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canslim-digest        Tuesday, August 20 2002        Volume 02 : Number 2837



In this issue:

       [CANSLIM] Too many CANSLIMers?
       Re: [CANSLIM] Too many CANSLIMers?
       Re: [CANSLIM] CVH
       Re: [CANSLIM] Home Depot
       Re: [CANSLIM] Best CNBC Commentators
       Re: [CANSLIM] Question
       Re: [CANSLIM] stop losses and profits
       Re: [CANSLIM] stop losses and profits

----------------------------------------------------------------------

Date: Tue, 20 Aug 2002 10:53:04 -0600
From: Warren Keuffel <wkeuffel@xmission.com>
Subject: [CANSLIM] Too many CANSLIMers?

I have been thinking about the various comments posted recently about
too many CANSLIMers chasing too few stocks, all buying at the pivot
point, malfeasance of market makers, etc., etc.

Given that (caution: assumption approaching) that the institutions
dictate the movement of a given stock (as St. WON tells us in The Book)
would it not follow, then, that the purchases of a few CANSLIMers ( or,
rather, the many CANSLIMers buying small quantities) would not be enough
to move the market?

Warren


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------------------------------

Date: Tue, 20 Aug 2002 17:06:41 GMT
From: "Boyd" <theboyd@tisd.net>
Subject: Re: [CANSLIM] Too many CANSLIMers?

Warren,

Another listserv member and I have bantered this about recently, off-line. 
Seems like some contradictatory assumptions.  

<opinion>
Maybe in a bear M where there are few good set-ups, we small CAN SLIMers
out here in WON-land can make a difference on low-vol stocks.  WON says
it's instutions that move a stock when it is really climbing.  But I have
never completely understood how the big money plays CAN SLIM (if they do). 
Do they ever buy at the pivot like us?  Surely they don't move in and out
of a stock like CAN SLIM can have us doing at times.  I thought they took
weeks to take a position?  If so, wouldn't they be the folks causing the
right side of the cup to form?  Not being an market insider, I am "clueless
in Texas."
</opinion>

Norm

Warren Keuffel writes:

> I have been thinking about the various comments posted recently about
> too many CANSLIMers chasing too few stocks, all buying at the pivot
> point, malfeasance of market makers, etc., etc.
> 
> Given that (caution: assumption approaching) that the institutions
> dictate the movement of a given stock (as St. WON tells us in The Book)
> would it not follow, then, that the purchases of a few CANSLIMers ( or,
> rather, the many CANSLIMers buying small quantities) would not be enough
> to move the market?
> 
> Warren
> 
> 
> -
> -To subscribe/unsubscribe, email "majordomo@xmission.com"
> -In the email body, write "subscribe canslim" or
> -"unsubscribe canslim".  Do not use quotes in your email.
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------------------------------

Date: Tue, 20 Aug 2002 10:20:37 -0700
From: "Bill Triffet" <btriffet@earthlink.net>
Subject: Re: [CANSLIM] CVH

Katherine,

Thanks for the detailed reply (printed for ref). Coming out of this ugly
bear, I'm always looking for a reason not to jump in. My thought on this
was," well it will get to it's old high of 34.20 and fall". There's
something more convincing to me when a stock breaks out to a new high right
from the pivot. This I see is not canslim but a mental limitation. I also
see it forces me to look only at high handles which is not desirable. I do
remember a lot of higher handle breakouts in 98-99 which may contribute to
my misconception.

Thanks,

- -Bill


- ----- Original Message -----
From: "Katherine Malm" <kmalm@earthlink.net>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 9:20 AM
Subject: Re: [CANSLIM] CVH


Hi Bill,

Thought I might use your comment as a chance to clear up a few things on
handles.

It is most common for handles to form within 5-15% of the left lip of the
cup. In this case, CVH formed within 9.4% of the high of the left of the cup
(34.65). In general, as long as the handle forms properly and falls within
the upper half of the base and other handle characteristics are present,
then you have a valid handle. That means that handles can actually form well
below the "normal" 5-15% range.

See an annotated chart at:
http://WallStreet-LLC.com/canslim/CVH081902.jpg  (Sorry, some of my comments
are a bit difficult to read on the chart, but are repeated in this email.)

Just in case you missed my post the other day, here is my summary of handle
characteristics:
HANDLES
General Requirements:
1. Handles most often begin to form lower than the left side of the base,
generally when the stock has climbed within 5-15% of the high.
2. The midpoint of a good handle should be higher than the midpoint of the
base.
3. The handle should form in the upper half of the base.
4. The handle should form above the 200 day MA, but trade may often lull
below the 50 day MA.
5. The handle should drift sideways or lower. Upward "wedging" handles are
failure prone because the upwardly drifting price doesn't shake out the weak
holders, leaving the stock vulnerable to a correction. Wedging handles also
make pivots harder to spot. WON considers this the most important aspect of
a handle formation.
6. The handle should drift lower on light volume. This shows existing
holders are content to remain invested.
7. Within the handle, volatility should contract. The distance between price
highs and lows (intraday and day to day) should narrow. Avoid zigzagging or
wide and loose handles. Choppy handles carry more uncertainty.
8. In normal markets, proper handles correct 10-20%. In Bear markets, they
can correct as much as 30%. A handle that drifts <10% is fine as long as it
is drifting downward and meets other requirements.
9. The handle must be at least one week in length but can stretch as much as
7-10 weeks. It should be smaller in proportion to the size of the cup.

Special Considerations:
1. "High handles" can begin to form at prices higher than the left side of
the base. This is neither ideal nor common, but can still be successful as
long as the other handle requirements are met.
2. Be sure to look at both daily and weekly charts, as stocks with lengthy
bases will have long handles. The lengthy handle may appear as a base if
looking at a daily chart. Long bases signal strong support and are very
strong patterns. (The longer the base, the stronger the subsequent move.)
Based on a study done by the IBD in 96-97, small and mid cap stocks had 33
week bases on average. Large caps had 66 week bases on average.
3. A stock can form a handle, near its pivot point and then begin forming
another handle. In this case, consider this to be one long handle.
4. "No-handle" bases are more error prone, but tend to work at the start of
a fresh rally, especially if the rally is strong. Look for volume to dry up
as the stock comes within 5-10% of its old peak. Stocks breaking out of
bases without a handle are most likely industry leaders; lead the market in
relative price performance, sales and earnings growth; and have high
institutional sponsorship.
5. Double bottom bases can form a handle, though normally they do not do so.

[Note: These notes are compiled from many years worth of Investors' Corners,
HTMMIS, the IBD web site and other misc. sources.]

- --Katherine


- ----- Original Message -----
From: "Bill Triffet" <btriffet@earthlink.net>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 10:49 AM
Subject: Re: [CANSLIM] CVH


| One more point of interest to me about CVH is the pivot point in relation
to
| the high of 34.20 back on 6/18. I realize that coming out of a bear (if we
| indeed are) the pivot point may be lower than the 52 week high. Still,
that
| seems to me it would make a very possible point of resistance.
| Am I just splitting hairs here?
|
| -Bill
|
|
| ----- Original Message -----
| From: "Katherine Malm" <kmalm@earthlink.net>
| To: <canslim@lists.xmission.com>
| Sent: Tuesday, August 20, 2002 5:10 AM
| Subject: Re: [CANSLIM] CVH
|
|
| > Hi All,
| >
| > Just to close the loop on yesterday's CVH discussion---see today's
weblink
| > on CVH:
| >
| > www.investors.com/weblink
| >
| >
| > Katherine





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------------------------------

Date: Tue, 20 Aug 2002 13:09:41 -0500
From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] Home Depot

Hi Hermann,

HD certainly doesn't pass the requisite technical tests to be considered a
current CANSLIM candidate, but I see it as important in several ways:

HD is one of the 500 pound gorillas of retailing and at one time carried far
more CANSLIM characteristics than it does now. While it may not be
exhibiting current technical strength, it is still important as a sentiment
indicator. First, if it were to form a bottom here, it *may* indicate that
institutions are once more willing to load up on the stock of a very good
company which has been refocusing its strategy recently and expanding into
new market niches such as government contracting.  Second, if the market
reacts well to good news and the price rises without taking a big jump on
the news and then selling off, that may well indicate a change in tone in
the market. That is, stocks go *up* on good news. Add that to more cases
where stocks stop going down so severely on bad news and it could indicate a
turning point in the market. Third, consumers as a whole have been willing
to spend throughout the recessionary period. If they are feeling confident
about their current and future prospects, they will parlay that confidence
into spending at good retailers and on other consumer discretionary
products. That by itself doesn't create macroeconomic "safety" but it sure
helps.

Just to test the waters, I created a list of stocks from various industries
that I consider to be "consumer discretionary." Stocks don't make it to the
list unless they are minimum $6/30000 ADV. In all, that's 300 stocks. Of the
300, 141 have forward growth rates >=15%, HD included. That's what I
considered to be the bare bones minimum for a "growth" stock. There's also
nothing to say that current growth rates have not been reduced too far, as
forecasters always seem to severely underforecast in periods like this in
the same manner that they tend to severely overforecast in bubble times. Of
the 141, only 40 stocks currently pass what I consider to be "minimum
technicals." (RS>=60, price no more than 15% below the 50 day SMA, and price
at or above the 200 day SMA). This is an interesting list of 40 stocks, by
the way. Take a look and see if you see any CANSLIM themes running through
the list of 40.

See the complete list of 300 at:
http://WallStreet-LLC.com/canslim/ConsumerOverview.xls. You can filter any
of the columns to narrow the list as I suggested in the last paragraph.

Katherine


- ----- Original Message -----
From: "Hermann Ertl" <hertl@attglobal.net>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 11:05 AM
Subject: Re: [CANSLIM] Home Depot


| > From: "Tom Worley" <stkguru@bellsouth.net>
| > Date: Tue, 20 Aug 2002 08:14:05 -0400
| >
| > HD reported this morning, like Lowe's showing excellent growth with
earnings
| > up 28% (3 cents ahead of forecasts) and sales up 12%. Shouldn't be a
| > surprise, given all the new home owners, but Lowe's is being credited
with
| > yesterday's rally in part. Let's see if HD can take care of Tuesday.
|
|
| At what stage in its chart patterns is HD?
|
|
|
| -
| -To subscribe/unsubscribe, email "majordomo@xmission.com"
| -In the email body, write "subscribe canslim" or
| -"unsubscribe canslim".  Do not use quotes in your email.


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------------------------------

Date: Tue, 20 Aug 2002 14:42:48 -0400
From: "Dan Forant" <dforant1@nycap.rr.com>
Subject: Re: [CANSLIM] Best CNBC Commentators

I agree entirely, the shows just a schmooozze job. Little content of value.
I tune to the 8:30 and 9:30 floor reports at times.

DanF
- ----- Original Message -----
From: "Patrick Wahl" <pjwahl@attbi.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 10:03 AM
Subject: Re: [CANSLIM] Best CNBC Commentators


> Kernen and Faber just report news, so they are ok.  Bartiromo seems to ask
inane
> questions.  I try to ignore most of what CNBC has when I do tune in, I
admit once in
> a while after the close I tune in to get a summary of the business news
for the day.
> As far as market moving info and useful opinion, I would forget that angle
on CNBC.
>
> On 20 Aug 2002 at 0:05, Pipdip21@aol.com wrote:
>
> > Who do we think are the best CNBC shows and the best commentators (e.g.,
> > Maria Bartiromo, David Faber and Joe Kernen, Martha MacCallum, Ted
David)?
> > What are their areas of expertise, weaknesses, biases, ability to move
> > market, etc.?
>
>
>
> -
> -To subscribe/unsubscribe, email "majordomo@xmission.com"
> -In the email body, write "subscribe canslim" or
> -"unsubscribe canslim".  Do not use quotes in your email.
>


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------------------------------

Date: Tue, 20 Aug 2002 15:16:27 -0400
From: "Woody" <conch1@aug.com>
Subject: Re: [CANSLIM] Question

This is a multi-part message in MIME format.

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	charset="iso-8859-1"
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Duke,

Would you mind forwarding any comments you receive about L. Navellier's =
B.C. Growth Newsletter to me?

TIA,

Woody Carr, Lurking and learning (a lot!) in St. Augustine

- ------=_NextPart_000_0055_01C2485C.8DC64E90
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	charset="iso-8859-1"
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
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<STYLE></STYLE>
</HEAD>
<BODY bgColor=3D#ffffff>
<DIV><FONT size=3D2>Duke,</FONT></DIV>
<DIV><FONT size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT size=3D2>Would you mind forwarding any comments you receive =
about L.=20
Navellier's B.C. Growth Newsletter to me?</FONT></DIV>
<DIV><FONT size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT size=3D2>TIA,</FONT></DIV>
<DIV><FONT size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT size=3D2>Woody Carr, Lurking and learning (a lot!) in St.=20
Augustine</FONT></DIV></BODY></HTML>

- ------=_NextPart_000_0055_01C2485C.8DC64E90--


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------------------------------

Date: Tue, 20 Aug 2002 14:19:53 -0500
From: michael_niemotka@baxter.com
Subject: Re: [CANSLIM] stop losses and profits

Katherine,

I actually followed this thinking and watched a nice profit (15%) in NCEN
turn into an 8% loss as the bottom dropped out.  I think it has made me
make a modification to stop at break even if I end up at 15% gain, at least
until M has be proven to be turned.  I came up with this based on assuming
a stock that breaks out would "normally" be expected to rise about 25-30%
before re-basing, so if never gets up by that amount from my buy point,
then I should exit sooner rather than later...


Mike Niemotka , PE
Sr. Principal Engineer
Baxter Healthcare Corporation
Route 120 & Wilson Road
Round Lake, IL 60073
Tel (847) 270-4075
Fax (847) 270-4525
michael_niemotka@baxter.com


                                                                                                                            
                    "Katherine Malm"                                                                                        
                    <kmalm@earthlink.net>         To:     canslim@lists.xmission.com                                        
                    Sent by:                      cc:                                                                       
                    owner-canslim@lists.xm        Subject:     Re: [CANSLIM] stop losses and profits                        
                    ission.com                                                                                              
                                                                                                                            
                                                                                                                            
                    08/16/2002 05:01 PM                                                                                     
                    Please respond to                                                                                       
                    canslim                                                                                                 
                                                                                                                            
                                                                                                                            




Oops...I realize now I misread your question.

I would *hold on* up to 8% below buy price, but if the stock comes back and
*kisses* the pivot, then I would buy more. I'm not inclined to buy more
when the stock drops *below* the pivot, unless it shows strong volume
pushing it back up to the pivot and beyond. Now I think I've confused even
myself!

This is the way I think of it  "Kiss the pivot, second chance to buy
more---Hit the pivot, yellow flag"

Katherine

- ----- Original Message -----
From: "Katherine Malm" <kmalm@earthlink.net>
To: <canslim@lists.xmission.com>
Sent: Friday, August 16, 2002 4:55 PM
Subject: Re: [CANSLIM] stop losses and profits

| Hi Mike,
|
| 8% standard stop loss, though I don't see this happen too often when the
| market is healthy.
|
| Katherine
|
| ----- Original Message -----
| From: <michael_niemotka@baxter.com>
| To: <canslim@lists.xmission.com>
| Sent: Friday, August 16, 2002 2:54 PM
| Subject: Re: [CANSLIM] stop losses and profits
|
|
| |
| | Katherine,
| |
| | I knew I could count on you for a good answer.  As a follow up to your
| | answer #4, if you made 10-15% in one week, how low would you allow the
| | stock to drop on low volume and still buy more, as opposed to selling
out?
| |
| | Put another way, if it ran up 15% in a week, would you allow it to go
| below
| | your original buy point, even if it was at low volume?
| |
| |
| | Have a great weekend everyone!
| |
| | Mike
| |
| | Mike Niemotka , PE
| | Sr. Principal Engineer
| | Baxter Healthcare Corporation
| | Route 120 & Wilson Road
| | Round Lake, IL 60073
| | Tel (847) 270-4075
| | Fax (847) 270-4525
| | michael_niemotka@baxter.com
| |
| |
| |
| |                     "Katherine Malm"
| |                     <kmalm@earthlink.net>         To:
| canslim@lists.xmission.com
| |                     Sent by:                      cc:
| |                     owner-canslim@lists.xm        Subject:     Re:
| [CANSLIM] stop losses and profits
| |                     ission.com
| |
| |
| |                     08/16/2002 02:31 PM
| |                     Please respond to
| |                     canslim
| |
| |
| |
| |
| |
| |
| | Hi Nancy,
| |
| | Let me try and clear up some of your confusion:
| |
| | 1. A stock's "rise" does not occur *in* a base, but *between* bases.
While
| | the price will fluctuate up and down within the base itself, the amount
of
| | fluctuation will vary depending on the severity of correction and the
time
| | it takes to form the area of consolidation. The stock is essentially
| | *absorbing* the gains of its previous advance.
| |
| | 2. When you purchase a stock, you will always purchase it as it *breaks
| | out*
| | of that base. This preferred buy point is referred to as the "pivot"
and
| is
| | again defined by the pattern that the base forms.
| |
| | 4. When a stock begins a healthy rising pattern after it breaks out, it
| can
| | rise *any* amount before it consolidates (bases) again. There is no
hard
| | and
| | fast rule as to how much it will rise before basing, though WON
suggests
| | that if it is >=25%, the next base would then be considered a "new
stage
| | base." This is only important in that his studies show that most stocks
| | can't muster the oomph to keep going after they've reached the 3rd or
4th
| | stage base.
| |
| | 3. Mike's question about a sell rule is not dependent on *which* base
in
| | the
| | base count we are evaluating. A base is a base. If the stock breaks out
as
| | it should and begins to rise, how are you going to handle selling it
| | when/if
| | the time comes?
| |
| | 4. WON suggests that, if you buy correctly at the pivot (or no more
than
| 5%
| | above it), that you should never have to suffer a loss of more than 8%.
| | This
| | is because, in his studies, he has found that a healthy stock never
falls
| | more than 8% below the pivot before continuing a healthy advance.
| |
| | 5. Mike's question, specifically, was "if a stock breaks out of a base,
| | then
| | rises 10-15%, then falls back, where do you place your sell stop? 8%
below
| | your buy price or something other than that?" In other words, should
you
| be
| | willing to accept *any* loss if a stock has managed to rise 10-15% in 6
| | wks,
| | then falls back to where you bought it. My vote is, if it takes 6 wks
to
| | rise and then erases the entire advance, I don't want to take an 8%
loss.
| | If
| | it rose 10-15% in *one* week and then fell back on low volume, I'd look
at
| | that as "normal" and might consider it a second chance to *buy* more.
| |
| | Katherine
| |
| |
| | ----- Original Message -----
| | From: "NANCY POLCARO" <zillagirl@msn.com>
| | To: <canslim@lists.xmission.com>
| | Sent: Friday, August 16, 2002 1:47 PM
| | Subject: Re: [CANSLIM] stop losses and profits
| |
| |
| | | Katherine-let me see if I am following correctly please.  My question
is
| | | that previously I understood that after the third rise in a base
| | formation
| | a
| | | stock may correct by dropping below the previous base and then
starting
| | up
| | | again if all is well with the stock.  Then the bases start to be
| | recounted
| | | again.  In this case, if you just bought in during the third rise in
the
| | | base, which from my understanding would probably go up between
15%(Mikes
| | | figure) and 25%( the amount of each rise in a base of a healthy
stock)
| | you
| | | would sell(not you personally but someone with my amount of
experience
| or
| | | the like) before the 8% drop, to protect your gain.  Then follow the
| | stock
| | | and watch for a buy in again at some point depending on how the stock
| | acts
| | | from this point on?  Is that close to correct ???  Thanks for your
| | thoughts
| | | Nancy
| | |
| | |
| | | >From: "Katherine Malm" <kmalm@earthlink.net>
| | | >Reply-To: canslim@lists.xmission.com
| | | >To: <canslim@lists.xmission.com>
| | | >Subject: Re: [CANSLIM] stop losses and profits
| | | >Date: Fri, 16 Aug 2002 13:09:30 -0500
| | | >
| | | >HI Mike,
| | | >
| | | >I think you'll get a hundred different answers on this one, so I'll
| just
| | | >answer from my personal point of view.
| | | >
| | | >If a stock breaks out of a well-formed base on volume, then takes 6
| | weeks
| | | >to
| | | >rise 10 or 15 percent, then I sure wouldn't want to risk 8% loss at
| that
| | | >point, even if it were falling back "normally" as you suggest. To me
| | that
| | | >means that no sell signals were triggered on the way up, and that
the
| | | >general pattern included up days on higher volume than down days,
| | support
| | | >at
| | | >the 50 day moving average, etc. My personal preference, however,
would
| | be
| | | >to
| | | >move my stop to breakeven or slightly below (3-4% max, depending on
| | market
| | | >conditions) if the stock had risen like this.
| | | >
| | | >Katherine
| | | >
| | | >
| | | >----- Original Message -----
| | | >From: <michael_niemotka@baxter.com>
| | | >To: <canslim@lists.xmission.com>
| | | >Sent: Friday, August 16, 2002 9:17 AM
| | | >Subject: [CANSLIM] stop losses and profits
| | | >
| | | >
| | | >| Group,
| | | >|
| | | >| In reading WON, he makes a statement that you should never let a
| stock
| | in
| | | >| which you are up 10-15% turn into a loss, but I was wondering you
| have
| | | >| interpreted that along with the sell at no more than an 8% loss
rule.
| | | >|
| | | >| Say you buy a stock, at a breakout, and it rises 10-15% over a few
| (6+
| | | >| weeks), and then is started to correct....Do you sell at you break
| | even
| | | >| point, or do you allow it to go to your 8% loss point before
selling?
| | | >This
| | | >| is assuming that the stock is NOT giving any strong sell signals,
but
| | | >| appears to be pulling back "normally".
| | | >|
| | | >| Thanks
| | | >|
| | | >| Mike Niemotka , PE
| | | >| Sr. Principal Engineer
| | | >| Baxter Healthcare Corporation
| | | >| Route 120 & Wilson Road
| | | >| Round Lake, IL 60073
| | | >| Tel (847) 270-4075
| | | >| Fax (847) 270-4525
| | | >| michael_niemotka@baxter.com
| | | >|
| | | >|
| | | >|
| | | >| -
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------------------------------

Date: Tue, 20 Aug 2002 14:41:44 -0500
From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: [CANSLIM] stop losses and profits

HI Mike,

I know I talked a bit in circles on this topic and it may have been because
I didn't read your question/response closely enough.

Here's the summary of my thinking on this issue:

I separate my sell rules into several distinct time periods, and the rules
vary a bit depending on what the stock does within a certain amount of time.
All of this also assumes a healthy "M", of course:

1. Time period: 1st 2 wks after breakout: If the stock rises, regardless of
the percentage, then falls back on low volume, the 8% rule still holds. I do
not add to a position unless the stock falls back near the pivot on *low
volume.* I am skeptical and keep a sharp eye if it drops below the pivot,
but it's not uncommon for this to happen, especially in iffy markets, and
especially in the first week. That's what the 8% rule is there for, it gives
you some leeway, but there are times where it goes up quickly and then falls
back and you're stuck with the 8% loss. When the volume picks up to the
downside, I'll move the stop to breakeven. If the volume is severe, I'll be
out before it hits that point.

2. Once the stock passes the 2 wk mark and up to the 8th week: I've moved my
stop to breakeven. That way, I don't have to take a loss in a stock that's
risen and stayed above its pivot.

3. Once the 8 wk mark passes, new sell rules kick in.

On something like NCEN, in particular, you were fighting against tide to
begin with, so there was already extra risk in your purchase. The market was
in a clear downtrend and had shown no signs of follow-thru. Second warning
was the churning it put in on 6/27, 6/28. Lots of volume and very little
price progress--yellow flag. That makes 2 because the poor market is a
yellow flag to begin with. Next warning: a big tail down on 7/1, though the
volume was relatively benign and didn't qualify as a "distribution" day.
Last warning to head for the exits: 7/2. A big volume day and big tail down.
That's 4 yellow flags in a row. Time to exit if you haven't already done so.
If it wasn't clear on 7/2, it was screaming for attention on 7/5--an up day
on very low volume. Assuming you'd missed all the signals, then you still
would be saved by a breakeven stop if you'd entered on the breakout 6/19.

All in all, the 8% stop is useful, but far less important than all the other
sell rules after a stock breaks out.

Katherine


- ----- Original Message -----
From: <michael_niemotka@baxter.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, August 20, 2002 2:19 PM
Subject: Re: [CANSLIM] stop losses and profits


|
| Katherine,
|
| I actually followed this thinking and watched a nice profit (15%) in NCEN
| turn into an 8% loss as the bottom dropped out.  I think it has made me
| make a modification to stop at break even if I end up at 15% gain, at
least
| until M has be proven to be turned.  I came up with this based on assuming
| a stock that breaks out would "normally" be expected to rise about 25-30%
| before re-basing, so if never gets up by that amount from my buy point,
| then I should exit sooner rather than later...
|
|
| Mike Niemotka , PE
| Sr. Principal Engineer
| Baxter Healthcare Corporation
| Route 120 & Wilson Road
| Round Lake, IL 60073
| Tel (847) 270-4075
| Fax (847) 270-4525
| michael_niemotka@baxter.com
|
|
|
|                     "Katherine Malm"
|                     <kmalm@earthlink.net>         To:
canslim@lists.xmission.com
|                     Sent by:                      cc:
|                     owner-canslim@lists.xm        Subject:     Re:
[CANSLIM] stop losses and profits
|                     ission.com
|
|
|                     08/16/2002 05:01 PM
|                     Please respond to
|                     canslim
|
|
|
|
|
|
| Oops...I realize now I misread your question.
|
| I would *hold on* up to 8% below buy price, but if the stock comes back
and
| *kisses* the pivot, then I would buy more. I'm not inclined to buy more
| when the stock drops *below* the pivot, unless it shows strong volume
| pushing it back up to the pivot and beyond. Now I think I've confused even
| myself!
|
| This is the way I think of it  "Kiss the pivot, second chance to buy
| more---Hit the pivot, yellow flag"
|
| Katherine
|
| ----- Original Message -----
| From: "Katherine Malm" <kmalm@earthlink.net>
| To: <canslim@lists.xmission.com>
| Sent: Friday, August 16, 2002 4:55 PM
| Subject: Re: [CANSLIM] stop losses and profits
|
| | Hi Mike,
| |
| | 8% standard stop loss, though I don't see this happen too often when the
| | market is healthy.
| |
| | Katherine
| |
| | ----- Original Message -----
| | From: <michael_niemotka@baxter.com>
| | To: <canslim@lists.xmission.com>
| | Sent: Friday, August 16, 2002 2:54 PM
| | Subject: Re: [CANSLIM] stop losses and profits
| |
| |
| | |
| | | Katherine,
| | |
| | | I knew I could count on you for a good answer.  As a follow up to your
| | | answer #4, if you made 10-15% in one week, how low would you allow the
| | | stock to drop on low volume and still buy more, as opposed to selling
| out?
| | |
| | | Put another way, if it ran up 15% in a week, would you allow it to go
| | below
| | | your original buy point, even if it was at low volume?
| | |
| | |
| | | Have a great weekend everyone!
| | |
| | | Mike
| | |
| | | Mike Niemotka , PE
| | | Sr. Principal Engineer
| | | Baxter Healthcare Corporation
| | | Route 120 & Wilson Road
| | | Round Lake, IL 60073
| | | Tel (847) 270-4075
| | | Fax (847) 270-4525
| | | michael_niemotka@baxter.com
| | |
| | |
| | |
| | |                     "Katherine Malm"
| | |                     <kmalm@earthlink.net>         To:
| | canslim@lists.xmission.com
| | |                     Sent by:                      cc:
| | |                     owner-canslim@lists.xm        Subject:     Re:
| | [CANSLIM] stop losses and profits
| | |                     ission.com
| | |
| | |
| | |                     08/16/2002 02:31 PM
| | |                     Please respond to
| | |                     canslim
| | |
| | |
| | |
| | |
| | |
| | |
| | | Hi Nancy,
| | |
| | | Let me try and clear up some of your confusion:
| | |
| | | 1. A stock's "rise" does not occur *in* a base, but *between* bases.
| While
| | | the price will fluctuate up and down within the base itself, the
amount
| of
| | | fluctuation will vary depending on the severity of correction and the
| time
| | | it takes to form the area of consolidation. The stock is essentially
| | | *absorbing* the gains of its previous advance.
| | |
| | | 2. When you purchase a stock, you will always purchase it as it
*breaks
| | | out*
| | | of that base. This preferred buy point is referred to as the "pivot"
| and
| | is
| | | again defined by the pattern that the base forms.
| | |
| | | 4. When a stock begins a healthy rising pattern after it breaks out,
it
| | can
| | | rise *any* amount before it consolidates (bases) again. There is no
| hard
| | | and
| | | fast rule as to how much it will rise before basing, though WON
| suggests
| | | that if it is >=25%, the next base would then be considered a "new
| stage
| | | base." This is only important in that his studies show that most
stocks
| | | can't muster the oomph to keep going after they've reached the 3rd or
| 4th
| | | stage base.
| | |
| | | 3. Mike's question about a sell rule is not dependent on *which* base
| in
| | | the
| | | base count we are evaluating. A base is a base. If the stock breaks
out
| as
| | | it should and begins to rise, how are you going to handle selling it
| | | when/if
| | | the time comes?
| | |
| | | 4. WON suggests that, if you buy correctly at the pivot (or no more
| than
| | 5%
| | | above it), that you should never have to suffer a loss of more than
8%.
| | | This
| | | is because, in his studies, he has found that a healthy stock never
| falls
| | | more than 8% below the pivot before continuing a healthy advance.
| | |
| | | 5. Mike's question, specifically, was "if a stock breaks out of a
base,
| | | then
| | | rises 10-15%, then falls back, where do you place your sell stop? 8%
| below
| | | your buy price or something other than that?" In other words, should
| you
| | be
| | | willing to accept *any* loss if a stock has managed to rise 10-15% in
6
| | | wks,
| | | then falls back to where you bought it. My vote is, if it takes 6 wks
| to
| | | rise and then erases the entire advance, I don't want to take an 8%
| loss.
| | | If
| | | it rose 10-15% in *one* week and then fell back on low volume, I'd
look
| at
| | | that as "normal" and might consider it a second chance to *buy* more.
| | |
| | | Katherine
| | |
| | |
| | | ----- Original Message -----
| | | From: "NANCY POLCARO" <zillagirl@msn.com>
| | | To: <canslim@lists.xmission.com>
| | | Sent: Friday, August 16, 2002 1:47 PM
| | | Subject: Re: [CANSLIM] stop losses and profits
| | |
| | |
| | | | Katherine-let me see if I am following correctly please.  My
question
| is
| | | | that previously I understood that after the third rise in a base
| | | formation
| | | a
| | | | stock may correct by dropping below the previous base and then
| starting
| | | up
| | | | again if all is well with the stock.  Then the bases start to be
| | | recounted
| | | | again.  In this case, if you just bought in during the third rise in
| the
| | | | base, which from my understanding would probably go up between
| 15%(Mikes
| | | | figure) and 25%( the amount of each rise in a base of a healthy
| stock)
| | | you
| | | | would sell(not you personally but someone with my amount of
| experience
| | or
| | | | the like) before the 8% drop, to protect your gain.  Then follow the
| | | stock
| | | | and watch for a buy in again at some point depending on how the
stock
| | | acts
| | | | from this point on?  Is that close to correct ???  Thanks for your
| | | thoughts
| | | | Nancy
| | | |
| | | |
| | | | >From: "Katherine Malm" <kmalm@earthlink.net>
| | | | >Reply-To: canslim@lists.xmission.com
| | | | >To: <canslim@lists.xmission.com>
| | | | >Subject: Re: [CANSLIM] stop losses and profits
| | | | >Date: Fri, 16 Aug 2002 13:09:30 -0500
| | | | >
| | | | >HI Mike,
| | | | >
| | | | >I think you'll get a hundred different answers on this one, so I'll
| | just
| | | | >answer from my personal point of view.
| | | | >
| | | | >If a stock breaks out of a well-formed base on volume, then takes 6
| | | weeks
| | | | >to
| | | | >rise 10 or 15 percent, then I sure wouldn't want to risk 8% loss at
| | that
| | | | >point, even if it were falling back "normally" as you suggest. To
me
| | | that
| | | | >means that no sell signals were triggered on the way up, and that
| the
| | | | >general pattern included up days on higher volume than down days,
| | | support
| | | | >at
| | | | >the 50 day moving average, etc. My personal preference, however,
| would
| | | be
| | | | >to
| | | | >move my stop to breakeven or slightly below (3-4% max, depending on
| | | market
| | | | >conditions) if the stock had risen like this.
| | | | >
| | | | >Katherine
| | | | >
| | | | >
| | | | >----- Original Message -----
| | | | >From: <michael_niemotka@baxter.com>
| | | | >To: <canslim@lists.xmission.com>
| | | | >Sent: Friday, August 16, 2002 9:17 AM
| | | | >Subject: [CANSLIM] stop losses and profits
| | | | >
| | | | >
| | | | >| Group,
| | | | >|
| | | | >| In reading WON, he makes a statement that you should never let a
| | stock
| | | in
| | | | >| which you are up 10-15% turn into a loss, but I was wondering you
| | have
| | | | >| interpreted that along with the sell at no more than an 8% loss
| rule.
| | | | >|
| | | | >| Say you buy a stock, at a breakout, and it rises 10-15% over a
few
| | (6+
| | | | >| weeks), and then is started to correct....Do you sell at you
break
| | | even
| | | | >| point, or do you allow it to go to your 8% loss point before
| selling?
| | | | >This
| | | | >| is assuming that the stock is NOT giving any strong sell signals,
| but
| | | | >| appears to be pulling back "normally".
| | | | >|
| | | | >| Thanks
| | | | >|
| | | | >| Mike Niemotka , PE
| | | | >| Sr. Principal Engineer
| | | | >| Baxter Healthcare Corporation
| | | | >| Route 120 & Wilson Road
| | | | >| Round Lake, IL 60073
| | | | >| Tel (847) 270-4075
| | | | >| Fax (847) 270-4525
| | | | >| michael_niemotka@baxter.com
| | | | >|
| | | | >|
| | | | >|
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