From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #339 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, July 25 1998 Volume 02 : Number 339 In this issue: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn Re: [CANSLIM] Gapping, Elder, Walter, Jeffry Re: [CANSLIM] Re: [NONCANSLIM] Gapping, Elder, Walter,Triple Screen Re: [CANSLIM] Re: [NONCANSLIM] Gapping, Elder, Walter,Jeffry Re: [CANSLIM] Shorts Re: [CANSLIM] Not CANSLIM - Today's Market Downturn Re: [CANSLIM] Not CANSLIM - Today's Market Downturn Re: [CANSLIM] NRVH earnings Re: [CANSLIM] Not CANSLIM - market reaction to earnings Re: [CANSLIM] Observations CDWC, SYMX, DELL, etc. Re: [CANSLIM] Noncanslim: Shorts and Gaps,OK I'll start RE: [CANSLIM] Noncanslim: Shorts and Gaps,OK I'll start [CANSLIM] surprised Re: [CANSLIM] Observations CDWC, SYMX, DELL, etc. RE: [CANSLIM] Not CANSLIM - Today's Market Downturn [CANSLIM] "M" [CANSLIM] Gapping - TM [CANSLIM] RE: NOT CANSLIM- surprised [CANSLIM] This weeks HGS file Re: [CANSLIM] "M" Re: [CANSLIM] Not CANSLIM - market reaction to earnings RE: [CANSLIM] Not CANSLIM - Today's Market Downturn Re: [CANSLIM] NRVH earnings Re: [CANSLIM] surprised Re: [CANSLIM] "M" RE: [CANSLIM] Not CANSLIM - Today's Market Downturn RE: [CANSLIM] Not CANSLIM - Today's Market Downturn ---------------------------------------------------------------------- Date: Fri, 24 Jul 1998 19:21:35 -0400 From: "Nelson E. Timken, Esq." Subject: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn Well, you guys have me totally confused as usual. I am holding some optio= ns and the stocks have tumbled. Nothing to do but hold on, but I was wonderi= ng what your probability of a recovery would be in the near future. Nelson - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Johan Van Houtven Sent: Friday, July 24, 1998 4:06 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn At 08:52 AM 24-07-98 -0700, you wrote: >Not my intention, Johan. I know it is not your intention. But I could use some extra motivation to a) drastically reduce my posts, b) stop watching every tick of the market= s from open to close. Why? I planed to use this week's vacation to a) read and reread all of Ian's stuff, b) get more organized, i.e. make a list of factors I have to look at before buying a stock, develop the most optimal stock screening strategy, etc, etc. - - - - ------------------------------ Date: Fri, 24 Jul 1998 19:53:20 -0400 From: "Jacksons" Subject: Re: [CANSLIM] Gapping, Elder, Walter, Jeffry I bought my copy at Barnes and Noble. $59.95. >On Fri, 24 Jul 1998 12:56:50 -0400, Ari Lawson wrote: > >>Could you please tell me were to get Dr.Elders book. >> Thanks Ari >> >Amazon.Com sells the book for about $41. > > >*----------------------------------------------------* - - ------------------------------ Date: Fri, 24 Jul 1998 17:32:08 -0700 From: Dan Cash Subject: Re: [CANSLIM] Re: [NONCANSLIM] Gapping, Elder, Walter,Triple Screen Had you applied MACD-Histogram, Stoch., triple screen to an index such as the S&P500 in you decision making process to bail on the 17th? Thanks, Dan Tannis Malone wrote: > Thanks to the discussion about distribution while prices are rising > and the triple screen, I closed out at near highs on my spiders and > diamonds on the 17th. It is so nice to have a method. > > Also, I am afraid I am turning into a bit of a Walter (not a bad thing > :)), reading Elder and WON at night. Since you are the resident expert > on Elder, Walter would you mind explaining what we should be looking > for in the way of watching the gapping that has happened in some of > the stocks these last few days? The way it is played out seems to be > another confirmation of market health etc. > > _________________________________________________________ > DO YOU YAHOO!? > Get your free @yahoo.com address at http://mail.yahoo.com > > - > - - ------------------------------ Date: Fri, 24 Jul 1998 19:29:36 -0700 (PDT) From: TM Subject: Re: [CANSLIM] Re: [NONCANSLIM] Gapping, Elder, Walter,Jeffry > "Had you applied MACD-Histogram, Stoch., triple screen to an index such > as the S&P500 in you decision making process to bail on the 17th?" Hi Dan, Yes in a way, SPY and DIA, trust funds are based on indices. MACD-Histo was (and had been) in the area above the zero line and sloping downwards, where I understood I should be looking to sell according to Elder. Jeffry's comments were invaluable. He was talking about "M"; my stocks "were" the market. I spent time reading Elder, reading Jeffry, reading Martin Zweig to interpret Jeffry, reading Jeffry to interpret Martin Zweig, reading WON, running to the computer looking at charts, volume, distribution. I used the 2nd screen (Slo-Sto) to determine a selling point trying to sell on the 16th based on the results of the 15th, but my stops were not hit. I raised the stops on the 17th based on the screen of the 16th and sold that day. The second screen kept me in ~24 hours longer and enabled me to sell higher. My goal going in was to preserve capital and beat the money market rate. I did better than that. The dilemma I'm having now is that I can't seem to find a good entry point in my paper trading with CS, mostly I would have been too late for much profits after expenses. If I have to put enough cash in to shave points for profits, this kind of trading will not be for me. There is something critical that I am missing yet-I'm going to study subtle accumulation more. Thank you, I always enjoy your contributions. TM - ---Dan Cash wrote: > > > Thanks, > Dan > > Tannis Malone wrote: > > > Thanks to the discussion about distribution while prices are rising > > and the triple screen, I closed out at near highs on my spiders and > > diamonds on the 17th. It is so nice to have a method. > > > > Also, I am afraid I am turning into a bit of a Walter (not a bad thing > > :)), reading Elder and WON at night. Since you are the resident expert > > on Elder, Walter would you mind explaining what we should be looking > > for in the way of watching the gapping that has happened in some of > > the stocks these last few days? The way it is played out seems to be > > another confirmation of market health etc. > > > > _________________________________________________________ > > DO YOU YAHOO!? > > Get your free @yahoo.com address at http://mail.yahoo.com > > > > - > > > > > - > > _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 24 Jul 1998 23:00:48 EDT From: Subject: Re: [CANSLIM] Shorts In a message dated 98-07-24 19:02:01 EDT, you write: <> What I great idea!! Count me in! DCSquires - - ------------------------------ Date: Sat, 25 Jul 1998 03:12:50 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] Not CANSLIM - Today's Market Downturn On Sat, 25 Jul 1998 00:55:48 +0200, you wrote: :At 03:54 PM 24-07-98 GMT, you wrote: :>Por favor: where on the Web can I find Ian Woodward, anyway... :>Can you/someone please post a URL? : :Sure. Here you go: : :http://nt-chat0.telescan.com:8080/gotomenu : :And you can get his newsletter at: : :http://sosadvisors.com/ianshome.htm : :Also several tidbits about Ian at: : :http://www.industrymonitors.com/ : :>:So I keep my mound shut for a while. :>Your prerogotive, of course. : :Sorry don't understand that Dan. What is prerogotive? : :Or did you mean prerogative? Yes, that's exactly what I meant. I thought the spelling was probably wrong, but my email program doesn't have a spell checker and I was too lazy to look it up. I figured you (and others reading) would know what I meant. :) Your *smiley* with a "B" suggests you wear glasses, Johan? Not knocking it, I wear glasses myself! Thanks for the links to Ian. There was (and maybe still is) an area in AOL that was a kind of CANSLIM forum. It was sort of Ian's spot at AOL. I just cancelled my AOL, so that's out. I haven't read much by him, but encountered some extremely generous praise of Ian Woodward, and really want to avail myself of his ideas/teachings/knowledfge/wisdom/musings, whatever it is he does. Dan : : :Johan Van Houtven / CLICK! N.V. : : : : :- musicant@autobahn.org - - ------------------------------ Date: Fri, 24 Jul 1998 21:01:09 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Not CANSLIM - Today's Market Downturn <> The AOL site was abandoned in favor of the Telescan site. Don't know why. The SOS site is the place to go for an introduction. It's also the place where you can obtain his newsletters. As for interaction, that's what the Telescan site is for, though it's far less busy than the AOL site was. However, all that will soon change. Unfortunately the Telescan site doesn't have the archives the AOL site did, so if you want to know what's going on, you'll have to buy either the video or the newsletters or both. That may sound a bit tight-fisted, but remember that O'N tries to sell you his book, his newspaper, Daily Graphs, t-shirts, coffee mugs, baseball caps . . . So the idea of making a little money off one's efforts is not unheard of, particularly on the net. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 24 Jul 1998 23:24:10 -0500 From: Dave Cameron Subject: Re: [CANSLIM] NRVH earnings Tim Fisher wrote (on Tuesday - but I've had no phone service for 3 days): > > Reported this morning; 76 cents vs. 66 cents estimate. I'm already in. > Right now it's 1/4 above it's 52-wk high at +1-1/2. Migh turn into a b/o, > might not. This is a great example of "rolatzi's" posting about stocks which beat estimates but... have a run-up before, and reverse a good chunk of that run-up afterwards. I own NRVH - didn't sell yet - don't know why - I guess because I bought long enough ago that I can afford a 20% retracement from the high. The chart pattern on Thursday should have taken me out - but I'm a bit stunned. I'm really still in because NRVH has a history of shaking people out on earnings reports. But... we're close to a "pull the trigger" point. For those that haven't looked - it has dropped 7 points or so (almost 20%) since Tim posted this. Dave C. > > 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, 24 Jul 1998 23:26:53 -0500 From: Dave Cameron Subject: Re: [CANSLIM] Not CANSLIM - market reaction to earnings rolatzi wrote: > > I have noticed that my holdings have come in with reported earnings > generally better than the estimated and each time the stock has sold > off as a result. Generally there has been some run up before the > report. I agree 100%. Several of my stocks had decent run-ups, then reported earnings, then sold off. If I'd sold them all the day before they reported, I'd be about 5% richer.... This happens from time to time - but it also happens in reverse as well. I don't know if it says anything about the market - it seems bearish - but one of said stocks had a 20% run-up, then reported earnings. It then dropped 10% - stayed there for 2 days and then bounced back 15%. So now its at a new high. The others could still do that... Dave C. - - ------------------------------ Date: Fri, 24 Jul 1998 23:27:44 -0500 From: Dave Cameron Subject: Re: [CANSLIM] Observations CDWC, SYMX, DELL, etc. Db, You got your 102 today - now what? Dave C. - --- dbphoenix wrote: > > < $32 and doesn't drop at all (opened at 32-3/8).>> > > This isn't the automatic bad news it used to be, esp. for larger > stocks. It gives the fund managers more stock to buy. As far as DELL > goes, root for 102. That would be a good entry point. > > --Db > > _________________________________________________________ > DO YOU YAHOO!? > Get your free @yahoo.com address at http://mail.yahoo.com > > - - - ------------------------------ Date: Sat, 25 Jul 1998 00:15:26 -0700 (PDT) From: TM Subject: Re: [CANSLIM] Noncanslim: Shorts and Gaps,OK I'll start I've reading Elder about gaps. He tells how to short them. pp. 95-100. Psychological aspects: "Gaps show that the trading crowd is spooked, that losers are getting hurt and dumping their positions. When you know that bulls or bears are hurting, you can figure out what they are likely to do next and trade accordingly". 4 types of gaps: common- "rapidly closed-prices return into the gap in within a few day" Seen: quiet trendless markets, sold-out low-volume market bottoms breakaway- "prices leap out of a congestion zone on heavy volume and begin a new trend Seen: sharp increase in volume the day of the breakaway and for several days after that continuation- "occurs in the midst of a powerful trend, which continues to reach new highs of low without filling the gap". Seen: volume confirms continuation gaps when it jumps at least 50% above the average for the previous few days. Need volume confirmation exhaustion-"not followed by new highs during uptrends or new lows during downtrends- prices churn and return into the gap and close it". Seen:at the ends of trends. Volume associated with gap moment, but prices do not reach new highs or lows. Confirmed when prices reverse and close it. Shorting strategy for each type: A. Breakaway gap- Sell short and place a stop a few ticks above the gaps upper rim. B. An exhaustion gap (down)- prices pull back into it. The downtrend is over. Cover shorts immediately. C. An exhaustion gap (up)-lack of new high after the gap. Several days of churning offer good shorting opportunities with a stop above the high. D. Continuation gap in a downtrend- Go short, with a stop a few ticks above the gap's upper rim; stop may be hit, E. Exhaustion gap- cover shorts immediately F. Common gap-no action needed G. Breakaway gap- Go long and place a protective stop a few ticks below the gap's lower rim. H. Continuation gap in an uptrend- Add to longs and place a protective stop a few ticks below the gap's lower rim. TM _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 25 Jul 1998 00:30:01 -0700 From: "Mike Lucero" Subject: RE: [CANSLIM] Noncanslim: Shorts and Gaps,OK I'll start In Elder's book, I didn't see a graphical explanation of the "rim" of a gap. Does anyone know what he means? Thanks, Mike > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf Of TM > Sent: Saturday, July 25, 1998 12:15 AM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] Noncanslim: Shorts and Gaps,OK I'll start > > > I've reading Elder about gaps. He tells how to short them. pp. > 95-100. > Psychological aspects: > "Gaps show that the trading crowd is spooked, that losers are getting > hurt and dumping their positions. When you know that bulls or bears > are hurting, you can figure out what they are likely to do next and > trade accordingly". > > 4 types of gaps: > common- "rapidly closed-prices return into the gap in within a few > day" > Seen: quiet trendless markets, sold-out low-volume market bottoms > breakaway- "prices leap out of a congestion zone on heavy volume > and begin a new trend > Seen: sharp increase in volume the day of the breakaway and for > several days after that > continuation- "occurs in the midst of a powerful trend, which > continues to reach new highs of low without filling the gap". > Seen: volume confirms continuation gaps when it jumps at least > 50% above the average for the previous few days. Need volume > confirmation > exhaustion-"not followed by new highs during uptrends or new lows > during downtrends- prices churn and return into the gap and close > it". > Seen:at the ends of trends. Volume associated with gap moment, > but prices do not reach new highs or lows. Confirmed when prices > reverse and close it. > Shorting strategy for each type: > A. Breakaway gap- Sell short and place a stop a few ticks above the > gaps upper rim. > B. An exhaustion gap (down)- prices pull back into it. The downtrend > is over. Cover shorts immediately. > C. An exhaustion gap (up)-lack of new high after the gap. Several > days of churning offer good shorting opportunities with a stop above > the high. > D. Continuation gap in a downtrend- Go short, with a stop a few ticks > above the gap's upper rim; stop may be hit, > E. Exhaustion gap- cover shorts immediately > F. Common gap-no action needed > G. Breakaway gap- Go long and place a protective stop a few ticks > below the gap's lower rim. > H. Continuation gap in an uptrend- Add to longs and place a > protective stop a few ticks below the gap's lower rim. > TM > _________________________________________________________ > DO YOU YAHOO!? > Get your free @yahoo.com address at http://mail.yahoo.com > > > - > - - ------------------------------ Date: Sat, 25 Jul 1998 01:17:41 -0700 From: "Mike Lucero" Subject: [CANSLIM] surprised I was taken by surprise by this sudden drop. We sure had more warning back in April. I expected a longer run, since we had so many follow-through days at the beginning. I haven't been using hard stops, and I haven't sold almost anything yet, waiting for a rally. I hope most of you did better than me. Mike - - ------------------------------ Date: Sat, 25 Jul 1998 08:02:53 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Observations CDWC, SYMX, DELL, etc. <> That was momentary, and it was on a Friday. We'll just have to see what happens on Monday. We aren't going to get another beautiful cup and handle like we got in May and June. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 24 Jul 1998 17:19:43 -0700 (PDT) From: dbphoenix Subject: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn <> I hope you won't be offended, Nelson, but this is a good example of what I was talking about. You say "nothing to do but hold on" as though that's your only choice. But you have several. You could hold on, buy more, sell half of what you hold, sell all of it, and so on. You have a number of choices. Why choose to hold? What were your price targets when you bought the options? How did you arrive at them? What were your stops? How did you arrive at them? Were your stops mental or physical? Did the stocks gap down through them? If so and your stops were mental, why did you not trip them? And so on. You've put yourself in the position now of hoping for a recovery, but what might that mean? If the stocks get back to the point where you should have tripped your stops, will you sell the options then? Or will you hope that they get back to breakeven so that you can sell them then? If they get back to breakeven, will you try for just a little profit before selling? And if you do have a little profit, why not try for more? After all, the stocks are now showing strength. See how it goes? You're confused because you don't know what's going to happen, and since you don't know what's going to happen, you don't know what to do. The point I'm trying to make is that what is going to happen is completely irrelevant to what you should do right now because no one can tell you what is going to happen, least of all any of us. What you should do right now should have been decided before you bought the options in the first place. If you didn't work all that out at the time, you're not alone. Some of us have to learn that lesson over and over and over again until we finally make the connection and stop acting stupid. And even if we do work out these strategies, we don't always follow them, and we have to learn THAT lesson over and over and over again. Which is why so many people just say the hell with it and buy mutual funds. Whether you should sell your options on Monday morning may depend on whether the degree of pain you'll feel by losing more money will be greater than the degree of pleasure you'll feel by recovering your losses in the event of an upturn. Are you willing to absorb any amount of pain on the offchance that your options may recover and you'll be able to get out even (assuming you act on that event)? Or have you lost all you can stand to lose? Would you rather sell, begin again, adopt a better strategy, and put that money to work elsewhere, even if it's only a money-market account? How are you going to feel and what are you going to do if you sell your options and they immediately begin to recover? - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 25 Jul 1998 07:49:09 -0400 From: Jeffry White <"postwhit@sover.net"@sover.net> Subject: [CANSLIM] "M" Johan wrote: > > Well, no reversal yet. Maybe we won't get one. Looks more like find those > potential short opportunities to me! Ouch! The market always does what most > people do not expect it to do, right? > > Let's fade the noise away: > > The stats for the OTC: > > 24/07: > > Today we closed @ 1931.09, -0.22%. lower than yesterday. Intraday the > picture looked a bit different however. > > Hi: 1954.69 Low:1909.75. So we closed in the middle of that range. > > Vol: 809820000 shares traded. 7.44% lower than yesterday. 3.81% above > ADV(30) and 8.12% above ADV(50). > > I'm spending almost all of my time lately with the last leg of work rennovating a home, so my post will have to be brief... There will be a rally attempt, there always is. Initiating short positions might have been prudent on the distribution day of Tuesday (perhaps after the cash closed on that day by buying puts on the high fliers or other candidates which suit your particular tastes). To initiate a short in the face of a highly probable "rally attempt" to come is probably not the best idea. I am reminded, by all of the discussion about shorting, that it just seems too obvious. Just as the long side seemed obvious early in the week on many of the chat groups, talking heads and whore analysts, so too may be the short side after the latter part of this week's action. My thought (from having suffered the pain of being short too early in April) would be to watch for a "failed rally attempt". Shorting off a failure like that, with tighter than normal stops might come at a time when it is not so obvious to so many that the market is weak. Sentiment can go much higher than the numbers we saw last week. Early April, for example, showed some strong numbers, but we rallied and wobbled for a month before we finally melted (with sentiment well higher than earlier in the month). Changes in market direction do not happen overnight, usually. We are likely early in any change of market direction, if that's what this is. We saw some distribution accompanied by high sentiment numbers in a very narrow market. That's somewhat different (on the breadth side particularly) than what happened in April, but don't jump the gun here and assume that a bear market is upon us or even that the market has change direction. All we seemingly have is a mini-blow off run which corrected on a reversal/distribution day with sentiment running fairly strong. The leaders have not yet "failed", only corrected. Sentiment is high, but it can wobble at these ranges for some time before we really know what is going to happen with the "M" direction. If the rally doesn't fail, in the classic sense, watch for further distribution signals. Regards, JW BTW, if Deepak or Dan Cash are out there today, perhaps they have a copy of a note I sent which attempted to memorialize my thinking in moving to cash back in April. Maybe they could post it to the group. I think it shows how watching the "M" *TOO* closely, and with too much emotion can be hazardous (missed profits, premature shorts, etc.) - - ------------------------------ Date: Sat, 25 Jul 1998 07:56:11 -0400 From: Jeffry White <"postwhit@sover.net"@sover.net> Subject: [CANSLIM] Gapping - TM TM wrote: > reading Martin Zweig to interpret Jeffry Thanks for the kind words, TM. Zweig is one of my favorites, but I read him before I encountered HTMMIS "Market Direction" or recieved tutoring from the Stock Farmers (which I've reference here before). His indicator list is much broader than WON's objective timing criteria, I think, but he's one of the best. Guess I'd better go back and read Zweig, again (for Pete's sake he's running a chunk of my money). Maybe *I'll* understand what I'm talking about. ;) JW - - ------------------------------ Date: Sat, 25 Jul 1998 09:08:36 -0400 From: "Nelson E. Timken, Esq." Subject: [CANSLIM] RE: NOT CANSLIM- surprised This is a multi-part message in MIME format. - ------=_NextPart_000_0003_01BDB7AB.CE3AE9E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Mike- A lot of us were surprised. I bought a huge amount of call options into this correction and am biting my nails waiting for an up day to get out. You were not alone. Nelson E. Timken http://onelist.com/subscribe.cgi/investing-list - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Mike Lucero Sent: Saturday, July 25, 1998 4:18 AM To: canslim@lists.xmission.com Subject: [CANSLIM] surprised I was taken by surprise by this sudden drop. We sure had more warning back in April. I expected a longer run, since we had so many follow-through days at the beginning. I haven't been using hard stops, and I haven't sold almost anything yet, waiting for a rally. I hope most of you did better than me. Mike - - - - ------------------------------ Date: Sat, 25 Jul 1998 09:32:03 -0600 From: "Dan Sutton" Subject: [CANSLIM] This weeks HGS file This week's HGS file (data after Friday's market close) is available at: ftp://ftp.xmission.com/pub/users/m/mcjathan/canslim/hgs0724.xls - - ------------------------------ Date: Sat, 25 Jul 1998 08:55:32 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] "M" YOur points are well-taken, Jeffry. However, the time to begin a shorting strategy is not when the market is in the middle of a major correction. The time to begin a shorting strategy is in advance of the event so that one can develop a list and monitor the stocks' activity, just as one develops a list of long candidates in advance of their breakouts. As far as a change of direction goes, the market HAS changed direction. It changed direction several days ago. And it may change direction again on Monday. By suggesting a thread on shorting, I'm not advocating that everyone jump in and short AMZN and YHOO and DELL on Monday morning. I'm suggesting that those who are interested and have some experience in the strategy share what they find. As always, caveat emptor. I don't know what more I can say about controlling hope and fear. Some lessons just have to be learned the hard way. But I want to caution anyone who's considering shorting stocks that if he has not yet dealt with his emotions on the long side, he's going to be in even deeper trouble on the short side. I also urge anyone who's confused or anxious or fearful to write down everything that he's feeling or thinking about the market, stocks, his portfolio, his strategy, whatever. We can intellectualize all we like about hope, fear, greed, and all the other emotions that prevent us from succeeding as much as we might in the stock market. But it's at times like these, when push comes to shove, that all of that comes bubbling up again and our stomachs begin to tighten. Anyone who hasn't already worked through this process ought to begin doing so right now, this weekend, as painful as it might be. Otherwise it will be no less painful and no less expensive the next time around. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 25 Jul 1998 12:05:15 EDT From: Subject: Re: [CANSLIM] Not CANSLIM - market reaction to earnings In a message dated 98-07-25 00:31:48 EDT, you write: << rolatzi wrote: > > I have noticed that my holdings have come in with reported earnings > generally better than the estimated and each time the stock has sold > off as a result. Generally there has been some run up before the > report. >> Bigcharts allows you to see earnings reports on the chart. This is very helpful if your stock is about to report. Look at the chart area just before and after the last few earnings reports and see how the stock acted. If the stock usaully rallies into the report and then sells off you can take out a little insurance policy by selling half your position before the report or into the gap open if the you expect the news to be good. Just like anything else "M" must be considered when looking at past reports. For example, most stocks sold off if they reported in April because of the market run up so much. DCSquires - - ------------------------------ Date: Sat, 25 Jul 1998 12:18:43 -0400 From: "Nelson E. Timken, Esq." Subject: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn >Nelson: >I hope you won't be offended, Nelson, but this is a good example of >what I was talking about. I'm not offended at all, DB. My lack of planning, my investing too heavily, and then not having any stop in my head for when to retreat were all stupid moves. It is just that simple. My question now, is having a great deal of money invested in short (Aug.) calls...how would I now proceed, keeping in mind that I am back at work on Monday, and limited in my ability to closely track what has been one of the most whipsaw markets we have ever seen. Looking at Friday, when the market was first up 50, then down 70 then up 50 again and then finally mixed to dead even, your fortunes can change by the hour. >You say "nothing to do but hold on" as >though that's your only choice. But you have several. You could hold >on, buy more, sell half of what you hold, sell all of it, and so on. >You have a number of choices. Why choose to hold? I cannot buy more- I am margined out. That is not an option, since I foolishly got in too deep. I could sell half at a huge loss, since they are now almost worthless. I could sell it all and take a huge loss. Practically speaking, I feel holding is all I have as an option. >What were your price targets when you bought the options? How did you >arrive at them? What were your stops? How did you arrive at them? >Were your stops mental or physical? Did the stocks gap down through >them? If so and your stops were mental, why did you not trip them? >And so on. I bought the Cisco Aug 80, MSFT Aug 120, Dell Aug 120, BMY Sept 125 and SGO Aug 110. I expected each stock to target $5 above the set strike, based on market direction. I didn't have stops in place. I could have tripped the stops when the market went up briefly on Friday, but chose to hold for a strong rally this week- a bad move I now feel. >You've put yourself in the position now of hoping for a recovery, but >what might that mean? If the stocks get back to the point where you >should have tripped your stops, will you sell the options then? Or >will you hope that they get back to breakeven so that you can sell >them then? If they get back to breakeven, will you try for just a >little profit before selling? And if you do have a little profit, why >not try for more? After all, the stocks are now showing strength. I'm not sure what to do, honestly. If the market goes back to where it was and I sell out, only to have it go higher, I will be disgusted with myself. On the other hand, if I lose a tremendous sum,I will be more disappointed. Nelson - - - - ------------------------------ Date: Sat, 25 Jul 1998 09:13:55 -0700 From: Tim Fisher Subject: Re: [CANSLIM] NRVH earnings Yeah, shook me out, altho with a healthy profit. Ditto on the creepy DELL action Friday. That pissed me off big-time. Guess my stop was 1 pt higher than "support". Would have doubled up and not sold had I been able to watch it and not counting chinook on Mt Hood. Whine, whine. At 11:24 PM 7/24/98 -0500, you wrote: >Tim Fisher wrote (on Tuesday - but I've had no phone service for 3 days): >> >> Reported this morning; 76 cents vs. 66 cents estimate. I'm already in. >> Right now it's 1/4 above it's 52-wk high at +1-1/2. Migh turn into a b/o, >> might not. > >This is a great example of "rolatzi's" posting about stocks which beat >estimates but... have a run-up before, and reverse a good chunk of that >run-up afterwards. I own NRVH - didn't sell yet - don't know why - >I guess because I bought long enough ago that I can afford a 20% retracement >from the high. The chart pattern on Thursday should have taken me out - >but I'm a bit stunned. I'm really still in because NRVH has a history >of shaking people out on earnings reports. But... we're close to a >"pull the trigger" point. > >For those that haven't looked - it has dropped 7 points or so (almost 20%) >since Tim posted this. > >Dave C. > >> >> Tim Fisher, 1995 President, Pacific Fishery Biologists >> Ore-ROCK-On Rockhounding Web Site >> PFB Information >> mailto:tim@OreRockOn.com >> WWW http://OreRockOn.com >> >> - > >- > 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, 25 Jul 1998 09:17:40 -0700 From: Tim Fisher Subject: Re: [CANSLIM] surprised We didn't have Greenspam mouthing off in April. Can I sue him? As for stops, they saved my butt. I was ehaded for the toilet. Stuff that I got stopped out of generally ended the week at -15% to -20% from last Friday. That would have eroded all my profits on this latest rally. As it is I held on to a meager 5% profit from the rally, was up 12% lst Friday. Life's a bitch, then you die. At 01:17 AM 7/25/98 -0700, you wrote: > >I was taken by surprise by this sudden drop. We sure had more warning back >in April. I expected a longer run, since we had so many follow-through days >at the beginning. > >I haven't been using hard stops, and I haven't sold almost anything yet, >waiting for a rally. > >I hope most of you did better than me. > >Mike > 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, 25 Jul 1998 09:27:11 -0700 From: Tim Fisher Subject: Re: [CANSLIM] "M" I am reminded of a mini-flame war I started on Clearstation. Someone recommended shorting DELL, and I replied that this was a dumb thing to do, i.e. shorting the market leader for the past year plus, and recommended going long in the same message. I am up 30%+/- on that recommendation (if you don't use Clearstation then go there and look at the "recommended" section); he is out 30%. Anyway I sincerely hope no one in this group would seriously consider shorting DELL. At 08:55 AM 7/25/98 -0700, you wrote: > >As far as a change of direction goes, the market HAS changed >direction. It changed direction several days ago. And it may change >direction again on Monday. By suggesting a thread on shorting, I'm >not advocating that everyone jump in and short AMZN and YHOO and DELL >on Monday morning. I'm suggesting that those who are interested and >have some experience in the strategy share what they find. As always, >caveat emptor. > >--Db 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, 25 Jul 1998 09:31:55 -0700 From: Tim Fisher Subject: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn My hangover this morning must be making me reminiscient (I have a love/hate relationship with the Oregon Brewers' Festival) but I am reminded of a statement in Motley Fools' book - something like "90% of all options expire worthless." Is this even remotely true? - At 12:18 PM 7/25/98 -0400, you wrote: > >I cannot buy more- I am margined out. That is not an option, since I >foolishly got in too deep. I could sell half at a huge loss, since they are >now almost worthless. I could sell it all and take a huge loss. Practically >speaking, I feel holding is all I have as an option. 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, 25 Jul 1998 10:08:39 -0700 (PDT) From: dbphoenix Subject: RE: [CANSLIM] Not CANSLIM - Today's Market Downturn <> I don't want this to sound like a revival meeting, but I feel what you're going through. I've been there myself. More than once. Way more. And nobody can help you. First, print out the post you just made and tape it below your monitor so you don't forget. The process you've gone through is exactly what you SHOULD go through. Second, remind yourself--and find a way to KEEP reminding yourself--that the money is gone. That's the hardest thing to accept. But it's gone. It hasn't just been mislaid. It's not in your account. It's gone. Can it be recovered? Maybe. But right now it's gone. Period. So what can you do? If the options are truly worthless, you could just forget about them and see what happens. If they have any value whatsoever, you could get rid of them and put what's left of your investment into something else that has more potential. You could even buy back the options you just sold if they show renewed strength (and you're not buying them back to punish them for making you feel bad). But I can assure you that no matter what you choose to do, the mere fact of formulating a plan and following through on it, even if you wind up with a net loss (which you already have anyway) will not only take the pressure off, but will also increase your self-confidence in your competence and clear your head so that you can see what's going on more objectively. Look at the 3Com people, for example. Those who bought at the top and watched their investment evaporate (particularly if they were following the Foolish Workshop at the time which precluded selling) may have bought more on the way down. Or waited for the first bottom and bought more then. And bought more at the next bottom. And the one after that. But did it ever occur to them to just sell and get out? Never. They were going to show 3Com. They were going to make 3Com pay. They were going to make that stock come back to a break-even point through sheer will-power. They weren't going to allow that stock to make them look stupid and incompetent by forcing them to sell. They were going to hang on no matter what. They were in control. Does this sound absolutely nuts? Of course it does. And yet we've all done it. But those who "got it" before this experience would have just said the heck with it and bought Cisco (their then-perceived rival) with what they had left, coming out way ahead in the end. In other words, whether you make your money back in the stock that disappointed you or make it back in something else entirely is not important. What's important is making the money back. Trying to punish the stock by making it give you back your money is not a rational thing to do. And yet we do it all the time. Remember too that Fridays are not generally beneficial to those who are long. Given the activity Friday, odds are that we'll have a rally on Monday. No guarantees, but possible. Even likely. If we don't, you'll be no worse off than you are right now. If we do, how will you determine your sell-points? What signals will you look for to tell you that the rally may be failing and it's time to get out no matter what (this decay factor is what turned me off to options way back when--not enough wiggle room)? As Sperandeo says, what will the market have to do in order to prove to you that you're wrong? Another thing to consider is the appropriateness of your strategy to your schedule. I posted something about stops and sell strategies recently which addressed the stage of the market we're in. Buying volatile stocks or options on volatile stocks when you're at or near a market top and must be away from your computer all day is probably not an appropriate strategy. At the beginning of the first or second leg, maybe. Maybe. But not at the end of the third (if I've shorted a stock, I never leave the screen, no matter what leg of the cycle we're in). Unless you have tight stops and are in no danger of a gap-down. But stops or not, the volatility of the stocks you purchase may be something you need to look at. A stock that appreciates slowly and steadily looks pretty boring until you drop 30% of your capital trading something faster and sexier. - --Db _________________________________________________________ DO YOU YAHOO!? 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