From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #261 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 Saturday, May 30 1998 Volume 02 : Number 261 In this issue: [CANSLIM] Re: Rush--Phyllis [CANSLIM] RUSH [CANSLIM] new guy here - Lucent [CANSLIM] Another mkt comment: 05/29/98 Re: [CANSLIM] Db!!!!--Jeffry Re: [CANSLIM] RUSH Re: [CANSLIM] new guy here - Lucent Re: [CANSLIM] Lucent--Chris Re: [CANSLIM] RUSH [CANSLIM] BigCharats is clicky. Re: [CANSLIM] new guy here - Lucent Re: [CANSLIM] Lucent--Tom Re: [CANSLIM] Lucent--Tom Re: [CANSLIM] Lucent--Tom Re: [CANSLIM] Lucent--Tom [CANSLIM] Economy Fw: [CANSLIM] Economy Re: [CANSLIM] Lucent--Tom ---------------------------------------------------------------------- Date: Fri, 29 May 1998 17:53:36 -0700 (PDT) From: dbphoenix Subject: [CANSLIM] Re: Rush--Phyllis <> I don't know you, Phyllis, and perhaps I am speaking out of turn, but if, as you say, you don't have much money, and you are, as you say, new to CANSLIM, at least consider paper-trading for a while. Nothing is more discouraging to the new investor or more damaging to the self-confidence of practically any investor than making a bad investment decision, and the success and failure of the decisions you make now will color your investing style for some time to come. One suggestion I've made with all novices and with everyone new to CS is to keep a journal. Those who've kept up with it have been glad they did so. In the journal you keep a record of every investment decision you make, the reasons why you made it, what the group and market were like at the time, how the decision turned out, why you think it turned out the way it did, what you'd do differently the next time (if anything), and so on. You can also use it as a place to keep your observations on the market (does anyone remember what they thought and how they felt about market conditions on a daily basis last January?), copy and paste posts you like, stock reports, news items, anything that strikes you as particularly intelligent or insightful, questions you're asking yourself, and so on. If you have a word-processing program, keeping such a journal is an easy thing to do, and a task which I believe you'll be glad you tackled. Think of it as a self-paced correspondence course in investing. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 29 May 1998 20:56:18 -0400 From: "PHYLLIS ROBINSON" Subject: [CANSLIM] RUSH RUSH also ahd more than double average volume with a new high. Isn't that one of the criteria that WON talks about in HTMMIS? I went to IBD today and decided that i would pick a stock i liked that fit Canslim. I have lost toooo much money to still be investing foolishly. Phyllis - - ------------------------------ Date: Fri, 29 May 1998 20:30:20 -0500 From: Chris McKeever Subject: [CANSLIM] new guy here - Lucent I was wondering if anyone has looked into Lucent Tech for Canslim Numbers. I know they have a huge new plant almost complete which will pump out the cable when it is done. From what I hear they are sold out in cable, when they have on hand at any one time millions of feet. I was looking at the chart, and to me that looks pretty good. If someone does run the numbers or check the chart out, I would appreciate if we could exchange comment. Maybe I could start to understand this more Being new to this I need all the help possible Chris - -----Original Message----- From: Connie Mack Rea To: canslim Date: Wednesday, May 27, 1998 9:46 AM Subject: [CANSLIM] Keep your head while others. . . . >Members-- > >Nothing so focuses the mind as having your stocks reported at the end of >the day in red. Now is an opportune time to practice some of your >charting and technical knowledge. > >Two months ago I was chided by a couple of members for having a "bad >feeling" about the market. Irrespective of my feeling, the market >continued to rise; while I was for a time almost out of the market, and >carrying a couple of shorts, most others were in, and making good >money. I eventually came back in and made some spending money, but >nothing more. > >This morning, the "bad feeling" came again, and I said that I had sold >half of my stocks. The remaining five had very modest profits and I did >not intend to take a loss on any of them. I used all market orders. >This evening I have but a single stock, VTCH, which is about a half inch >from being closed out. By 10:30 it seemed obvious that things were >coming apart and by 2:30 big sell programs kicked in. > > - - ------------------------------ Date: Fri, 29 May 1998 18:58:11 -0700 (PDT) From: rolatzi Subject: [CANSLIM] Another mkt comment: 05/29/98 Didn't i read about three days ago that Michael Metz decided to retire after having been a bear for the last 3 years? Ciao, Rolatzi "There is a shift in leadership," said Michael Metz, managing director at CIBC Oppenheimer & Corp. "The big-cap stocks are over owned and most vulnerable. We are starting to see some shift to unexploited mid- and small-cap stocks." > _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 29 May 1998 22:14:49 -0400 From: "Frank V. Wolynski" Subject: Re: [CANSLIM] Db!!!!--Jeffry At 17:09 5/29/98 -0700, dbphoenix wrote: > ...sniped..... >I've been a part of several forums over the last couple of years and >I've been amazed (I'm pretty easily amazed) at how many people get all >wrapped up in whether earnings were up 25% or 35% (for example). Or >whether a particular company missed a quarter in 1995. These, to me, >are completely trivial details. What really matters is whether or not >a given company is kicking ass or is not kicking ass. If it is >kicking ass, I'm going to use pullbacks as an opportunity to buy more >shares, not wring my hands in a fit of angst over whether or not I >should trigger my stops. If it is not kicking ass, why would I want >to own it at all, even if it did manage an earnings surprise and an >upgrade? > >But that's just me. ><> > >You're welcome ;) >--Db > This is exactly why a company like MSPG, Mindspring can quadruple over a 6mth period and post deficit or small earnings. EPS I believe was under 50 at the time of the lift off, but sales were exploding, net income was going vertical and expectations of earnings were high. Meanwhile back at the EPS ranking farm, I observed many 99'ers just idling, barely moving. I anticipated a withdrawal from the mesmerization of the DGO site, but have to admit, I think I would miss WWW.Rapidresearch.com more than I do DGO. I really like the yearly second page of the display, up to 5 years arranged in rows and columns for mucho fundamental data. It is easy to spot earnings, ROE, debt and sales accelerating. If you DGO'ers would like to try an experiment, try printing a DGO chart of MSPG and then a rapidresearch report of MSPG, see if one was giving any better hint than the other for the move! Db, you really got my wheels turning with this thread, thanks for taking the time to drill the points home! It was priceless! Frank Wolynski (Sometimes wrong, never unsure!) - - ------------------------------ Date: Fri, 29 May 1998 21:26:46 -0700 (PDT) From: Tim Fisher Subject: Re: [CANSLIM] RUSH FWIW I have bought stocks based on no other reason than someone on the Net recommended them, said they were CANSLIM, SURPRISE! they weren't even close. Of course it's my fault since I did no homework, was lazy, etc. and I will NEVER EVER do that again. Some of you know who I am talking about. Here's another opinion of RUSH. If you did your homework you should have gotten numbers similar to these month-old numbers below. Notice that earnings are just coming out of a hole. That's OK but I don't buy stocks with ANY losses in the past 4 quarters. Either Zacks has bad data or there are not 5 years of earnings available. I'd research the 5-yr trend before buying ANYTHING. It's an important part of "L". It has 31x debt. That is HIGH. It wouldn't keep me out but combined with the other irregularities this one wouldn't even make my watch list. IMHO you RUSHed into RUSH. RET/WHL-AUTO PT Rush Enterprise TICKER RUSH EXCHANGE NSDQ X SECTOR 3 X INDUSTRY 9 24WK PCHG% 27.78 TREND EPGR N/A QEPS 0/-4 66.67 QEPS -1/-5 20.83 QEPS -2/-6 8.70 QEPS -2/-7 -42.31 TREND SALE N/A P/E 12M 12.92 ROI 14.65 D/Equity 31.88 PEG F1 0.55 % INSIDERS 56.99 % INSTITUT 30.68 At 08:56 PM 5/29/98 -0400, you wrote: >RUSH also ahd more than double average volume with a new high. Isn't that >one of the criteria that WON talks about in HTMMIS? I went to IBD today and >decided that i would pick a stock i liked that fit Canslim. I have lost >toooo much money to still be investing foolishly. >Phyllis > Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information mailto:tim@OreRockOn.com WWW http://OreRockOn.com - - ------------------------------ Date: Fri, 29 May 1998 21:26:50 -0700 (PDT) From: Tim Fisher Subject: Re: [CANSLIM] new guy here - Lucent First off LU is a great stock and I would buy it even if it weren't CANSLIM. There are only a couple of these out there, such as MSFT and DELL which were CANSLIM at one time. Since it's a spinoff from AT&T it's too new to have a good EPS trend. It had a couple of so-so qtrs which technically kick it out of my scans. It has moderate debt and of course no insiders own it (see AT&T and the whole spinoff thing is another discussion which I won't get into). TELECOMM EQUIP Lucent Tech Inc TICKER LU EXCHANGE NYSE X SECTOR 10 X INDUSTRY 179 24WK PCHG% 84.91 TREND EPGR N/A QEPS 0/-4 180.00 QEPS -1/-5 27.41 QEPS -2/-6 42.50 QEPS -2/-7 200.00 TREND SALE N/A P/E 12M 51.77 ROI 32.91 D/Equity 49.16 PEG F1 2.35 % INSIDERS 0.01 % INSTITUT 39.60 At 08:30 PM 5/29/98 -0500, you wrote: >I was wondering if anyone has looked into Lucent Tech for Canslim Numbers. >I know they have a huge new plant almost complete which will pump out the >cable when it is done. From what I hear they are sold out in cable, when >they have on hand at any one time millions of feet. > >I was looking at the chart, and to me that looks pretty good. If someone >does run the numbers or check the chart out, I would appreciate if we could >exchange comment. Maybe I could start to understand this more > > > >Being new to this I need all the help possible > >Chris > > >-----Original Message----- >From: Connie Mack Rea >To: canslim >Date: Wednesday, May 27, 1998 9:46 AM >Subject: [CANSLIM] Keep your head while others. . . . > > >>Members-- >> >>Nothing so focuses the mind as having your stocks reported at the end of >>the day in red. Now is an opportune time to practice some of your >>charting and technical knowledge. >> >>Two months ago I was chided by a couple of members for having a "bad >>feeling" about the market. Irrespective of my feeling, the market >>continued to rise; while I was for a time almost out of the market, and >>carrying a couple of shorts, most others were in, and making good >>money. I eventually came back in and made some spending money, but >>nothing more. >> >>This morning, the "bad feeling" came again, and I said that I had sold >>half of my stocks. The remaining five had very modest profits and I did >>not intend to take a loss on any of them. I used all market orders. >>This evening I have but a single stock, VTCH, which is about a half inch >>from being closed out. By 10:30 it seemed obvious that things were >>coming apart and by 2:30 big sell programs kicked in. >> >> > > > > >- > > > Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information mailto:tim@OreRockOn.com WWW http://OreRockOn.com - - ------------------------------ Date: Fri, 29 May 1998 21:50:02 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Lucent--Chris <> I agree with Tim that LU is a hell of a company. And it's had an amazing run, considering that so many people pooh-poohed it when it first went public (good ol' talking heads). And you're not supposed to consider valuations with CS stocks. But at least consider that it has a PE of almost 200. Earnings will be up around 400% this year, but next year they're expected to rise only about 20%. That means there's no room for error. Consider also that profit margins are razor-thin. ROE is no great shakes either. Debt's low, but revenues aren't keeping pace with earnings. As far as the chart is concerned, note that LU doubled after moving out of a seven-month base. Its current base is only five weeks. Considering the strength and rapidity of its rise, it may need to rest here for a while, and that wouldn't be a bad thing. But if and when it does begin to move again, consider how much demand it will take to move 1.3 billion shares. Not that the demand won't be there. But it will have to be substantial. This is not to discourage you with regard to LU. Just some things to consider. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 30 May 1998 08:22:44 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] RUSH Tim, not sure who the reference is to someone saying a stock is non-CANSLIM, but since I was the one posting on RUSH initially as far as I remember, I am certainly willing to defend it. You are using data from Zack's while I am using data from Daily Graphs, which illustrates some of the problems we have in discussing stocks here since we all use different favorite sites. I haven't used Zack's extensively, but if I recall right they report earnings on a net net basis (e.g. including any non-recurring gains or losses). WON strips out these non-recurring events and reports only on recurring basis. And as of a week ago, all earnings were also adjusted to report on a fully diluted basis in accordance with FASB Standard #128. From DG May 22, 1998 (so a week old, my new book not here yet) RUSH - Rush Enterprises (Retail - Misc/diversified) RS 91, EPS 87, GRS 95, u/d 0.9, A/D B, Timeliness B, 6.6 mil shares issued, 2.9 mil in float, ADV 13,200, Funds 39%, Banks 6%, Management 57% thus there is an effective "real" or trading float of about 1.5 mil shares. On earnings, annual earnings reported as 31 cents in 1993, followed by 80 cents, 93 cents, 94 cents, 81 cents for 1997 (year ended Dec). Estimate for 1998 is 1.05 (up 30%) and for 1999 $1.20 (up 14%). The last 8 qtrs of earnings (oldest to newest) were (all in cents) 26, 23, 24, 12, 15, 25, 29, 20 (for March 98). Thus the past two qtrs Q4FY97 and Q1FY98 were 29 vs 24 (up 21%) and 20 vs 12 (up 67%). Not a perfect CAN(new highs)SLI, which is why I was watching rather than buying, however the chart looked promising, and still does. That only left "M", which is a different issue. A one day outperformance by RUT doesn't mean the small caps are taking over. They are down the worst, thus bargain shopping is likely. Debt is 54%, ROE is 14%, cash flow is $1.26, 1.91 times book value. The debt looks typical to me for their business (selling new and used Peterbilt trucks, a high ticket item typically financed rather than owned outright by the dealer). Normally WON puts a little triangle next to earnings (both annual and qtrly) where the reported nrs included a non-recurring pre-tax gain or charge. I don't see that for any of the years or qtrs, so if there were any of these type events, they were stripped out and may account for the differences. I don't know why Zacks is reporting less than five years however. Tom W - -----Original Message----- From: Tim Fisher To: canslim@lists.xmission.com Date: Saturday, May 30, 1998 12:23 AM Subject: Re: [CANSLIM] RUSH >FWIW I have bought stocks based on no other reason than someone on the Net >recommended them, said they were CANSLIM, SURPRISE! they weren't even close. >Of course it's my fault since I did no homework, was lazy, etc. and I will >NEVER EVER do that again. Some of you know who I am talking about. > >Here's another opinion of RUSH. If you did your homework you should have >gotten numbers similar to these month-old numbers below. Notice that >earnings are just coming out of a hole. That's OK but I don't buy stocks >with ANY losses in the past 4 quarters. Either Zacks has bad data or there >are not 5 years of earnings available. I'd research the 5-yr trend before >buying ANYTHING. It's an important part of "L". It has 31x debt. That is >HIGH. It wouldn't keep me out but combined with the other irregularities >this one wouldn't even make my watch list. IMHO you RUSHed into RUSH. > >RET/WHL-AUTO PT Rush Enterprise >TICKER RUSH >EXCHANGE NSDQ >X SECTOR 3 >X INDUSTRY 9 >24WK PCHG% 27.78 >TREND EPGR N/A >QEPS 0/-4 66.67 >QEPS -1/-5 20.83 >QEPS -2/-6 8.70 >QEPS -2/-7 -42.31 >TREND SALE N/A >P/E 12M 12.92 >ROI 14.65 >D/Equity 31.88 >PEG F1 0.55 >% INSIDERS 56.99 >% INSTITUT 30.68 > >At 08:56 PM 5/29/98 -0400, you wrote: >>RUSH also ahd more than double average volume with a new high. Isn't that >>one of the criteria that WON talks about in HTMMIS? I went to IBD today and >>decided that i would pick a stock i liked that fit Canslim. I have lost >>toooo much money to still be investing foolishly. >>Phyllis >> >Tim Fisher, 1995 President, Pacific Fishery Biologists >Ore-ROCK-On Rockhounding Web Site >PFB Information >mailto:tim@OreRockOn.com >WWW http://OreRockOn.com > > >- > - - ------------------------------ Date: Sat, 30 May 1998 08:51:37 -0400 From: Connie Mack Rea Subject: [CANSLIM] BigCharats is clicky. Members-- A few hints about saving some clicks in BigCharts. BC is "clicky." When using the "large" chart screen, you have to make several clicks to get to indicators on the left; then you have to make four to five on the right to get to the bottom screen. Try this. Remember BC is a frames screen. When you want to make any change, as I'm suggesting, you must left click on the frame you want to work with. Left click on any part of the blue on the left frame; then go to View at the top of your browser [I use Netscape with Windows] and choose Decrease Font. Click again to further decrease font size. Left click on the chart and double click Decrease again. This will affect only the text and numerals [price, volume, etc.]. Go back to the left screen and go to the bottom of the items where you find Chart Size. Left click on small. Now you see a reduced chart that lets you see both the chart and the lower indicator screen at the same time. The reduced fonts on the left screen should save you a click or two when you're ready to click on Draw Chart. Use these decreased settings only on your initial screen. When you're ready to examine the kicked-out stocks, return to the full settings. Connie Mack - - ------------------------------ Date: Sat, 30 May 1998 09:07:19 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] new guy here - Lucent Welcome to the group, Chris. I will add my CS based comments on Lucent to those of the other members. In my week old DG book, it looks like the RS is 95 (they overprinted the notation of a Fortune article on 5/25 right on top of the nr!!) however EPS is 96, A/D A, Timeliness A, New CEO 10/97 (usually bullish), Debt 49%, Funds 10%, Banks 10%, Management 1%, u/d 1.7. DG disagrees with some of the data already posted here, specifically debt shown as 49% and PE (trailing) also shown as 49 (remember DG strips out non-recurring events while many other sites include everything). I would also disagree with the comment that sales are not keeping pace with earnings. In an efficient company, earnings should grow faster than sales as you don't have to increase the overhead (personnel, marketing, warehouses and other facilities, etc). In many cases, existing facilities were built for greater future business levels, and the company is just "growing into" those operational facilities, and thus now beginning to gain the sales to justify their capacity and costs. I don't follow LU, but the sharp sequential drop in both sales and earnings from Q1 (ending Dec) to Q2 (ending Mar) would make me want to have a rational and logical explanation for such a large drop. Tom W - -----Original Message----- From: Chris McKeever To: canslim@lists.xmission.com Date: Friday, May 29, 1998 9:39 PM Subject: [CANSLIM] new guy here - Lucent >I was wondering if anyone has looked into Lucent Tech for Canslim Numbers. >I know they have a huge new plant almost complete which will pump out the >cable when it is done. From what I hear they are sold out in cable, when >they have on hand at any one time millions of feet. > >I was looking at the chart, and to me that looks pretty good. If someone >does run the numbers or check the chart out, I would appreciate if we could >exchange comment. Maybe I could start to understand this more > > > >Being new to this I need all the help possible > >Chris > > >-----Original Message----- >From: Connie Mack Rea >To: canslim >Date: Wednesday, May 27, 1998 9:46 AM >Subject: [CANSLIM] Keep your head while others. . . . > > >>Members-- >> >>Nothing so focuses the mind as having your stocks reported at the end of >>the day in red. Now is an opportune time to practice some of your >>charting and technical knowledge. >> >>Two months ago I was chided by a couple of members for having a "bad >>feeling" about the market. Irrespective of my feeling, the market >>continued to rise; while I was for a time almost out of the market, and >>carrying a couple of shorts, most others were in, and making good >>money. I eventually came back in and made some spending money, but >>nothing more. >> >>This morning, the "bad feeling" came again, and I said that I had sold >>half of my stocks. The remaining five had very modest profits and I did >>not intend to take a loss on any of them. I used all market orders. >>This evening I have but a single stock, VTCH, which is about a half inch >>from being closed out. By 10:30 it seemed obvious that things were >>coming apart and by 2:30 big sell programs kicked in. >> >> > > > > >- > - - ------------------------------ Date: Sat, 30 May 1998 06:49:19 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Lucent--Tom <> You may be confusing revenues with net income. Cost of sales has nothing to do with revenues per se. Earnings cannot outpace sales to an extreme degree on a sustained basis. At some point, revenues must either increase or earnings must fall, given a constant of efficiency. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 30 May 1998 10:01:37 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Lucent--Tom I disagree, DB, the point is, efficiency is not constant. As sales increase, so should gross and net profit margins at an even faster pace, thus earnings efficiency should also grow. When this DOESN'T happen, it's a major red flag for me, and a ding on the quality of management. When sales go up 20%, it doesn't mean that the sales force, much less the "front office staff", had to be increased by the same 20%. Nor does it mean that the CEO's salary went up by 20% anymore than the rent/lease went up at all on their facilities. Much of a major corp's costs are fixed, and do not vary depending on sales. Thus they must increase sales to increase earnings efficiencies. If I see sales flat and earnings rising sharply, I suspect cost cutting which can only last so long, and want to examine their SEC filings more closely. Likewise if I see sales rising sharply without at least commensurate earnings growth, I suspect either a shift in product mix to lower margin products, a greater investment in either R&D or overhead, a change in tax status (used up their tax loss carryforwards), or some mix, and again want to examine their financial filings comments. Only when I see sales growing significantly, and earnings growing even faster, am I uniquely comfortable with their trends. Tom W - -----Original Message----- From: dbphoenix To: canslim@lists.xmission.com Date: Saturday, May 30, 1998 9:46 AM Subject: Re: [CANSLIM] Lucent--Tom ><than sales as you don't have to increase the overhead (personnel, >marketing, warehouses and other facilities, etc). In many cases, >existing facilities were built for greater future business levels, and >the company is just "growing into" those operational facilities, and >thus now beginning to gain the sales to justify their capacity and >costs.>> > >You may be confusing revenues with net income. Cost of sales has >nothing to do with revenues per se. Earnings cannot outpace sales to >an extreme degree on a sustained basis. At some point, revenues must >either increase or earnings must fall, given a constant of efficiency. > >--Db > > > > > >_________________________________________________________ >DO YOU YAHOO!? >Get your free @yahoo.com address at http://mail.yahoo.com > > >- > - - ------------------------------ Date: Sat, 30 May 1998 07:28:06 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Lucent--Tom <> I agree that efficiency is not constant. I excluded it as a variable only to make the point--poorly--that you make better above; that is, that revenues and earnings must keep pace with each other. If they are out of sync, more investigation is warranted. In other words, we agree on all but one point, which is that efficiency is finite. Efficiencies of one sort or another can go only so far, which is one of the reasons why so many market-watchers are concerned about the ability of many U.S. companies to maintain their growth rates and why CANSLIM generally parts company with those businesses whose efficiencies are beginning to stabilize and who now must concentrate on top-line growth in order to sustain the earnings growth that made them a CS candidate in the first place. All of which may take a very long time. There were many, many opportunities to buy MSFT, DELL, CSCO, etc., long after they first showed up on the radar screens. And there will probably be a number of opportunities to buy LU. But I wouldn't mind seeing another 10% retracement of the most recent move. Or at the very least, a longer base. If it reaches 60, I'll be there. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 30 May 1998 11:12:19 -0400 From: "Mike Asher" Subject: Re: [CANSLIM] Lucent--Tom My .02 worth, LU's is sitting on 50MA.......for now. Viewed on weekly chart it has formed an umbrella top. If it closes below 50MA it would be a normal correction to fall to 200MA in the $50 range. Judging by what is being said from a fundamental perspective and M factor, a correction would seem reasonable. JMO, mike - - ------------------------------ Date: Sat, 30 May 1998 22:49:19 +1200 From: "Dean Edwards" Subject: [CANSLIM] Economy I thought this article was quite interesting, so I have posted it. http://www.intellectualcapital.com/issues/98/0101/icbusiness.asp - -This Week's Market by Trader Vic" a weekly >review of Wall Street trends written by market expert Vic >Sperandeo. > >Trader Vic first gained recognition as a market wizard when he >correctly predicted the Stock Market debacle of October, 1987 >in an interview with Barron's on September 21, 1987 entitled >"Trader Vic - The Ultimate Wall Street Pro." His 30 plus years >on Wall Street include involvement in Stocks, Bonds, Futures, >Commodities and Currency markets as a trader and money >manager. He also managed the Quantum Fund for George Soros, >hired to hedge his long positions from late 1981 through June of >1982, which he did successfully, becoming bullish himself in June >of 1982. > >Trader Vic has written articles and editorials for dozens of >publications including Barron's, The Wall Street Journal, Institutional >Investor and USA Today, and he is frequently quoted in the financial >press. He has also appeared on NBC, CNBC, BBC, CBS and various >other TV and radio stations. He currently is the President of Hugo >Securities Co., Inc. and the Professional CTA Fund. > > >The stock market's results have been incredible since October 1990. >This is the longest cyclical bull market in U.S. history, lasting 2771 >calendar days from 10/10/90 - 5/13/98 on the Dow Industrials. The >longest cyclical bull market previous to this was 7/31/23 - 9/3/29 or >2226 days. > >The reasons are simple: > >1.) Corporate earnings have been excellent throughout the period. > >2.) Inflation has been at a 30 year low. > >3.) Interest rates have been low and stable. > >4.) Fed policy has been accommodating to financial markets. > >The emphasis to most market forecasts are these common >essential ingredients pertaining to equities. However, a look at >history suggests that these factors have little to do with >substantial market declines. For example, World Wars were not >predictable. In more recent times: > >1962 the Kennedy - U.S. Steel conflict caused a decline of 27.1%; > >1973 Opec oil embargo caused a decline of 46.0%; > >1987 crash - A 36.0% decline caused by a political event of James >Baker threatening to devalue the dollar; > >1989 October mini - crash of 10.0% because of the break-up of >the UAL deal; > >1990 A decline of 21.2% when Iraq invaded its neighbor....! > >These are some examples of non-predictable events. Thereby, >when markets are overvalued, or extended, it is prudent to be >hedged or cautious, although this may cause some temporary >under-performance. > >Within the last month the Fed has said in its minutes that it >will raise rates soon. This is what is causing this short-term >decline. An increase in rates is highly unlikely after September, >because of the election. Therefore, between now and August >the market will at best pause. The market should rally after an >increase in rates as this event is being well discounted. > >The Bottom Line: >A short-term correction is under way and will continue for the >near-term. Expect a choppy highly selective market environment. >It will turn into an intermediate or an "important" decline if the May >27, 1998 lows are broken. Bonds should be firm to up as an economic >slow-down is discounted. > >Sincerely, > >Victor Sperandeo >Trader Vic - - ------------------------------ Date: Sun, 31 May 1998 03:05:23 +1200 From: "Dean Edwards" Subject: Fw: [CANSLIM] Economy I am posting this email again. >I thought this article was quite interesting, so I have posted it. > >http://www.intellectualcapital.com/issues/98/0101/icbusiness.asp > >-This Week's Market by Trader Vic" a weekly >>review of Wall Street trends written by market expert Vic >>Sperandeo. >> >>Trader Vic first gained recognition as a market wizard when he >>correctly predicted the Stock Market debacle of October, 1987 >>in an interview with Barron's on September 21, 1987 entitled >>"Trader Vic - The Ultimate Wall Street Pro." His 30 plus years >>on Wall Street include involvement in Stocks, Bonds, Futures, >>Commodities and Currency markets as a trader and money >>manager. He also managed the Quantum Fund for George Soros, >>hired to hedge his long positions from late 1981 through June of >>1982, which he did successfully, becoming bullish himself in June >>of 1982. >> >>Trader Vic has written articles and editorials for dozens of >>publications including Barron's, The Wall Street Journal, Institutional >>Investor and USA Today, and he is frequently quoted in the financial >>press. He has also appeared on NBC, CNBC, BBC, CBS and various >>other TV and radio stations. He currently is the President of Hugo >>Securities Co., Inc. and the Professional CTA Fund. >> > >> >>The stock market's results have been incredible since October 1990. >>This is the longest cyclical bull market in U.S. history, lasting 2771 >>calendar days from 10/10/90 - 5/13/98 on the Dow Industrials. The >>longest cyclical bull market previous to this was 7/31/23 - 9/3/29 or >>2226 days. >> >>The reasons are simple: >> >>1.) Corporate earnings have been excellent throughout the period. >> >>2.) Inflation has been at a 30 year low. >> >>3.) Interest rates have been low and stable. >> >>4.) Fed policy has been accommodating to financial markets. >> >>The emphasis to most market forecasts are these common >>essential ingredients pertaining to equities. However, a look at >>history suggests that these factors have little to do with >>substantial market declines. For example, World Wars were not >>predictable. In more recent times: >> >>1962 the Kennedy - U.S. Steel conflict caused a decline of 27.1%; >> >>1973 Opec oil embargo caused a decline of 46.0%; >> >>1987 crash - A 36.0% decline caused by a political event of James >>Baker threatening to devalue the dollar; >> >>1989 October mini - crash of 10.0% because of the break-up of >>the UAL deal; >> >>1990 A decline of 21.2% when Iraq invaded its neighbor....! >> >>These are some examples of non-predictable events. Thereby, >>when markets are overvalued, or extended, it is prudent to be >>hedged or cautious, although this may cause some temporary >>under-performance. >> >>Within the last month the Fed has said in its minutes that it >>will raise rates soon. This is what is causing this short-term >>decline. An increase in rates is highly unlikely after September, >>because of the election. Therefore, between now and August >>the market will at best pause. The market should rally after an >>increase in rates as this event is being well discounted. >> >>The Bottom Line: >>A short-term correction is under way and will continue for the >>near-term. Expect a choppy highly selective market environment. >>It will turn into an intermediate or an "important" decline if the May >>27, 1998 lows are broken. Bonds should be firm to up as an economic >>slow-down is discounted. >> >>Sincerely, >> >>Victor Sperandeo >>Trader Vic > > > > - - ------------------------------ Date: Sat, 30 May 1998 09:23:18 -0700 From: Bill Subject: Re: [CANSLIM] Lucent--Tom Tom, Do you believe that the average investor has to go through all of the analysis that you described below on every stock that he wants to purchase? Seems to me that the 'market' has already determined the worthiness of the stock, long before one has the chance to review it. All of the good and bad news has already been factored into the price of the stock based on 'historical' data as published by IBD, DG, etc.. What moves a stock is the collective efforts of individuals betting on the come. To think that one person can outsmart the masses consistently seems unreasonable to me. Someone here mentioned that the charts are your best friends -- I would like to add to that an appreciation of statistical analysis and good insider information as equally important in my universe. The word 'efficiency' crops up in many discussions here. Many writers use the word to describe people working harder and faster to produce more goods and services for the benefit of the corporation. While it may be possible to 'whip' a worker bee into higher levels of production with the proper incentives, it is the entity's willingness to CHANGE with the adoption of a CONTINUOUS IMPROVEMENT PROGRAM that ultimately raises efficiency. Of all the variables available to evaluate MANAGEMENT, the appreciation of CIP and TQM rank high on my stock buying check list. Bill-->> - ------------------------------------------ At 7:01 AM -0700 5/30/98, Tom Worley wrote: >I disagree, DB, the point is, efficiency is not constant. As sales >increase, so should gross and net profit margins at an even faster >pace, thus earnings efficiency should also grow. > >When this DOESN'T happen, it's a major red flag for me, and a ding on >the quality of management. When sales go up 20%, it doesn't mean that >the sales force, much less the "front office staff", had to be >increased by the same 20%. Nor does it mean that the CEO's salary went >up by 20% anymore than the rent/lease went up at all on their >facilities. Much of a major corp's costs are fixed, and do not vary >depending on sales. Thus they must increase sales to increase earnings >efficiencies. If I see sales flat and earnings rising sharply, I >suspect cost cutting which can only last so long, and want to examine >their SEC filings more closely. Likewise if I see sales rising sharply >without at least commensurate earnings growth, I suspect either a >shift in product mix to lower margin products, a greater investment in >either R&D or overhead, a change in tax status (used up their tax loss >carryforwards), or some mix, and again want to examine their financial >filings comments. Only when I see sales growing significantly, and >earnings growing even faster, am I uniquely comfortable with their >trends. > >Tom W > >-----Original Message----- >From: dbphoenix >To: canslim@lists.xmission.com >Date: Saturday, May 30, 1998 9:46 AM >Subject: Re: [CANSLIM] Lucent--Tom > > >><>than sales as you don't have to increase the overhead (personnel, >>marketing, warehouses and other facilities, etc). In many cases, >>existing facilities were built for greater future business levels, >and >>the company is just "growing into" those operational facilities, and >>thus now beginning to gain the sales to justify their capacity and >>costs.>> >> >>You may be confusing revenues with net income. Cost of sales has >>nothing to do with revenues per se. Earnings cannot outpace sales to >>an extreme degree on a sustained basis. At some point, revenues must >>either increase or earnings must fall, given a constant of >efficiency. >> >>--Db >> >> >> >> >> >>_________________________________________________________ >>DO YOU YAHOO!? >>Get your free @yahoo.com address at http://mail.yahoo.com >> >> >>- >> > > >- - - ------------------------------ End of canslim-digest V2 #261 ***************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. 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