date: Thursday, March 19, 1998 6:33 PM Subject: [CANSLIM] NON CANSLIM - US Fiscal Payments >Could anyone tell me which day of the calender week and how often, (e.g >fortnighty, weekly or monthly) the US Federal Government distributes pensions, >social welfare and payments to government employees . > >Thanks > > >- > - - ------------------------------ Date: Thu, 19 Mar 1998 19:18:04 -0700 From: Tim Fisher Subject: Re: [CANSLIM] NON CANSLIM - US Fiscal Payments At 08:57 PM 3/19/98 -0500, you wrote: >Pensions and the like (monthly payments) I believe are all as of the first >of the month, and usually received if sent by mail by the 2nd or 3rd. Govt >employees are paid on the 15th and 30th, or the last working day before if >these dates fall on a holiday or weekend. > When I worked for the Fed I was paid every 2 weeks. I think everyone else was too. That's 26 pay periods a year for you who are counting, as opposed to 24 for most of the rest of the world. I am straining here but as I recall we were paid every other Thursday, starting with the first Thursday of the year. That last part may be totally wrong. We were paid a day ahead if payday was a Fed holiday. >Any statements or opinions are strictly my own and not that of my employer. >My comments should not be interpreted 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. Hopefully my comments will better inform and educate all >investors. >tom w >-----Original Message----- >From: Dean Edwards >To: canslim >Date: Thursday, March 19, 1998 6:33 PM >Subject: [CANSLIM] NON CANSLIM - US Fiscal Payments > > >>Could anyone tell me which day of the calender week and how often, (e.g >>fortnighty, weekly or monthly) the US Federal Government distributes >pensions, >>social welfare and payments to government employees . >> >>Thanks Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information tfish@spiritone.com WWW http://www.spiritone.com/~tfish -- See naked fish and rocks! - - ------------------------------ Date: Thu, 19 Mar 1998 20:06:01 -0800 From: "Patrick Wahl" Subject: Re: [CANSLIM] TWLB and ANEN > From: "John Iding" > To: > Thanks to all for the suggestions ... I will be selling TWLB tomorrow and > holding ANEN for a bit longer .... John I don't want to seem argumentative, but you are doing exactly the opposite of what you should do, that is, selling you strong stock and keeping your weak one. Seems like WON has an little story about this, something about red and yellow dresses... - - ------------------------------ Date: Thu, 19 Mar 1998 23:07:02 -0500 From: Craig Griffin Subject: Re: [CANSLIM] Pivot Point (2 of 2) - Repost from Feb 2 1997 Joe, you wrote: > "" on a break out. Informative post, thx. don't know a thing joe >btw, bot GSMS today @ 38.5, little late, but not to far extended for my 7% >stop lose. Any thoughts? Nice run on INFM today, have been in it for 3 days > now. It looks like you bought both GSMS and INFM very well (pivot on GSMS was 38 and on INFM there are two pivots, the first and best at 17 1/8 and the second at say 18 1/4 after that little one day pause. The 18 1/4 number is a fudge number I made up somewhere between the place it paused and the left side of the cup at 18 1/2.). The idea of course is: 1) identify the pivot point as the base finally seems to be forming up and near the end, 2) buy the stock as close as possible to the pivot on the day of the breakout, just as it drives past it. In practice it can be very difficult to catch them right at the pivot point. The ideal is to buy within 5% of the pivot. Sometimes, in a strong market with the right stock it is ok to buy up as much as 10% past the pivot. The problem with chasing it that far is as Tom mentioned the other night is as follows: the stock can pull back to support at the top of the base and you get stopped out just as others who are waiting for a second chance buy hop on. Sometimes, you just have to say "too late, I missed that one, the train has left the station". Then you just hope it backs up and comes back close to the station so you can hop on. Of course taking advantage of that second chance buy is another subject and in general is based on a stock sort bouncing off of support and not diving through it. An example of a second chance buy, which a member of our group mentioned taking advantage of recently (can't remember who it was) is THRX. It broke out on 02/04 after only a 2 day handle (ideally you want to see at least a week in the handle, but sometimes they don't do it, and that makes them more dangerous). The pivot was 50 1/4. Then it went a bit before pulling back and ultimately falling on 2/13 as low as 49, but closing the day at 50, more or less dead on the pivot. It could have gone either way, but the next day it moved up on higher volume and gave a second chance buy as it did so. You'll notice that the entire pullback took place on much lower volume than the breakout surge, which is as it should be. Regards, Craig - - ------------------------------ Date: Thu, 19 Mar 1998 23:20:22 -0500 From: Craig Griffin Subject: Re: [CANSLIM] TWLB and ANEN At 08:06 PM 3/19/98 -0800, you wrote: > >> Thanks to all for the suggestions ... I will be selling TWLB tomorrow and >> holding ANEN for a bit longer .... John > >I don't want to seem argumentative, but you are doing exactly the >opposite of what you should do, that is, selling you strong stock and >keeping your weak one. Seems like WON has an little story about >this, something about red and yellow dresses... See page 90 in Chapter 9 of the Second Edition of How to Make Money in Stocks. See also pp 92-93. - - ------------------------------ Date: Thu, 19 Mar 1998 23:33:39 -0500 From: Craig Griffin Subject: [CANSLIM] Examples of Pivot Points on Recent Breakouts This chart reading is part art and part science, but it is enough science that anyone can learn it. And the way CANSLIM does it is really pretty simple once you get the hang of it. Remember that we prefer for a base to be at least 8 weeks in length. But sometimes, especially in strong markets with strong stocks, it is ok to buy a breakout from a 6 week base. When you start buying from 2 week bases (unless it is a handle on a larger base), then you are starting to be a sheer momentum trader, which is not CANSLIM. The examples below are good real life type examples. The first few are much easier reads than the last two (MSPG and CBUK). But really, none of them are too tough, if they were, it would mean the chart was too wide and loose to interest me and I would just move on looking for a nice tight base. The stocks discussed below are: MISI WCOM ZOMX INFM EAII CBUK MSPG Each of the examples has broken out from a recent base. If you want to test yourself and before reading my comments, here are your questions for each stock: 1. When does that most recent base start? 2. When does the base end? 3. What kind of base was it (ie. flat base, cup w/handle, double bottom)? 4. About how deep is the base in percent (top to bottom)? 5. What was the pivot point or buy point? 6. When was the breakout day? 7. (Extra credit) Was there an earlier fakeout and if so on what date? Examples / Answers : On MISI the base runs from 11/19/97 to 2/3/98. This is a 20% flat base. The pivot point was 29 1/8 until 1/28/98. One 1/28/98, MISI had a breakout with an immediate pullback into the base. The breakout only got as far as 29 5/8. I would have probably sold the day after, even though it would not have hit my stop at -8%. The stock never did pull back enough to stop you out (a good sign). On 2/4/98 the stock had a "secondary" breakout. This was the "real" breakout as evidenced by the volume and I would have probably bought my position right back on that day. The pivot on this breakout was 29 5/8. The volume showed that good institutional buying seemed to be occurring and the stock was likely to advance (which is always what you are looking for - the more volume the better). On WCOM there is a cup with handle base. The cup forms from 10/3/97 to 2/20/98. The handle then forms from 2/20 until 3/13/98, drooping down nicely until it turns up to make its move beginning on 3/12/98. The pivot is 39 1/4 (the high point in the handle) with the actual breakout coming on 3/16/98 on good volume as mentioned on this list. ZOMX is another cup with handle. The base runs from 10/22/97 to 03/16/97. The handle begins on 02/17/97 or 03/04/97, depending on how you want to look at it. The move up on 03/02/98 is a "fakeout breakout" if you try to start the handle on 02/17/98. If you had bought that day you would have been stopped out at 8% on 03/06 or 03/09. It then would have taken a very experienced Canslim'r to overcome emotions and re-buy it on 03/17/98 on the real breakout a full 16% higher than she or he sold it! But that would clearly have been the right thing to do. The pivot point was 14 or 14 1/2 depending on how you want to play it and based on the volume as it broke through 14 on the 17th. It is sort of cheating to jump in as it crosses 14, so you have to be alert if it turns sharply south on you that day or the next. But if you are reading it right, you get a head start and your stop is nestled nice and deep in the handle (14 - 8% of 14 = 12 7/8). Why, you might asked, would you want to sell it on 3/6 or 3/9 just because your 8% stop got hit. Well, because there is not guarantee that it was not going to go to $5 a share at that point. And believe me, it can happen, so you honor your stop, buying some insurance thereby, and look to pick it back up if it comes back out of there. A similar fakeout happened with INFM on 2/27 and 3/2. On EAII, the base is very tight (about 16%) and is a flat base that runs from 11/5/97 to 01/30/98. The pivot point is 32 1/2. The breakout was on 02/02/98 on excellent volume. On CBUK the base runs from 9/12/97 to 2/19/98. The base is a sort of double bottom or flat base extending about 20% from top to bottom. The pivot was at 21 1/2. It broke out on 2/20/98. However volume was inadequate. Frequently breakouts on inadequate volume fail. However this one did not. The stock then moved up and formed what I call a "high handle" on 2/23, 2/24, 2/25, and 2/26. The stock then broke out again from the handle with the new pivot point of 23 5/8 on 2/27/98. Notice that this handle did not droop down at all. Ok, this was a VERY non-typical one to show you how the variations can occur. Finally, look at MSPG, also very non-typical. This is a base on a base (usually a very strong formation to buy from when you can recognize it). The first base runs from 10/24 to 12/11/97. The breakout which occurs on 12/12/97 (pivot point 30 1/2) fails a few days later. It then forms another tight base that is just slightly higher that the first base. This second base really begins on 12/12 and continues through 02/02/98 with a fakeout breakout in between. The fakeout went up about 10% on 10/21 from a very ugly formation. Then pulled back around 8% and ended up finally really breaking out on excellent volume on 02/03/98. It is a hard call, but I would say the pivot is somewhere around 35. Thereafter it was launched and is up about 50% since then in a strong internet group. But it was a real faker coming out of the base. Hard to own, but worthwhile if one could manage it. - - ------------------------------ Date: Fri, 20 Mar 1998 00:14:12 EST From: DCSquires Subject: Re: [CANSLIM] Examples of Pivot Points on Recent Breakouts In a message dated 98-03-19 23:35:25 EST, you write: << here are your questions for each stock: 1. When does that most recent base start? 2. When does the base end? 3. What kind of base was it (ie. flat base, cup w/handle, double bottom)? 4. About how deep is the base in percent (top to bottom)? 5. What was the pivot point or buy point? 6. When was the breakout day? 7. (Extra credit) Was there an earlier fakeout and if so on what date? >> This is great stuff for any members that are new to CS. If you combine this with solid earnings, RS>80, EPS>70 , ACC>B, U/D>1.0, GS>60 and buy the stock on strong volume CS will become fun, fun, fun. DSquires - - ------------------------------ Date: Fri, 20 Mar 1998 13:16:16 +0700 From: Peter Christiansen Subject: Re: [CANSLIM] TWLB and ANEN > I don't want to seem argumentative, but you are doing exactly the > opposite of what you should do, that is, selling you strong stock and > keeping your weak one. Agree 100%. - -- Peter Christiansen Chiang Mai, Thailand - - ------------------------------ Date: Fri, 20 Mar 1998 01:29:25 EST From: JANSI1AUG1 Subject: [CANSLIM] Re: canslim-digest V2 #155 Connie: What is the "MF" in "OBV/MF"? Is that the Money Flow that is in Metastock; and I don't understand what an "OBV/MF scan" is. If "MF" is Money Flow, what is the reason why you would want such a ratio-wouldn't Money Flow and OBV track one another, ie. if OBV is in positive divergence with the stock, wouldn' Money Flow be too? I guess I'm asking: WHY TRACK BOTH OF THEM? (Sorry for the caps, but I wanted to emphasize this last question.) jans - - ------------------------------ Date: Fri, 20 Mar 1998 01:35:26 EST From: JANSI1AUG1 Subject: [CANSLIM] Re. Acceleration Deepak, Here is the article;sorry but IBD on-line doesn't have the table of small cap companies with accelerated earning as the newspaper IBD does. jans Above all else, what one factor is most likely to tip off a huge price advance in a small-cap stock? Earnings acceleration. Quickening profit growth stands out as the best single predictor of a blowout price move. Learn to spot accelerating earnings, and you've taken a key step toward finding the next big winner. I N V E S T O R ' S C O R N E R ''One of the most successful attributes of successful stocks has to do with companies that are undergoing positive change in their fundamentals,'' said Gary Pilgrim, who runs the $5 billion PBHG Growth Fund. ''The idea is to catch . . . a company when it is emerging from one rate of growth and transitioning to a higher rate of growth. That's our view of the highest- potential stock to own.'' Now may be an especially opportune time to focus on small-cap firms with accelerating quarterly earnings. After lagging large caps for three years, small caps could be primed for a comeback. The ''flight to quality'' - which favored huge, established companies over smaller firms - is showing signs of waning. The Wilshire and S&P 600 small-cap indexes have led the large- cap S&P 500 since January. The Russell 2000 last week broke into new high ground for the first time since October. Earnings growth, which slackened at large-cap companies in '97, is expected to slow even more in '98. Despite that deceleration, cash flows last year favored huge, resilient companies because of fears that Asia's financial crisis would harm the U.S. economy. If investor faith in the domestic economy surges, cash could flow from stability to growth. That would mean new life for small caps. For the past three quarters, earnings have grown faster among small-cap companies, as measured by the S&P 600, than among S&P 500 companies. Analysts expect large- cap profit growth to lag in '98 as well. The upshot? Now may be a good time to buy small-cap stocks with accelerating earnings - while their superior growth still trades at a relative discount. That's the view of portfolio manager Steve Ross of Nicholas Applegate Capital Management. ''The fastest-growing companies have been the worst performers in the market,'' Ross said. ''Growth rates continue to look strong, and because they have underperformed for so long, the valuations are some of the most attractive they've been in years.'' Spotting acceleration is a two-step process. First, you need to know the percentage per-share growth rate for a given quarter vs. the same quarter a year ago. Don't base a quarter's percentage growth rate on the previous quarter. Seasonal effects can distort the result. For example, Aaron Rents Inc., with a market cap of $337 million, reported a fourth-quarter profit of 25 cents a share. That's up 39% from 18 cents in the '96 fourth quarter. Next comes acceleration. When gauging acceleration, you do compare consecutive quarters. As a general rule, it's good to see EPS growth accelerate over at least the two most recent quarters. In fact, the more quarters that the growth rate speeds up, the better. EPS growth at Aaron Rents, for instance, has accelerated over the past three quarters. From a 5% growth rate in the first quarter of '97, Aaron's earnings per share grew 20% in the second quarter, 32% in the third and 39% in the fourth. For another example, take Boole & Babbage Inc., a San Jose, Calif.-based software company with a market cap of $671 million. Earnings growth at the company has accelerated the past four quarters - from an earnings decline of 17% to positive growth rates of 82%, 106%, 140% and 310%. Does that kind of growth fetch a high price tag? Not these days. Many growth-stock hunters dismiss price-to-earnings ratios as having almost no predictive value of future price action. But for those who must peek at the P-E, Boole & Babbage trades around 26 times earnings, Aaron around 22. Few would call those multiples excessive, even though both stocks have set a string of recent new highs. While P-E's have little use in getting a fix on a stock's future price movement, some pros do like the idea of buying ''growth at a reasonable price.'' One way to price growth is called the price-earnings-growth ratio. The idea is to compare a stock's P-E with its EPS growth rate. That yields a ratio which measures price in terms of profit growth. The Motley Fool Web site runs a PEG ratio calculator at www.fool.com/pegulator/pegulator.htm. Once you find a stock with acceleration, dig into the roots of that momentum. Just as acceleration can lift a stock, a slowdown in earnings growth can stall or even devastate a share price. If you buy on acceleration, you want to look for signs that the most recent quarterly growth rate is sustainable. Pilgrim advises investors to watch out for misleading growth rates. ''A company can show a large earnings increase because the last year was terrible,'' Pilgrim said. Investors should hunt for companies that are improving after several years of sound performance. A good confirming sign, Pilgrim says, is an earnings surprise followed by upward analyst revisions. Cliff Fox, who manages the PIMCO Renaissance Fund, likes to see sales growth alongside profit growth. The $560 million growth fund invests in companies with a wide range of market caps - from Calmat Co. with a $659 million market cap to AT&T Corp., which weighs in at $105 billion. Renaissance holds IBD'S A+ grade, placing it among the top 5% mutual funds for trailing 36-month performance. ''Usually, you see a little revenue acceleration because that tends to give you operating leverage,'' Fox said. On the other hand, sales also can outstrip profit growth. What if a company's sales are up 90% for the quarter, but earnings are up only 30%? That could spell crumbling profit margins. Once investors look inside the fundamentals of a prospective company, Fox warns investors to make sure external factors affecting that growth will be present down the road. ''Look far enough forward not to buy today's surprises when there are downtrends down the corner,'' Fox said. For example, investors shouldn't expect interest rates, which have already dropped sharply, to bolster earnings at rate- sensitive companies. ''That could include home builders or companies exposed to mortgage refinancing.'' //////////////////////////////////////////////////////////// Copyright (c) 1998 Investors Business Daily, All rights reserved. Investor's Business Daily - Investor's Corner (03/17/98) Small-Cap Profit Acceleration Getting Back On Track By Loren Fleckenstein - - ------------------------------ Date: Fri, 20 Mar 1998 00:58:46 -0800 From: Mike Lucero Subject: RE: [CANSLIM] NASDAQ distribution day Johan, I believe you previously mentioned that the price and volume being divergent four times is a signal to start lightening up the portfolio. In what time period would that be? I believe the volume has diverged from price 3 times this week on both NYSE and Nasdaq. Mike On Wednesday, March 18, 1998 2:54 AM, Johan Van Houtven [SMTP:Johan.VanHoutven@ping.be] wrote: > Tuesday was clearly a distribution day for the NASDAQ. We closed lower on > significantly higher volume than the previous day. > > The new high on Monday was on low volume. > > We have also had a few other distribution days the last 2 -3 weeks. > > Anyone reading the market different? > > > > --- Johan Van Houtven > > > > - > > - - ------------------------------ Date: Fri, 20 Mar 1998 08:00:15 -0500 From: "Chris Peek" Subject: Re: [CANSLIM] Examples of Pivot Points on Recent Breakouts Craig, Thanks for the excellent examples and discussions. I am new to CANSLIM and have been reading here for about 8 months or so trying to learn as much as I can. I have been trying to figure out the whole cup and handle thing for a while by comparing what is being said here and looking at the charts and this finally makes it clear. I kind of feel silly because I have been looking for a base that is more stable and not varying in price as much as the examples you used and thus was not seeing the base before. I have a question though, a lot of the examples you used had short, quick price increases from where the pivot point was. How long do you hold the examples that you used? I was recently listening to a tape (with WON and David Ryan) that a friend got with his suscription to IBD and I got the impression that you held until you lost your 7% or hit your price that you wanted to sell at - no ifs, ands or buts! But they also were talking about a much longer time frame for the increases to occur, I think they said 12 to 18 months was typical. What are the thoughts on this? Thanks, Chris Peek - -----Original Message----- From: Craig Griffin To: canslim@lists.xmission.com Date: Thursday, March 19, 1998 11:35 PM Subject: [CANSLIM] Examples of Pivot Points on Recent Breakouts >This chart reading is part art and part science, but it is enough science >that anyone can learn it. And the way CANSLIM does it is really pretty >simple once you get the hang of it. > >Remember that we prefer for a base to be at least 8 weeks in length. But >sometimes, especially in strong markets with strong stocks, it is ok to buy >a breakout from a 6 week base. When you start buying from 2 week bases >(unless it is a handle on a larger base), then you are starting to be a >sheer momentum trader, which is not CANSLIM. > - - ------------------------------ Date: Fri, 20 Mar 1998 14:22:17 +0100 From: Johan Van Houtven Subject: RE: [CANSLIM] NASDAQ distribution day Mike, Good question. I do not recall a specific time frame. I would say within 10 trading days or so. Did you also notice that LOTS of small caps broke out yesterday, or shot higher. I'm mighty bullish on the small caps for now. Russell 2000, and other small cap indexes looking good. >Johan, > >I believe you previously mentioned that the price and volume being >divergent four times is a signal to start lightening up the portfolio. In >what time period would that be? > >I believe the volume has diverged from price 3 times this week on both NYSE >and Nasdaq. > >Mike > >On Wednesday, March 18, 1998 2:54 AM, Johan Van Houtven >[SMTP:Johan.VanHoutven@ping.be] wrote: >> Tuesday was clearly a distribution day for the NASDAQ. We closed lower on >> significantly higher volume than the previous day. >> >> The new high on Monday was on low volume. >> >> We have also had a few other distribution days the last 2 -3 weeks. >> >> Anyone reading the market different? >> >> >> >> --- Johan Van Houtven >> >> >> >> - >> >> > >- > > - --- Johan Van Houtven - - ------------------------------ Date: Fri, 20 Mar 1998 16:49:39 +0100 From: Johan Van Houtven Subject: Re: [CANSLIM] Examples of Pivot Points on Recent Breakouts Craig, I know, this is getting old, but... thank you for posting another excellent leason. It cleared up a few things for me. To see if I have learned well, I'm buying PGEX at a pivot of 55.25 now. ADV= 205K, and trading 256K already @ 10.50 AM. - --- Johan Van Houtven - - ------------------------------ Date: Fri, 20 Mar 1998 11:56:35 -0500 From: Connie Mack Rea Subject: Re: [CANSLIM] Re: canslim-digest V2 #155 - --------------936736C0A2D97DAE1DF3C512 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Morning Jans-- MF is the MoneyFlow indicator in BigCharts. Whether MF is similarly composed in Metastock, I don't know. There are different ways to figure both OBV and MF. There may be a presumption that if MF is tracking price then there is an analogous presumption that OBV [On Balance Volume] is doing similarly. However, that is only a presumption, for there are instances when one is tracking and the other is not. And an OBV/MF scan is the attempt to ferret out those few instances when both OBV and MF both have a positive divergence. When either OBV or MF shows a positive divergence, you may presume that you have discovered a powerful and positive indication that price will rise. To require that both OBV and MF show a positive divergence is to impose a further and powerful constraint and implies that the stock will rise. Off hand, I would say that less than one in ten stocks shows either an OBV or MF positive divergence. To add a second constraint is to reduce the chances of a stock having both indicators show a positive divergence by several degrees of magnitude. E.g., this morning I screened about 225 stocks under $25 that show large volume increases and are accompanied by at least a half point increase in price. Only two with positive OBV/MF divergence emerged. One of the stocks that I posted yesterday had a 3-point plus runup. Why OBV/MF diverges from price, either positively or negatively, is a most complex question and one that seems to defy logic. Even on BC's 15 minute charts a stock will occasionally show positive or negative divergence. The significance of divergence, either positive or negative, is a significance I use when I day trade. To ignore either is to hang your butt out to dry. Minute or hourly charts are quite good for deciding when to enter and exit. But you must expect to get jerked around. There is much latitude for reading positive and negative OBV/MF divergence. I have learned to spend a lot of time in trying to read divergence. E.g., what is the differing significance of a three-day divergence against a six-day? Or a one month divergence against a two? How ought I weight a divergence that occurred a week ago against one that occurred a month ago, two months ago, or six months? The permutations of time/length are overwhelming. Add to these the point where the divergences occur in relation to the price, and you have further permutations. Every new criterion adds several magnitudes of complexity. It is then that experience, almost instinctively, can extract meaning and significance from a chart. When I post about a stock, I don't post an exit or entry point. Although I know how to mechanically figure pivot points, etc., I watch the stock on a real time 15-minute chart, watch the OBV and MF, my 3/7/10 EMA, the SAR, and anything else that comes to mind. When the "time" comes, I enter or exit. In a loose sense, I don't know exactly what I'm doing. After you've come up with an OBV/MF stock, you may apply any of your charting indicators [trend lines, triangles, pennants, Fibonacci numbers, etc.]. Some of you have told me that you've done very well by combining my OBV/MF and Canslim stocks. There is nothing inherent about my criteria that forbids a Canslim stock from appearing in my screens. The occasions when they do are few but powerful, for a cup/handle formation is powerful whether viewed by a trader or an investor. The two stocks that I kicked out this morning are HOG and LCRY. LCRY has just the last few days shown a turn down in MF. OBV turned down for a couple of days but has just turned up. How to read these last few days is an instance of the difficulty in knowing how to weigh a very short term change against a long term positive divergence. Before moving into either stock, you may want to wait until the 3/7/10 EMA gives a buy. Be sure to look at the Stochastics and MACD of each stock. There is a non-confirmation of MACD in LCRY and HOG. If I wanted to be daring and wanted to jump the gun a bit, I would choose LCRY. A couple of you said that you had bought FMAX from an earlier post. You are sitting high and heavy with profits after yesterday's move. Congratulations. Connie Mack JANSI1AUG1 wrote: > Connie: > > What is the "MF" in "OBV/MF"? Is that the Money Flow that is in > Metastock; and I don't understand what an "OBV/MF scan" is. If "MF" > is Money > Flow, what is the reason why you would want such a ratio-wouldn't > Money Flow > and OBV track one another, ie. if OBV is in positive divergence with > the > stock, wouldn' Money Flow be too? I guess I'm asking: WHY TRACK > BOTH OF > THEM? (Sorry for the caps, but I wanted to emphasize this last > question.) > > jans > > - - --------------936736C0A2D97DAE1DF3C512 Content-Type: text/html; charset=us-ascii Content-Transfer-Encoding: 7bit

Morning Jans--

MF is the MoneyFlow indicator in BigCharts. Whether MF is similarly composed in Metastock, I don't know. There are different ways to figure both OBV and MF.

There may be a presumption that if MF is tracking price then there is an analogous presumption that OBV [On Balance Volume] is doing similarly. However, that is only a presumption, for there are instances when one is tracking and the other is not.

And an OBV/MF scan is the attempt to ferret out those few instances when both OBV and MF both have a positive divergence. When either OBV or MF shows a positive divergence, you may presume that you have discovered a powerful and positive indication that price will rise.

To require that both OBV and MF show a positive divergence is to impose a further and powerful constraint and implies that the stock will rise. Off hand, I would say that less than one in ten stocks shows either an OBV or MF positive divergence. To add a second constraint is to reduce the chances of a stock having both indicators show a positive divergence by several degrees of magnitude.

E.g., this morning I screened about 225 stocks under $25 that show large volume increases and are accompanied by at least a half point increase in price. Only two with positive OBV/MF divergence emerged. One of the stocks that I posted yesterday had a 3-point plus runup.

Why OBV/MF diverges from price, either positively or negatively, is a most complex question and one that seems to defy logic. Even on BC's 15 minute charts a stock will occasionally show positive or negative divergence. The significance of divergence, either positive or negative, is a significance I use when I day trade. To ignore either is to hang your butt out to dry. Minute or hourly charts are quite good for deciding when to enter and exit. But you must expect to get jerked around.

There is much latitude for reading positive and negative OBV/MF divergence. I have learned to spend a lot of time in trying to read divergence. E.g., what is the differing significance of a three-day divergence against a six-day? Or a one month divergence against a two?

How ought I weight a divergence that occurred a week ago against one that occurred a month ago, two months ago, or six months? The permutations of time/length are overwhelming. Add to these the point where the divergences occur in relation to the price, and you have further permutations. Every new criterion adds several magnitudes of complexity. It is then that experience, almost instinctively, can extract meaning and significance from a chart.

When I post about a stock, I don't post an exit or entry point. Although I know how to mechanically figure pivot points, etc., I watch the stock on a real time 15-minute chart, watch the OBV and MF, my 3/7/10 EMA, the SAR, and anything else that comes to mind. When the "time" comes, I enter or exit. In a loose sense, I don't know exactly what I'm doing.

After you've come up with an OBV/MF stock, you may apply any of your charting indicators [trend lines, triangles, pennants, Fibonacci numbers, etc.].

Some of you have told me that you've done very well by combining my OBV/MF and Canslim stocks. There is nothing inherent about my criteria that forbids a Canslim stock from appearing in my screens. The occasions when they do are few but powerful, for a cup/handle formation is powerful whether viewed by a trader or an investor.

The two stocks that I kicked out this morning are HOG and LCRY. LCRY has just the last few days shown a turn down in MF. OBV turned down for a couple of days but has just turned up. How to read these last few days is an instance of the difficulty in knowing how to weigh a very short term change against a long term positive divergence.

Before moving into either stock, you may want to wait until the 3/7/10 EMA gives a buy. Be sure to look at the Stochastics and MACD of each stock. There is a non-confirmation of MACD in LCRY and HOG. If I wanted to be daring and wanted to jump the gun a bit, I would choose LCRY.

A couple of you said that you had bought FMAX from an earlier post. You are sitting high and heavy with profits after yesterday's move. Congratulations.

Connie Mack

JANSI1AUG1 wrote:

Connie:
     What is the "MF" in "OBV/MF"? Is that the Money Flow that is in
Metastock; and I don't understand what an "OBV/MF scan" is. If "MF" is Money
Flow, what is the reason why you would want such a ratio-wouldn't Money Flow
and OBV track one another, ie. if OBV is in positive divergence with the
stock, wouldn' Money Flow be too?   I guess I'm asking: WHY TRACK BOTH OF
THEM? (Sorry for the caps, but I wanted to emphasize this last question.)
                                                  jans
-

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