From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2343 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 Monday, April 22 2002 Volume 02 : Number 2343 In this issue: [CANSLIM] Large Cap vs. Small Cap etc.... Re: [CANSLIM] S&P 500 forecast Re: [CANSLIM] Recommending stocks - my thoughts [CANSLIM] CNTL Re: [CANSLIM] CNTL Re: [CANSLIM] Management Ownership/Fund Ownership. [CANSLIM] Semnots Document Re: [CANSLIM] Institutional Ownership Re: [CANSLIM] Semnots Document Re: [CANSLIM] CNTL [CANSLIM] cmx Re: [CANSLIM] Institutional Ownership [CANSLIM] why buy breakouts - article Re: [CANSLIM] Institutional Ownership Re: [CANSLIM] why buy breakouts - article ---------------------------------------------------------------------- Date: Mon, 22 Apr 2002 05:04:41 -0700 (PDT) From: Dave Cameron Subject: [CANSLIM] Large Cap vs. Small Cap etc.... I think its interesting to read all the varied opinions on market cap. It used to be (back when I first got HTMMIS) that WON recommended only going with small companies because they had more room to move, and could move up more quickly than large companies. In fact, on his audio tapes, he specified a size that was too big (can't remember what it was though) in terms of number of shares outstanding. I do recall he said he had his best successes with companies with less than 30 million shares outstanding. Of course, these successes were now 25 years ago.... so maybe that's worth about 75 million shares outstanding today. Anyway, to Warren's earlier posting, this means staying under $200MM in market cap is a bit too tight. A lot of companies this size have aspirations to go public, but haven't yet. I work for a company that had $50MM in revenue last year. Our CEO wants to go public, but has been told by advisors that he should wait until hitting $100MM. This, despite the fact we'd be a great CANSLIM company. Average earnings growth has been 30% annually over the last 12 years. Tom mentioned $650MM - this might not be bad. Although, its been pointed out earlier, that WON has really severely relaxed his "30 million shares outstanding line" in that he's mentioned stocks in public having the CANSLIM (CANLIM?) characteristics that are 50 times that size. ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Yahoo! Games - play chess, backgammon, pool and more http://games.yahoo.com/ - - - -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: Mon, 22 Apr 2002 08:16:06 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] S&P 500 forecast This is a multi-part message in MIME format. - ------=_NextPart_000_00F7_01C1E9D5.F33335D0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I don't understand your reasoning for this, Ernie, but I would certainly = cheer 1238 on the S&P500 by then. Tom Worley stkguru@bellsouth.net AIM: TexWorley - ----- Original Message -----=20 From: Hill, Ernie=20 To: CANSLIM=20 Sent: Saturday, April 20, 2002 10:08 PM Subject: [CANSLIM] S&P 500 forecast At this point in time I have two high probability projections for the = next major turning point in the S&P 500. The highest probability is for = a turning point on May 21, 2002 at a price level of 1200. The second = highest probability is for a turning point on May 22, 2002 at a price = level of 1238. As we approach these dates one of these scenarios should = emerge as the most likely candidate. =20 E ****************************************************************** This email and any files transmitted with it from the ElPaso=20 Corporation are confidential and intended solely for the=20 use of the individual or entity to whom they are addressed.=20 If you have received this email in error please notify the=20 sender. ****************************************************************** - ------=_NextPart_000_00F7_01C1E9D5.F33335D0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
I don't understand your reasoning for this, = Ernie, but I=20 would certainly cheer 1238 on the S&P500 by then.
 
Tom Worley
stkguru@bellsouth.net
AIM:=20 TexWorley
----- Original Message -----=20
From: Hill, Ernie=20
To: CANSLIM
Sent: Saturday, April 20, 2002 10:08 PM
Subject: [CANSLIM] S&P 500 forecast

At this point in time I = have two=20 high probability projections for the next major turning point in = the=20 S&P 500. The highest probability is for a turning point on=20 May 21,=20 2002 at a price level of 1200. = The=20 second highest probability is for a turning point on = May 22,=20 2002 at a price level of 1238. = As we=20 approach these dates one of these scenarios should emerge as the most = likely=20 candidate.

 

E



********************************************************= **********
This=20 email and any files transmitted with it from the ElPaso
Corporation = are=20 confidential and intended solely for the
use of the individual or = entity to=20 whom they are addressed.
If you have received this email in error = please=20 notify the=20
sender.
**********************************************************= ********
 - ------=_NextPart_000_00F7_01C1E9D5.F33335D0-- - - - -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: Mon, 22 Apr 2002 08:35:26 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Recommending stocks - my thoughts Dave, I heartily endorse your last paragraph, and recommend everyone read it several times. The psychology of investing is difficult enough, being confident enough to make a decision, even if it ends up being the wrong decision, is often (usually, for me) the hardest part. I have gone on streaks where I had 10 or 12 decisions in a row, and every one was proven to be wrong by subsequent market action. Even now, in my VR Fund, the performance of my sells after selling is substantially outperforming my buys. But the numbers are coming down, and I am working harder on my selling strategy to time it better. Still frustrating, and tends to make me hesitate to enter a new sell order. But I do it anyway, just argue a little more with myself over it. Tom Worley stkguru@bellsouth.net AIM: TexWorley - ----- Original Message ----- From: "Dave Cameron" To: Sent: Saturday, April 20, 2002 11:18 PM Subject: [CANSLIM] Recommending stocks - my thoughts I tend to agree with what seems to be the majority. But let me chime in here anyway. 1. I think if people want to post their buys, that's great, as long as they give reasons behind it. I am mature enough to not just tailcoat someone's trade. I've lost money (years ago) doing that; don't plan to again. Its a good way for us all to learn. 2. If people don't want to post their buys, that's fine too. The only caution I'd make is overvaluing someone's future success based on their past success. I've seen some comments like "I was up 80% in 1999, but down 15% in 2001". Take these comments for only what they are worth, a statement of past performance. Every market is different, every day is different. What someone did last year isn't relevant. What they are doing now is. 3. Very few of us "prove" our performance or qualifications. We simply have to judge whether we can get value from others based on our thoughts and reasoning that can be helped by other's comments. I could tell you I was up 140% in 1995 or down 50% in 2000 - and you'd have no idea whether I was telling the truth or not. (Both are directionally correct, but exaggerations.) Yet, if anything I post makes you think more - then I've helped. People like Tom and Katherine are good at making me think. 4. One of the things I like about this list is that a lot of the active posters talk in terms of principles or rules. I think the best value to be had on this list is to learn to think like a successful stock investor, and then follow through. If one really learns and thinks and acts, then the confidence level will be higher, and one will learn when to get in and when to get out - and not be unduly swayed by other's opinions. In order to be successful at CANSLIM, I firmly believe one needs the knowledge AND the confidence that one will be successful. My worst periods have always been when my confidence is down and my decision making wavers. Anyway... to me, this type of discussion is much more valuable than "I bought IGT because..." ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Yahoo! Games - play chess, backgammon, pool and more http://games.yahoo.com/ - - - -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: Mon, 22 Apr 2002 07:49:40 -0600 From: "Patrick Wahl" Subject: [CANSLIM] CNTL Someone mentioned this yesterday, appears to be breaking out, I don't have volume numbers though. - - - -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: Mon, 22 Apr 2002 08:56:29 -0500 From: "Katherine Malm" Subject: Re: [CANSLIM] CNTL This is a multi-part message in MIME format. - ------=_NextPart_000_0006_01C1E9DB.97CA1F00 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Patrick, 9:55a $28.60 20,200 vol (ADV 34,800) ----- Original Message -----=20 From: Patrick Wahl=20 To: canslim@lists.xmission.com=20 Sent: Monday, April 22, 2002 8:49 AM Subject: [CANSLIM] CNTL Someone mentioned this yesterday, appears to be breaking out, I don't = have=20 volume numbers though. - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - ------=_NextPart_000_0006_01C1E9DB.97CA1F00 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Patrick,
 
9:55a   $28.60   20,200=20 vol      (ADV 34,800)
----- Original Message -----
From:=20 Patrick = Wahl=20
Sent: Monday, April 22, 2002 = 8:49=20 AM
Subject: [CANSLIM] CNTL

Someone mentioned this yesterday, appears to be = breaking out, I=20 don't have
volume numbers though.

-
-To = subscribe/unsubscribe,=20 email "majordomo@xmission.com"
-In= the=20 email body, write "subscribe canslim" or
-"unsubscribe = canslim".  Do=20 not use quotes in your email.
- ------=_NextPart_000_0006_01C1E9DB.97CA1F00-- - - - -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: Mon, 22 Apr 2002 09:58:08 EDT From: Davellil5@aol.com Subject: Re: [CANSLIM] Management Ownership/Fund Ownership. In a message dated 4/20/02 8:08:09 PM, dfcameron@yahoo.com writes: << >> WON says the more management ownership of stock the better. I don't follow that rule. I had a stock that was 50% owned by two founders. At one point, they decided to liquidate a large part of their holdings to finance some new venture. This is not surprising. People who found Companies are enterprisers. They may liquidate in order to found new enterprises. I took a pasting. My limit for close ownership is now 20%. Regards, Dave - - - -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: Mon, 22 Apr 2002 10:09:29 -0400 From: "Duke Miller" Subject: [CANSLIM] Semnots Document This is a multi-part message in MIME format. - ------=_NextPart_000_0008_01C1E9E5.CDB2BC30 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit All: In a recent correspondence, I mentioned some rules for stops that I found in a document called "Semnots" that were in the front of my Advanced Workshop Workbook. I have since had several requests for a copy, so I scanned it to a document which Jeff kindly helped me upload to: http://WallStreet-LLC.com/canslim/Duke_Miller_Notes.pdf . It's a great five-page, yet brief, summary of CANSLIM, and you may find of interest since it predates the madness of the late 90's. (I'm not suggesting we return to the basics of CANSLIM, but it may answer some lingering questions for you.) Duke - ------=_NextPart_000_0008_01C1E9E5.CDB2BC30 Content-Type: text/html; charset="us-ascii" Content-Transfer-Encoding: quoted-printable Message
All:
 
In a recent = correspondence,=20 I mentioned some rules for stops that I found in a document called = "Semnots"=20 that were in the front of my Advanced Workshop Workbook.  I have = since had=20 several requests for a copy, so I scanned it to a document which Jeff = kindly=20 helped me upload to:  http://WallStreet-LLC.com/canslim/Duke_Miller_Notes.pdf= .  =
 
It's a great = five-page, yet=20 brief, summary of CANSLIM, and you may find of interest since it = predates=20 the madness of the late 90's.  (I'm not suggesting we = return to the=20 basics of CANSLIM, but  it may answer some lingering questions for=20 you.)
 
Duke
 
 
 
 
- ------=_NextPart_000_0008_01C1E9E5.CDB2BC30-- - - - -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: Mon, 22 Apr 2002 10:10:39 EDT From: Davellil5@aol.com Subject: Re: [CANSLIM] Institutional Ownership I called the headquarters of IBD and spoke to a man whose name I didn't bother to note. He was knowledge-able about the Sponsor Ranking. As I said, I didn't find out how they marry together the number of funds holding a stock and the performance record of those funds. It would be useful for others in this CANSLIM group to comment on their experience with this ranking. Correlation with winners, strong or weak? Regards, Dave - - - -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: Mon, 22 Apr 2002 09:35:39 -0500 From: "Rich W" Subject: Re: [CANSLIM] Semnots Document This is a multi-part message in MIME format. - ------=_NextPart_000_015C_01C1E9E1.101B42E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Duke, Thanks for the link, this is great reading, only got 4 pages? will have to save this link in my links from Canslim folder Will send to my group Rich Weinhold =20 636-240-7267 STL Stock Analysis Group Coordinator - ------=_NextPart_000_015C_01C1E9E1.101B42E0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Duke,
Thanks for the link, this is great reading, only = got 4=20 pages?
will have to save this link in my links = from=20 Canslim folder
Will send to my group
 
 
Rich Weinhold 
636-240-7267
STL Stock = Analysis
Group =20 Coordinator
- ------=_NextPart_000_015C_01C1E9E1.101B42E0-- - - - -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: Mon, 22 Apr 2002 08:43:53 -0600 From: "Patrick Wahl" Subject: Re: [CANSLIM] CNTL Then it already meets volume requirements for a breakout, currently (10:34) volume at 75K shares. I think the chart looks pretty good, and the revenue and earnings growth are good. M isn't looking so hot today however.... On 22 Apr 2002 at 8:56, Katherine Malm wrote: > Patrick, > > 9:55a $28.60 20,200 vol (ADV 34,800) > ----- Original Message ----- > From: Patrick Wahl > To: canslim@lists.xmission.com > Sent: Monday, April 22, 2002 8:49 AM > Subject: [CANSLIM] CNTL > > > Someone mentioned this yesterday, appears to be breaking out, I don't have > volume numbers though. > > - > -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: Mon, 22 Apr 2002 11:08:08 -0400 From: "Erik_Harris3745" Subject: [CANSLIM] cmx Can someone provide canslim info on CMX? Has a decent looking chart and just broke its high on good volume. I just wish the market would improve a little. Thanks, Erik - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Patrick Wahl Sent: Monday, April 22, 2002 9:50 AM To: canslim@lists.xmission.com Subject: [CANSLIM] CNTL Someone mentioned this yesterday, appears to be breaking out, I don't have volume numbers though. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. _________________________________________________________ Do You Yahoo!? Get your free @yahoo.com address at http://mail.yahoo.com - - - -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: Mon, 22 Apr 2002 10:44:03 -0500 From: "Rich W" Subject: Re: [CANSLIM] Institutional Ownership Dave, Just looked back at last Tue's IBD, and found that 2 of my best gains have a B rank, TALX ( up +100%,sold off 2/3 last yr) And VSEA ( up 29.72 % this yr) both on my IRA in my Taxable account, which all have very long term gains, 3 that have done fair this year and have this ranking, UPC = C up 11.1 % this yr BAC = E up 13.75% BUD = E up 14.47% so looking at this not sure how to use this ranking, as seems to be different for NASDAQ than NYSE stocks, so is there a Correlation? Maybe someone else can do this and better answer the question. Rich Weinhold 636-240-7267 STL Stock Analysis Group Coordinator - - - -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: Mon, 22 Apr 2002 11:54:58 -0400 From: "Erik_Harris3745" Subject: [CANSLIM] why buy breakouts - article This is a multi-part message in MIME format. - ------=_NextPart_000_0008_01C1E9F4.869E5520 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Hi, Does anyone subscribe to The Street. I'm curious about the article below. I can't image what the reasoning is for the comment about not buying breakouts. Just Curious, Erik ______________________________________________________________________ Monday April 22, 8:16 am Eastern Time Bantering About the Virtues of Breakouts By Gary B. Smith Special to TheStreet.com This past Friday, my colleague Dan Fitzpatrick wrote this in his column : "For example, it's no longer profitable to buy breakouts; they should be sold. And yet it's tough to unlearn habits that have worked so well for so many years. I talk with professional money managers every day. I am amazed at how many continue to buy breakouts. Memo to money managers: That game is over." ________________________________________________________________________ - ------=_NextPart_000_0008_01C1E9F4.869E5520 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Hi,
Does anyone subscribe to The Street. I'm = curious about=20 the article below. I can't image what the reasoning is for the comment = about not=20 buying breakouts.

Just=20 Curious,
Erik
_________________________________________________= _____________________
Monday=20 April 22, 8:16 am Eastern Time
Bantering About the Virtues of=20 Breakouts

By Gary B. Smith
Special to = TheStreet.com

This past=20 Friday, my colleague Dan Fitzpatrick wrote this in his column = :

"For=20 example, it's no longer profitable to buy breakouts; they should be = sold. And=20 yet it's tough to unlearn habits that have worked so well for so many = years. I=20 talk with professional money managers every day. I am amazed at how many = continue to buy breakouts. Memo to money managers: That game is=20 over."
_______________________________________________________________= _________

- ------=_NextPart_000_0008_01C1E9F4.869E5520-- _________________________________________________________ Do You Yahoo!? Get your free @yahoo.com address at http://mail.yahoo.com - - - -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: Mon, 22 Apr 2002 11:58:43 EDT From: Davellil5@aol.com Subject: Re: [CANSLIM] Institutional Ownership Rich, my experience with the Sponsor Ranking mirrors yours, except I haven't seen any difference in the correlation of NYSE and Nasdaq stock winners with the ranking. Hope some others chime in with more info on this correlation or lack of same, as it may be. Regards, Dave - - - -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: Mon, 22 Apr 2002 11:03:33 -0500 From: "Katherine Malm" Subject: Re: [CANSLIM] why buy breakouts - article This is a multi-part message in MIME format. - ------=_NextPart_000_0027_01C1E9ED.57B6C000 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi Erik, I think the article has to be put into context. First, Gary B. Smith is = a short term trader and he was responding to this comment. Second, the = author who made the statement you quoted also offered an additional = explanation. Third, WON suggests the individual investor use breakouts = as an indication of institutional demand overcoming supply and is a = confirmation of a move in an otherwise sound CANSLIM stock. Obviously, = if you *are* the institutional money, it doesn't make a lot of sense to = be buying breakouts as an entry strategy. Below is the entire article: - --Katherine Bantering About the Virtues of Breakouts By Gary B. Smith Special to TheStreet.com 04/22/2002 08:16 AM EDT URL: http://www.thestreet.com/p/rmoney/techforumrm/10018593.html This past Friday, my colleague Dan Fitzpatrick wrote this in his column: = "For example, it's no longer profitable to buy breakouts; they should = be sold. And yet it's tough to unlearn habits that have worked so well = for so many years. I talk with professional money managers every day. I = am amazed at how many continue to buy breakouts. Memo to money managers: = That game is over." Naturally, because I'm the poster child for the breakout movement, many = readers asked me to comment, and I am happy to do so.=20 First, Dan emailed me shortly after the column went up with this = clarification:=20 "... the context of that comment related to professional money = managers, and not nimble traders. The money managers (buy-and-hold = types) I talk to like to buy breakouts, and then start building big = positions in them. But after working with several of them, I see the = same thing happening: Just as they've got their 'big position' built, = the rally finds supply, and the rally peters out. (Of course, the retail = and short-term traders have a good profit in the stock, and are closing = out their positions just as the big guys are waiting for more). So, in = this market, the small trader-types have a distinct advantage over the = big money." Of course, Dan is entirely correct, in essence implying that breakouts = can still work for short-term traders, a class into which I definitely = fall.=20 In addition, the success of any breakout, of course, totally depends on = the exit strategy employed. With a 5% target and 2% stop, you might have = success with breakouts, while a 20% target and 5% stop may yield abysmal = losses.=20 Finally, I would argue that a small part of the success of breakouts is = knowing which ones to pick and which to avoid. In my Chartman's Top = Stocks newsletter, there are long and short picks published every night, = and ironically, the longs have been working a lot better than the = shorts. In fact, if Dan were entirely correct, obvious breakouts like = Kraft (KFT:NYSE - news - commentary) , Newell Rubbermaid (NWL:NYSE - = news - commentary) and Pier 1 (PIR:NYSE - news - commentary) would yield = very little in profits, but instead they're some of my most successful = picks.=20 Still, I can't argue with what Dan said. As a broad generality, he might = be correct. On the other hand, my world is geared to traders with a = methodology, and for those, breakouts can and have worked quite well.=20 - ----- Original Message -----=20 From: Erik_Harris3745=20 To: canslim@lists.xmission.com=20 Sent: Monday, April 22, 2002 10:54 AM Subject: [CANSLIM] why buy breakouts - article Hi, Does anyone subscribe to The Street. I'm curious about the article = below. I can't image what the reasoning is for the comment about not = buying breakouts. Just Curious, Erik ______________________________________________________________________ Monday April 22, 8:16 am Eastern Time Bantering About the Virtues of Breakouts By Gary B. Smith Special to TheStreet.com This past Friday, my colleague Dan Fitzpatrick wrote this in his = column : "For example, it's no longer profitable to buy breakouts; they should = be sold. And yet it's tough to unlearn habits that have worked so well = for so many years. I talk with professional money managers every day. I = am amazed at how many continue to buy breakouts. Memo to money managers: = That game is over." = ________________________________________________________________________ - ------=_NextPart_000_0027_01C1E9ED.57B6C000 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Hi Erik,
 
I think the article has to be put into context. First, Gary B. = Smith is a=20 short term trader and he was responding to this comment. Second, the = author who=20 made the statement you quoted also offered an additional explanation. = Third, WON=20 suggests the individual investor use breakouts as an indication of = institutional=20 demand overcoming supply and is a confirmation of a move in an otherwise = sound=20 CANSLIM stock. Obviously, if you *are* the institutional money, it = doesn't make=20 a lot of sense to be buying breakouts as an entry strategy. Below = is the =20 entire article:
 
--Katherine
 
Bantering About the Virtues of=20 Breakouts
By Gary B.=20 Smith
Special to=20 TheStreet.com

04/22/2002 08:16 AM EDT
URL: http= ://www.thestreet.com/p/rmoney/techforumrm/10018593.html

This past Friday, my colleague Dan Fitzpatrick wrote this in his = column:=20

"For example, it's no longer profitable to buy breakouts; = they=20 should be sold. And yet it's tough to unlearn habits that have worked = so well=20 for so many years. I talk with professional money managers every day. = I am=20 amazed at how many continue to buy breakouts. Memo to money managers: = That=20 game is over."

Naturally, because I'm the poster child for the breakout = movement, many=20 readers asked me to comment, and I am happy to do so.=20

First, Dan emailed me shortly after the column went up with this=20 clarification:=20

"... the context of that comment related to professional = money=20 managers, and not nimble traders. The money managers (buy-and-hold = types) I=20 talk to like to buy breakouts, and then start building big positions = in them.=20 But after working with several of them, I see the same thing = happening: Just=20 as they've got their 'big position' built, the rally finds supply, and = the=20 rally peters out. (Of course, the retail and short-term traders have a = good=20 profit in the stock, and are closing out their positions just as the = big guys=20 are waiting for more). So, in this market, the small trader-types have = a=20 distinct advantage over the big money."

Of course, Dan is entirely correct, in essence implying that = breakouts=20 can still work for short-term traders, a class into which I definitely = fall.=20

In addition, the success of any breakout, of course, totally = depends on=20 the exit strategy employed. With a 5% target and 2% stop, you might have = success=20 with breakouts, while a 20% target and 5% stop may yield abysmal losses. =

Finally, I would argue that a small part of the success of = breakouts is=20 knowing which ones to pick and which to avoid. In my Chartman's Top = Stocks=20 newsletter, there are long and short picks published every night, and=20 ironically, the longs have been working a lot better than the shorts. In = fact,=20 if Dan were entirely correct, obvious breakouts like Kraft = (KFT:NYSE -=20 news - commentary) , Newell Rubbermaid (NWL:NYSE - news - = commentary) and=20 Pier 1 (PIR:NYSE - news - commentary) would yield very little in = profits,=20 but instead they're some of my most successful picks.=20

Still, I can't argue with what Dan said. As a broad generality, = he might=20 be correct. On the other hand, my world is geared to traders with a = methodology,=20 and for those, breakouts can and have worked quite well.
 
 
----- Original Message -----
From:=20 Erik_Harris3745
Sent: Monday, April 22, 2002 = 10:54=20 AM
Subject: [CANSLIM] why buy = breakouts -=20 article


Hi,
Does anyone subscribe to The Street. I'm = curious about=20 the article below. I can't image what the reasoning is for the comment = about=20 not buying breakouts.

Just=20 = Curious,
Erik
_________________________________________________= _____________________
Monday=20 April 22, 8:16 am Eastern Time
Bantering About the Virtues of=20 Breakouts

By Gary B. Smith
Special to = TheStreet.com

This past=20 Friday, my colleague Dan Fitzpatrick wrote this in his column = :

"For=20 example, it's no longer profitable to buy breakouts; they should be = sold. And=20 yet it's tough to unlearn habits that have worked so well for so many = years. I=20 talk with professional money managers every day. I am amazed at how = many=20 continue to buy breakouts. Memo to money managers: That game is=20 = over."
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