From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1844 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Friday, November 23 2001 Volume 02 : Number 1844 In this issue: Re: [CANSLIM] EPIQ Systems, Inc. Re: [CANSLIM] EPIQ Systems, Inc. [CANSLIM] CANSLIM dicussions Re: [CANSLIM] Steel Re: [CANSLIM] CBRL Re: [CANSLIM] CANSLIM dicussions Re: [CANSLIM] Steel ---------------------------------------------------------------------- Date: Fri, 23 Nov 2001 08:39:57 -0800 From: "Perry Stanfield" Subject: Re: [CANSLIM] EPIQ Systems, Inc. Uhmm, if the bus has come back to the station, and there isn't anything in the news to explain it, what would be Un-Canslim about picking some up today considering it is within 5% of the pivot? Perry - ----- Original Message ----- From: To: Sent: Thursday, November 22, 2001 5:47 PM Subject: [CANSLIM] EPIQ Systems, Inc. > Tom, > > Do you have any idea what happened to EPIQ on Wednesday? At about 10:45 AM > it dropped over 9% within a 5 minute span of time. Can't seem to find an > explanation for the sudden retracement. I got stopped out which was a bid of > a surprise? > > Howard > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 23 Nov 2001 10:58:37 -0600 From: "Katherine Malm" Subject: Re: [CANSLIM] EPIQ Systems, Inc. Agreed. See how it's bouncing again right off the right side of the triangle? The IBD Big Picture said it fell below its pivot, but I don't think that's the key spot in this technical formation. I'd have a stop just below the B/O point (approx. 30) if I did it, just in case. Bit of a swing entry, but if you've done your homework and can build a case for the fundamentals/industry/etc., I don't see it as problematic. Katherine - ----- Original Message ----- From: "Perry Stanfield" To: Sent: Friday, November 23, 2001 10:39 AM Subject: Re: [CANSLIM] EPIQ Systems, Inc. > Uhmm, if the bus has come back to the station, and there isn't anything in > the news to explain it, what would be Un-Canslim about picking some up today > considering it is within 5% of the pivot? > > Perry > > > ----- Original Message ----- > From: > To: > Sent: Thursday, November 22, 2001 5:47 PM > Subject: [CANSLIM] EPIQ Systems, Inc. > > > > Tom, > > > > Do you have any idea what happened to EPIQ on Wednesday? At about 10:45 > AM > > it dropped over 9% within a 5 minute span of time. Can't seem to find an > > explanation for the sudden retracement. I got stopped out which was a bid > of > > a surprise? > > > > Howard > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 23 Nov 2001 13:12:35 EST From: Vanchee1@aol.com Subject: [CANSLIM] CANSLIM dicussions - --part1_8d.fce95bb.292feb93_boundary Content-Type: text/plain; charset="US-ASCII" Content-Transfer-Encoding: 7bit Hey canslimers, what's going on, seems like most canslim stocks discussed on this board of lately have been real duds. Time to wake up, and get with the leaders. That 100% annual gain will not come close with the stocks being posted here lately. Good luck, seems like that's all that's working here. Chris - --part1_8d.fce95bb.292feb93_boundary Content-Type: text/html; charset="US-ASCII" Content-Transfer-Encoding: 7bit Hey canslimers, what's going on, seems like most canslim stocks discussed on this board of lately have been real duds. Time to wake up, and get with the leaders. That 100% annual gain will not come close with the stocks being posted here lately. Good luck, seems like that's all that's working here.

Chris - --part1_8d.fce95bb.292feb93_boundary-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 23 Nov 2001 10:16:32 -0800 (PST) From: Fanus Subject: Re: [CANSLIM] Steel And the lightbulb in my head went on... Thanks for the summary Katherine. - - Fanus - --- Katherine Malm wrote: > Hah! *I"m* the one who started the thread, and *I* > got lost! > > The point you bring up about Camrys and Robert's > reply that a good number of Japanese cars are > actually made in the US (my Camry was made in > Tennessee) is exactly the issue. Quality of US > steel, pointed out by Tom's personal story, plus the > fact that it is a component in so many industries is > the reason why watching it is so critical. > > For everybody else who got lost, I thought it was > worth a summary: > (1) Steel is a deep cyclical industry--i.e., it's > far down in the food chain. > (2) Steel feeds other cyclical > industries--transportation (bridges, etc.), auto > manufacturing, building, oil tool manufacturing, > machine tool manufacturing, etc. etc. > (3) Steel is manufactured globally, but US is still > a major quality producer. Demand and production of > steel is a global activity. > (4) Steel is highly capital intensive, so it > typically carries high debt. A unionized labor force > in steel constantly puts pressure on its cost > structure as well, as pointed out by Robert. > (5) Because it is so capital intensive, it requires > capacity buildout of great proportion ahead of the > demand curve. In fact, steel and similar deep > cyclicals will actually continue to add capacity > into the early part of a recession. > (6) That, combined with lack of significant > innovation, means that when demand comes to a > screeching halt, they must do something to keep > their earnings from being squeezed into oblivion > from high labor cost, high interest payments, and > falling revenues. > (7) When cyclicals such as steel show signs of > bottoming in price, that is often an early > indication that the economic/business cycle has > taken a turn. That's why you'll see the IBD > occasionally refer to the Morgan Stanley Cyclical > Index (CYC). A turn in cyclicals, economically > sensitive commodities (e.g. copper, which goes into > just about every manufacturing process one way or > the other) and a coincident change in monetary > factors usually give signals that we're starting > recovery. > (8) Watching indicators such as these are important > in determining where we are with respect to "M" in > CANSLIM. > (9) Cyclicals, commodities, etc., are typically not > CANSLIM candidates because they do not have > persistent high growth trends (due to lack of > technological innovation). However, there have been > times in history where innovation or industry > restructuring/refocus will actually provide > opportunities. If you are CANSLIM, you don't invest > in steel, but you should watch it along with other > indicators to get a better feel for economic cycles. > (10) On Wednesday morning, steel producers such as > NUE, AKS, X started jumping from their bottoming > technical pattern. This was a news driven event, but > it was a change in tone nonetheless. > > Watch these guys along with other indicators to get > a feel for how the economy is *really* doing. You > need that as a CANSLIM investor, because we do not > invest in a vacuum. Our growth candidates must have > "M" in our favor to do well. "M" cannot be healthy > and uptrending unless the economy is healthy and > ready to make a turn for the better. > > Katherine > kmalm@earthlink.net > > ----- Original Message ----- > From: "Fanus" > To: > Sent: Friday, November 23, 2001 12:19 AM > Subject: Re: [CANSLIM] Steel > > > > I must admit, I got kinda lost with all the > discussion > > about steel and how it relate to CANSLIM, but just > > couldn't resist pointing out that the Camry > (Japanease > > manufactured) is one of the top sellers in the US. > If > > Japanese steel rust earlier, or is not good as > good > > quality as US(?) steel, most of the people do not > know > > it. I do not argue the fact that one steel is > better > > than another, but what is happening in the market > > place is all we should care about. What we know as > a > > fact does not mean anything if the market "think" > > differently. > > > > But then again, as I said, I got lost in the steel > > discussion and probably misunderstood it > completely. > > And no, I am not driving a Camry. I am driving a > > German model. > > > > - Fanus > > > > --- Tom Worley wrote: > > > Robert, > > > > > > I have told this story before, but think it's > > > applicable to the present situation where we > have > > > excess steel capacity for demand, and are trying > to > > > identify when demand picks up (vs capacity being > > > shut down) as a sign of an improving economy. I > > > would expect that excess capacity, at least for > now, > > > will depress prices and profit margins, so the > first > > > sign will more likely be on improving revenues > than > > > on earnings or gross / net margins. > > > > > > My story: My Dad worked most of 40 years selling > > > metals, everything from Aluminum to Zinc (A to > Z, > > > get it?). I still recall him taking me to the > > > warehouse one Saturday and pointing out piles of > > > steel laying in the yard outside. He showed me > one > > > pile that barely had any surface rust on it, and > > > told me it was of US manufacturer and had been > there > > > outdoors about three months. Then he showed me > > > another pile, which was completely covered with > rust > > > and deeply pitted. He explained that it was > imported > > > (in that case from Japan) and had only been > there > > > several weeks. While he only had a 2nd grade > > > education, he had learned a great deal about > > > metallurgy and went into a detailed explanation > of > > > why one steel was barely rusted and another was > > > already deeply pitted, and how that would > require > > > more finishing work depending on the > application. > > > That lesson, that you get what you pay for, > stayed > > > with me the rest of my life. > > > > > > I continue to this day to see Japanese cars rust > out > > > faster than US built cars, so suspect the > quality of > > > steel remains an issue now. As long as demand, > and > > > prices, remain depressed, I would hope to see > the > > > better quality manufacturers benefit. > > > > > > Tom Worley > > > stkguru@netside.net > > > AIM: TexWorley > > > > > > ----- Original Message ----- > > > From: Robert Gammon > > > To: canslim@lists.xmission.com > > > Sent: Thursday, November 22, 2001 12:53 PM > > > Subject: Re: [CANSLIM] Steel > > > > > > > > > Katherine, > > > The problem still remains. While steel is > > > fundamental to the > > > modern economy, steel users are not tied to > the US > > > steel industry > > > for their supplies. Please look for another > > > indicator of the > > > overall health of the manufacturing industry. > > > Yes, I focused > > > VERY narrowly on one part of your comments, > and > > > while that may > > > not be fair, I feel it is pertinent to the > > > discussion to point > > > out the flaws in using this indicator. The > health > > > of the steel > > > industry used to be a good indicator, but I > feel > > > that it is no > > > longer a viable indicator of the health of the > === message truncated === __________________________________________________ Do You Yahoo!? Yahoo! GeoCities - quick and easy web site hosting, just $8.95/month. http://geocities.yahoo.com/ps/info1 - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 23 Nov 2001 13:17:28 -0500 From: "Al French" Subject: Re: [CANSLIM] CBRL I agree that a too-tight stop is expensive, but I've paid a lot of 7% tuition fees to learn that it is better to buy close enough to the pivot (and support) that price does not have to move much to know if the trade was a mistake. That way, a close stop may be used without it being too tight. Let me illustrate: With CBRL, the high of the base (support) was $25.96, pivot $26.06. If I bought 5% above the pivot, and used a 7% stop, my stop would be $25.44 and I could lose $192. But, if I bought 1% over the pivot and used a 3% stop, my stop would be exactly the same, $25.44, but my potential loss would be only $88. The 3% stop would be closer and a better risk/reward ratio, but I don't see how that could be too tight under CANSLIM principles. I bought CBRL this morning at $26.27 when it reversed from an intraday dip. Since the $25.96 support seems clearly defined, I'll use a 1%-below-support stop of $25.67 ($25.70 adjusted down to avoid the round number). That puts my stop 2.3% below my purchase price. I'll agree that it is tight, but it will be fun and not very costly to discover if it is too tight. Al French - ----- Original Message ----- From: "Patrick Wahl" To: Sent: Friday, November 23, 2001 10:23 AM Subject: Re: [CANSLIM] CBRL > I think that stop placement is too close. I have learned the > expensive lesson that stops that are too tight cost you more > money than they save you. I think just under 24 might be better. > No comments on the chart, a little difficult for me to read. > > On 22 Nov 01, at 17:03, Al French wrote: > > > CBRL broke out, volume > 250%, of a one-year deep cup with a > > three-week handle 11/21. The right side of the cup looks close to > > LLUR. IBD numbers are 94 65 91 ACA PE = 13. Indicators show > > strong accumulation. Earnings have not been real good during past > > year, but quarterly report yesterday said EPS up 17%, sales up > > 4.8%, and company projects improvement for next quarter. > > > > I'm thinking of buying tomorrow limit yesterday's close of $26.59 > > with a close stop just below $26 support/resistance for a low-risk > > entry. Any comments? > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 23 Nov 2001 13:47:53 -0500 From: "Dan Forant" Subject: Re: [CANSLIM] CANSLIM dicussions This is a multi-part message in MIME format. - ------=_NextPart_000_0023_01C17425.73005C60 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable It is my experience that depending upon someone else to present winning = stocks can be disastrous. This is not a CANSLIM Market yet. No leaders, = and they may not show until well into next year. I like some of the = stocks listed here for short term buys.=20 DanF ----- Original Message -----=20 From: Vanchee1@aol.com=20 To: canslim@lists.xmission.com=20 Sent: Friday, November 23, 2001 1:12 PM Subject: [CANSLIM] CANSLIM dicussions Hey canslimers, what's going on, seems like most canslim stocks = discussed on this board of lately have been real duds. Time to wake up, = and get with the leaders. That 100% annual gain will not come close with = the stocks being posted here lately. Good luck, seems like that's all = that's working here.=20 Chris=20 - ------=_NextPart_000_0023_01C17425.73005C60 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
It is my experience that depending upon = someone=20 else to present winning stocks can be disastrous. This is not a CANSLIM = Market=20 yet. No leaders, and they may not show until well into next year. I like = some of=20 the stocks listed here for short term buys.
 
DanF
----- Original Message -----
From:=20 Vanchee1@aol.com=20
Sent: Friday, November 23, 2001 = 1:12=20 PM
Subject: [CANSLIM] CANSLIM=20 dicussions

Hey = canslimers, what's=20 going on, seems like most canslim stocks discussed on this board of = lately=20 have been real duds. Time to wake up, and get with the leaders. That = 100%=20 annual gain will not come close with the stocks being posted here = lately. Good=20 luck, seems like that's all that's working here.

Chris=20 - ------=_NextPart_000_0023_01C17425.73005C60-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 23 Nov 2001 14:35:50 -0500 From: "Dan Forant" Subject: Re: [CANSLIM] Steel This is a multi-part message in MIME format. - ------=_NextPart_000_004A_01C1742C.261E7D80 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Katherine: Your wisdom and articulate manner are much appreciated. It is nice to = see a woman come to the forefront and make arguments from a factual = standpoint. (Not for a moment did I think they couldn't ;-) DanF ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Friday, November 23, 2001 9:25 AM Subject: Re: [CANSLIM] Steel Hah! *I"m* the one who started the thread, and *I* got lost! The point you bring up about Camrys and Robert's reply that a good = number of Japanese cars are actually made in the US (my Camry was made = in Tennessee) is exactly the issue. Quality of US steel, pointed out by = Tom's personal story, plus the fact that it is a component in so many = industries is the reason why watching it is so critical. For everybody else who got lost, I thought it was worth a summary: (1) Steel is a deep cyclical industry--i.e., it's far down in the food = chain. (2) Steel feeds other cyclical industries--transportation (bridges, = etc.), auto manufacturing, building, oil tool manufacturing, machine = tool manufacturing, etc. etc.=20 (3) Steel is manufactured globally, but US is still a major quality = producer. Demand and production of steel is a global activity. (4) Steel is highly capital intensive, so it typically carries high = debt. A unionized labor force in steel constantly puts pressure on its = cost structure as well, as pointed out by Robert. (5) Because it is so capital intensive, it requires capacity buildout = of great proportion ahead of the demand curve. In fact, steel and = similar deep cyclicals will actually continue to add capacity into the = early part of a recession.=20 (6) That, combined with lack of significant innovation, means that = when demand comes to a screeching halt, they must do something to keep = their earnings from being squeezed into oblivion from high labor cost, = high interest payments, and falling revenues.=20 (7) When cyclicals such as steel show signs of bottoming in price, = that is often an early indication that the economic/business cycle has = taken a turn. That's why you'll see the IBD occasionally refer to the = Morgan Stanley Cyclical Index (CYC). A turn in cyclicals, economically = sensitive commodities (e.g. copper, which goes into just about every = manufacturing process one way or the other) and a coincident change in = monetary factors usually give signals that we're starting recovery. (8) Watching indicators such as these are important in determining = where we are with respect to "M" in CANSLIM. (9) Cyclicals, commodities, etc., are typically not CANSLIM candidates = because they do not have persistent high growth trends (due to lack of = technological innovation). However, there have been times in history = where innovation or industry restructuring/refocus will actually provide = opportunities. If you are CANSLIM, you don't invest in steel, but you = should watch it along with other indicators to get a better feel for = economic cycles. (10) On Wednesday morning, steel producers such as NUE, AKS, X started = jumping from their bottoming technical pattern. This was a news driven = event, but it was a change in tone nonetheless.=20 Watch these guys along with other indicators to get a feel for how the = economy is *really* doing. You need that as a CANSLIM investor, because = we do not invest in a vacuum. Our growth candidates must have "M" in our = favor to do well. "M" cannot be healthy and uptrending unless the = economy is healthy and ready to make a turn for the better.=20 Katherine kmalm@earthlink.net ----- Original Message -----=20 From: "Fanus" To: Sent: Friday, November 23, 2001 12:19 AM Subject: Re: [CANSLIM] Steel > I must admit, I got kinda lost with all the discussion > about steel and how it relate to CANSLIM, but just > couldn't resist pointing out that the Camry (Japanease > manufactured) is one of the top sellers in the US. If > Japanese steel rust earlier, or is not good as good > quality as US(?) steel, most of the people do not know > it. I do not argue the fact that one steel is better > than another, but what is happening in the market > place is all we should care about. What we know as a > fact does not mean anything if the market "think" > differently. =20 >=20 > But then again, as I said, I got lost in the steel > discussion and probably misunderstood it completely. > And no, I am not driving a Camry. I am driving a > German model. >=20 > - Fanus >=20 > --- Tom Worley wrote: > > Robert, > >=20 > > I have told this story before, but think it's > > applicable to the present situation where we have > > excess steel capacity for demand, and are trying to > > identify when demand picks up (vs capacity being > > shut down) as a sign of an improving economy. I > > would expect that excess capacity, at least for now, > > will depress prices and profit margins, so the first > > sign will more likely be on improving revenues than > > on earnings or gross / net margins. > >=20 > > My story: My Dad worked most of 40 years selling > > metals, everything from Aluminum to Zinc (A to Z, > > get it?). I still recall him taking me to the > > warehouse one Saturday and pointing out piles of > > steel laying in the yard outside. He showed me one > > pile that barely had any surface rust on it, and > > told me it was of US manufacturer and had been there > > outdoors about three months. Then he showed me > > another pile, which was completely covered with rust > > and deeply pitted. He explained that it was imported > > (in that case from Japan) and had only been there > > several weeks. While he only had a 2nd grade > > education, he had learned a great deal about > > metallurgy and went into a detailed explanation of > > why one steel was barely rusted and another was > > already deeply pitted, and how that would require > > more finishing work depending on the application. > > That lesson, that you get what you pay for, stayed > > with me the rest of my life.=20 > >=20 > > I continue to this day to see Japanese cars rust out > > faster than US built cars, so suspect the quality of > > steel remains an issue now. As long as demand, and > > prices, remain depressed, I would hope to see the > > better quality manufacturers benefit. > >=20 > > Tom Worley > > stkguru@netside.net > > AIM: TexWorley > >=20 > > ----- Original Message -----=20 > > From: Robert Gammon=20 > > To: canslim@lists.xmission.com=20 > > Sent: Thursday, November 22, 2001 12:53 PM > > Subject: Re: [CANSLIM] Steel > >=20 > >=20 > > Katherine, > > The problem still remains. While steel is > > fundamental to the=20 > > modern economy, steel users are not tied to the US > > steel industry=20 > > for their supplies. Please look for another > > indicator of the=20 > > overall health of the manufacturing industry.=20 > > Yes, I focused=20 > > VERY narrowly on one part of your comments, and > > while that may=20 > > not be fair, I feel it is pertinent to the > > discussion to point=20 > > out the flaws in using this indicator. The health > > of the steel=20 > > industry used to be a good indicator, but I feel > > that it is no=20 > > longer a viable indicator of the health of the > > economy, or the=20 > > manufacturing sector. > >=20 > > Robert Gammon > >=20 > > On Thu, 22 Nov 2001 09:01:49 -0600, Katherine Malm > > wrote: > >=20 > > >Again, Robert, I must repeat. I am *not* looking > > at steel as a=20 > > CANSLIM > > >candidate. I am looking at it only as a sign of > > economic=20 > > activity. I do not > > >invest in cyclical or basic industries unless > > there is new=20 > > innovation that > > >provides secular growth in the industry. Please > > don't=20 > > misinterpret my > > >comments. > > > > > >Katherine > > > > > > > > >----- Original Message ----- > > >From: "Robert Gammon" > > > > >To: > > >Sent: Thursday, November 22, 2001 8:49 AM > > >Subject: Re: [CANSLIM] Steel > > > > > > > > >>=20 > > =20 > > > = =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D > > >> On Thu, 22 Nov 2001 08:28:48 -0600, Katherine > > Malm wrote: > > >> > > >> Hi Tom, > > >> > > >> My comment was not related to steel as a buy, > > but rather as a > > >> sign that excess industry capacity was > > beginning to be=20 > > deleted. > > >>=20 > > =20 > > > = =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D > > >> > > >> The union involved has correctly pointed out > > that steel=20 > > capacity > > >> is a global issue, not just a US one. The > > proposed closings=20 > > are > > >> a drop in the ocean, significant ONLY in the > > small mud puddle > > >> that is the US Steel industry. Virtually every > > nation with=20 > > steel > > >> production capacity has more capacity than > > domestic industry=20 > > can > > >> absorb (except perhaps for the USA). So where > > does the=20 > > surplus > > >> production go? To the USA and countries that > > have not yet > > >> developed a domestic steel industry. There are > > precious few=20 > > of > > >> the later, given that so much of the modern > > economy uses steel=20 > > as > > >> a building block of industry. So, much of the > > excess capacity > > >> flows to the USA. > > >> > > >> The problems of the US Steel Industry are not > > going to be=20 > > solved > > >> by this capacity reduction. If anything, the > > fallout from=20 > > these > > >> closings will have long term negative effects > > on the industry. > > >> The problems need to be addressed at the > > International=20 > > Political > > >> Level and at the International Trade level.=20 > > The steel=20 > > industry > > >> is quite often a matter of national pride, so a > > suggestion=20 > > that > > >> 1/3 to 1/2 of capacity should be shutdown and a > > proportionate > > >> share of workers laid off will likely be > > received as a > > >> declaration of war. > > >> > > >> Steel stocks appear to me to be short term > > trading vehicles=20 > > only. > > >> They stink as a long term holding, and I fail > > to see how we=20 > > could > > >> construe these stocks as CANSLIM. > > >> > > >> Robert > > >> > > >> > > >> - > > >> -To subscribe/unsubscribe, email > > "majordomo@xmission.com" > > >> -In the email body, write "subscribe canslim" > > or > > >> -"unsubscribe canslim". Do not use quotes in > > your email. > > > > > > > > >- > > >-To subscribe/unsubscribe, email > > "majordomo@xmission.com" > > >-In the email body, write "subscribe canslim" or > > >-"unsubscribe canslim". Do not use quotes in > > your email. > >=20 > >=20 > >=20 > > - > > -To subscribe/unsubscribe, email > > "majordomo@xmission.com" > >=20 > =3D=3D=3D message truncated =3D=3D=3D >=20 >=20 > __________________________________________________ > Do You Yahoo!? > Yahoo! GeoCities - quick and easy web site hosting, just = $8.95/month. > http://geocities.yahoo.com/ps/info1 >=20 > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email.=20 - ------=_NextPart_000_004A_01C1742C.261E7D80 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Katherine:
 
Your wisdom and articulate manner are = much=20 appreciated. It is nice to see a woman come to the forefront and make = arguments=20 from a factual standpoint. (Not for a moment did I think they couldn't=20  ;-)
 
DanF
----- Original Message -----
From:=20 Katherine=20 Malm
Sent: Friday, November 23, 2001 = 9:25=20 AM
Subject: Re: [CANSLIM] = Steel

Hah! *I"m* the one who started the = thread, and=20 *I* got lost!
 
The point you bring up about Camrys = and Robert's=20 reply that a good number of Japanese cars are actually made in the US = (my=20 Camry was made in Tennessee) is exactly the issue. Quality of US = steel,=20 pointed out by Tom's personal story, plus the fact that it is a = component in=20 so many industries is the reason why watching it is so = critical.
 
For everybody else who got lost, I = thought it was=20 worth a summary:
(1) Steel is a deep cyclical = industry--i.e., it's=20 far down in the food chain.
(2) Steel feeds other cyclical=20 industries--transportation (bridges, etc.), auto manufacturing, = building, oil=20 tool manufacturing, machine tool manufacturing, etc. etc. =
(3) Steel is manufactured globally, = but US is=20 still a major quality producer. Demand and production of steel is a = global=20 activity.
(4) Steel is highly capital = intensive, so it=20 typically carries high debt. A unionized labor force in steel = constantly puts=20 pressure on its cost structure as well, as pointed out by = Robert.
(5) Because it is so capital = intensive, it=20 requires capacity buildout of great proportion ahead of the demand = curve. In=20 fact, steel and similar deep cyclicals will actually continue to add = capacity=20 into the early part of a recession.
(6) That, combined with lack of = significant=20 innovation, means that when demand comes to a screeching halt, they = must do=20 something to keep their earnings from being squeezed into oblivion = from high=20 labor cost, high interest payments, and falling revenues. =
(7) When cyclicals such as steel show = signs of=20 bottoming in price, that is often an early indication that the=20 economic/business cycle has taken a turn. That's why you'll see the = IBD=20 occasionally refer to the Morgan Stanley Cyclical Index (CYC). A turn = in=20 cyclicals, economically sensitive commodities (e.g. copper, which goes = into=20 just about every manufacturing process one way or the other) and a = coincident=20 change in monetary factors usually give signals that we're starting=20 recovery.
(8) Watching indicators such as these = are=20 important in determining where we are with respect to "M" in=20 CANSLIM.
(9) Cyclicals, commodities, etc., are = typically=20 not CANSLIM candidates because they do not have persistent high growth = trends=20 (due to lack of technological innovation). However, there have been = times in=20 history where innovation or industry restructuring/refocus will = actually=20 provide opportunities. If you are CANSLIM, you don't invest in steel, = but you=20 should watch it along with other indicators to get a better feel for = economic=20 cycles.
(10) On Wednesday morning, steel = producers such=20 as NUE, AKS, X started jumping from their bottoming technical pattern. = This=20 was a news driven event, but it was a change in tone nonetheless.=20
 
Watch these guys along with other=20 indicators to get a feel for how the economy is *really* doing. = You need=20 that as a CANSLIM investor, because we do not invest in a=20 vacuum. Our growth candidates must have "M" in our favor to = do well.=20 "M" cannot be healthy and uptrending unless the economy is healthy and = ready=20 to make a turn for the better.
 
Katherine
kmalm@earthlink.net
 
----- Original Message -----
From: "Fanus" <fanus13@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Friday, November 23, 2001 12:19 = AM
Subject: Re: [CANSLIM] = Steel

> I must admit, I got kinda lost with all the = discussion
>=20 about steel and how it relate to CANSLIM, but just
> couldn't = resist=20 pointing out that the Camry (Japanease
> manufactured) is one of = the top=20 sellers in the US. If
> Japanese steel rust earlier, or is not = good as=20 good
> quality as US(?) steel, most of the people do not = know
>=20 it.  I do not argue the fact that one steel is better
> = than=20 another, but what is happening in the market
> place is all we = should=20 care about. What we know as a
> fact does not mean anything if = the=20 market "think"
> differently.   
> =
> But=20 then again, as I said, I got lost in the steel
> discussion and = probably=20 misunderstood it completely.
> And no, I am not driving a Camry. = I am=20 driving a
> German model.
>
> - Fanus
> =
> ---=20 Tom Worley <stkguru@netside.net>=20 wrote:
> > Robert,
> >
> > I have told = this story=20 before, but think it's
> > applicable to the present = situation where=20 we have
> > excess steel capacity for demand, and are trying=20 to
> > identify when demand picks up (vs capacity = being
> >=20 shut down) as a sign of an improving economy.  I
> > = would=20 expect that excess capacity, at least for now,
> > will = depress=20 prices and profit margins, so the first
> > sign will more = likely be=20 on improving revenues than
> > on earnings or gross / net=20 margins.
> >
> > My story: My Dad worked most of 40 = years=20 selling
> > metals, everything from Aluminum to Zinc (A to = Z,
>=20 > get it?). I still recall him taking me to the
> > = warehouse one=20 Saturday and pointing out piles of
> > steel laying in the = yard=20 outside. He showed me one
> > pile that barely had any = surface rust=20 on it, and
> > told me it was of US manufacturer and had been = there
> > outdoors about three months. Then he showed = me
> >=20 another pile, which was completely covered with rust
> > and = deeply=20 pitted. He explained that it was imported
> > (in that case = from=20 Japan) and had only been there
> > several weeks. While he = only had a=20 2nd grade
> > education, he had learned a great deal = about
>=20 > metallurgy and went into a detailed explanation of
> > = why one=20 steel was barely rusted and another was
> > already deeply = pitted,=20 and how that would require
> > more finishing work depending = on the=20 application.
> > That lesson, that you get what you pay for,=20 stayed
> > with me the rest of my life.
> > =
> > I=20 continue to this day to see Japanese cars rust out
> > faster = than US=20 built cars, so suspect the quality of
> > steel remains an = issue now.=20 As long as demand, and
> > prices, remain depressed, I would = hope to=20 see the
> > better quality manufacturers benefit.
> = >=20
> > Tom Worley
> > stkguru@netside.net
> >=20 AIM: TexWorley
> >
> >   ----- Original = Message=20 -----
> >   From: Robert Gammon
> = >  =20 To: canslim@lists.xmission.com
>=20 >   Sent: Thursday, November 22, 2001 12:53 PM
>=20 >   Subject: Re: [CANSLIM] Steel
> >
> = >=20
> >   Katherine,
>=20 >      The problem still remains.  = While=20 steel is
> > fundamental to the
> >   = modern=20 economy, steel users are not tied to the US
> > steel = industry=20
> >   for their supplies.  Please look for=20 another
> > indicator of the
> >   = overall health=20 of the manufacturing industry.
> > Yes, I focused
>=20 >   VERY narrowly on one part of your comments, = and
> >=20 while that may
> >   not be fair, I feel it is = pertinent=20 to the
> > discussion to point
> >   out = the=20 flaws in using this indicator.  The health
> > of the = steel=20
> >   industry used to be a good indicator, but I=20 feel
> > that it is no
> >   longer a = viable=20 indicator of the health of the
> > economy, or the
>=20 >   manufacturing sector.
> >
> = >  =20 Robert Gammon
> >
> >   On Thu, 22 Nov = 2001=20 09:01:49 -0600, Katherine Malm
> > wrote:
> > =
>=20 >   >Again, Robert, I must repeat. I am *not* = looking
>=20 > at steel as a
> >   CANSLIM
> = >  =20 >candidate. I am looking at it only as a sign of
> > = economic=20
> >   activity. I do not
> >  =20 >invest in cyclical or basic industries unless
> > there = is new=20
> >   innovation that
> >  =20 >provides secular growth in the industry. Please
> > don't =
> >   misinterpret my
> >  =20 >comments.
> >   >
> >  =20 >Katherine
> >   >
> >  =20 >
> >   >----- Original Message -----
> = >   >From: "Robert Gammon"
> > <r.gammon51@worldnet.att.net>
> >   >To: <canslim@lists.xmission.com>
> >   >Sent: Thursday, November = 22, 2001=20 8:49 AM
> >   >Subject: Re: [CANSLIM] = Steel
>=20 >   >
> >   >
> = >  =20 >>
> > 
> >
>=20 = =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
>=20 >   >> On Thu, 22 Nov 2001 08:28:48 -0600,=20 Katherine
> > Malm wrote:
> >   = >>
>=20 >   >> Hi Tom,
> >   = >>
>=20 >   >> My comment was not related to steel as a=20 buy,
> > but rather as a
> >   >> = sign that=20 excess industry capacity was
> > beginning to be
>=20 >   deleted.
> >   >>
>=20 > 
> >
>=20 = =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
>=20 >   >>
> >   >> The union = involved=20 has correctly pointed out
> > that steel
> = >  =20 capacity
> >   >> is a global issue, not just = a US=20 one.  The
> > proposed closings
> = >  =20 are
> >   >> a drop in the ocean, significant = ONLY in=20 the
> > small mud puddle
> >   >> = that is=20 the US Steel industry.  Virtually every
> > nation with =
>=20 >   steel
> >   >> production = capacity=20 has more capacity than
> > domestic industry
>=20 >   can
> >   >> absorb (except = perhaps=20 for the USA).  So where
> > does the
> = >  =20 surplus
> >   >> production go?  To the = USA and=20 countries that
> > have not yet
> >   = >>=20 developed a domestic steel industry.  There are
> > = precious few=20
> >   of
> >   >> the = later,=20 given that so much of the modern
> > economy uses steel =
>=20 >   as
> >   >> a building block = of=20 industry.  So, much of the
> > excess capacity
>=20 >   >> flows to the USA.
> >  =20 >>
> >   >> The problems of the US = Steel=20 Industry are not
> > going to be
> >  =20 solved
> >   >> by this capacity = reduction.  If=20 anything, the
> > fallout from
> >  =20 these
> >   >> closings will have long term = negative=20 effects
> > on the industry.
> >   = >> The=20 problems need to be addressed at the
> > International =
>=20 >   Political
> >   >> Level and = at the=20 International Trade level.
> > The steel
> = >  =20 industry
> >   >> is quite often a matter of = national=20 pride, so a
> > suggestion
> >   = that
>=20 >   >> 1/3 to 1/2 of capacity should be shutdown = and=20 a
> > proportionate
> >   >> share = of=20 workers laid off will likely be
> > received as a
>=20 >   >> declaration of war.
> >   = >>
> >   >> Steel stocks appear to me = to be=20 short term
> > trading vehicles
> >  =20 only.
> >   >> They stink as a long term = holding, and=20 I fail
> > to see how we
> >   = could
>=20 >   >> construe these stocks as CANSLIM.
>=20 >   >>
> >   >> = Robert
>=20 >   >>
> >   >>
>=20 >   >> -
> >   >> -To=20 subscribe/unsubscribe, email
> > "majordomo@xmission.com"
>=20 >   >> -In the email body, write "subscribe=20 canslim"
> > or
> >   >> = - -"unsubscribe=20 canslim".  Do not use quotes in
> > your email.
>=20 >   >
> >   >
> = >  =20 >-
> >   >-To subscribe/unsubscribe, = email
>=20 > "majordomo@xmission.com"
>=20 >   >-In the email body, write "subscribe canslim" = or
>=20 >   >-"unsubscribe canslim".  Do not use quotes=20 in
> > your email.
> >
> >
> > =
>=20 >   -
> >   -To subscribe/unsubscribe, = email
> > "majordomo@xmission.com"
> >
> =3D=3D=3D message truncated = =3D=3D=3D
>
>=20
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