Tom, Thanks again for your = input. I was surprised to read that = you generally buy into a breakout only after closing on the breakout day. = I always thought that one needed = to monitor the market very closely in order to buy as close to the pivot as possible to be successful in this business. In the past three years I = purchased stocks that were 3 to 5 percent above the pivot and got shaken out of = most of them. But that could very = well have been the market. In better = times I guess buying at 3 to 5 percent above the pivot might work better. What you do (buying after = the market closes) certainly makes sense. At least you know conclusively that the volume materialized. I especially was intrigued with = your comment that you would not buy during the first hour or two. Why is that? Also, you were right about the = 4-day handle. I bent that = rule. The reason is -- the other day = I passed on HITK which broke out after forming a 4-day handle. And it is doing great. That was still fresh in my = mind. I didn’t want to miss out = on a similar breakout. It seems = that a lot of stocks breakout that do not meet all the fundamentals and = technicals, few probably do. I guess = the trick is to bend the fewest rules as possible and know why you’re doing so. And, of course, the = main thing may be to just stay in the game and keep swinging. You’re bound to = get a big hit sooner or later. = I’m still waiting for mine. Thanks again.

-----Original = Message-----
From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: = Thursday, April 03, = 2003 8:48 PM
To: = canslim@lists.xmission.com
Subject: Re: [CANSLIM] = Bailing out of a would-be breakout

for a correct = ("proper") breakout, I would certainly want to see volume at least 50% over ADV = (and preferably at least 100%). Problem with that is for those trying to = catch a breakout during the day, when the price may have broken the pivot, and = volume up to that point looks like it will reach these levels, but then volume = slows way up in the afternoon.

I rarely have the time to = try to catch b/o's during the day, so normally can consider the full day's = trading with some leisure at night, or early the next morning. But if I was to = buy during the day, and volume up to that point indicated double or better = day's average (assuming I was at least an hour or two into the day), then a = slowdown in the afternoon would not by itself cause me to sell out. Once I am in = a stock, I rely much more on the chart pattern, where it closes in terms = of that day's trading range, and whether it is up or down on more or less than = ADV.

One of the principles of = CANSLIM, in addition to being able to read the charts, is to buy on a breakout = within 5% of the pivot, then use an 8% stop loss from your purchase price. This means = you could slip below the pivot, and still not feel obligated to sell. The = closer to the pivot you buy, the further below the pivot you could ride it. =

In the case you mention = with FRX, one point I would emphasize, which I suspect you are already sensitive = to, is that you saw a b/o with only a 4 day handle. The cup itself was well = formed, including a capitulation day on 2/14/03 on 2X ADV. However, the = shortness of the handle, combined with the lack of time for volume to dry up, = suggests to me that the b/o that enticed you was far too immature, especially given = the state of "M", and the market susceptibility to emotional = reaction to the war in Iraq (which has nothing to do at least directly to either "M" or the state of the economy, but is nonetheless the most = current overwhelming and overriding influence on = "M").

Sometimes you can get away = with buying too quickly, or too early, but normally you want the trend ("M") already in your favor when you do so. With the economy continuing to weaken, emotions still very high over the war with = Iraq, and a lot of = uncertainty still remaining, I think I would be unlikely to buy a breakout intraday unless = it had already traded twice a normal ADV, regardless of just how far it is in = the trading day.

Should you now sell (if you = haven't already)?? I can't answer that, even with today's drop below the pivot, = and on 1.5X ADV. Certainly today was not encouraging. But your investment time = frame, risk tolerance, whether you bot the entire intended position or just a = portion, etc. all affect what you should do now. The stock has not broken down, = the fundies remain quite healthy, forecasts are strong for the longer term. =

----- Original Message = - -----

From: Jerome = Buckmelter

To:<= /font> canslim@lists.xmission.com

Sent: Thursday, April 03, = 2003 11:04 AM

Subject: RE: [CANSLIM] Bailing out of a would-be = breakout

Tom, Thank you = for your input. I value your = insights and opinions. Is it not true = that if volume does not reach 50%, a breakout has not occurred by = definition? Therefore shouldn’t I = view the action I described with FRX as not a breakout, and think about treating = the buy differently from a genuine breakout, i.e., setting the loss at 7% or 8%, etc.? = I

-----Original = Message-----
From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: = Wednesday, April 02, = 2003 8:14 PM
To: = canslim@lists.xmission.com
Subject: Re: [CANSLIM] = Bailing out of a would-be breakout

Jerome, assuming you are = accurate in selecting the pivot point, and bought within 5% of that point, then I = would stick to a stop loss of 8 -10% below your purchase price. This is a very volatile and emotional market. I would also pay close attention to where = such a stop loss price places you with recent downside support. Depending on = that, I might use a larger or smaller stop loss, so that my selling point is = just under support, especially institutional support.

----- Original Message = - -----

From: Jerome Buckmelter =

To:<= /font> CANSLIM LIST

Sent: Wednesday, April 02, = 2003 10:22 PM

Subject: [CANSLIM] Bailing out of a would-be breakout

Does anyone have an idea = how to handle a “breakout” if it doesn’t act right on the first = day? I got fooled this morning by = the huge volume FRX displayed as it zoomed by its pivot (on a 4-day handle). Of course, everything else was = surging upwards at the opening of the market! FRX cooled off as the day progressed, and its volume ended the = day a little above average. And = the price, of course, dropped below my purchase price, but still held above = the pivot. Some time ago I = devised a strategy for myself for such occasions, but I haven’t tested it = yet, and I hope I could get some feed back from fellow CANSLIMers before making a mistake with it. = Here’s my strategy: Sell near at the = end of the first day if 50% volume does not materialize and stock closes below purchase price. Hold if volume does not materialize and stock price = closes above the purchase price. Sell at the end of the second day if volume = does not materialize, even if the price is up. Sell the second day if the price falls below the pivot. Is this a sound strategy? Does WON address this situation anywhere? Can anyone share = their strategy? I would really = appreciate some input. Thanks. =