From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #367 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 Tuesday, August 25 1998 Volume 02 : Number 367 In this issue: Re: [CANSLIM] VIX (CBOE's Volatility Index) Re: [CANSLIM] VIX (CBOE's Volatility Index) [CANSLIM] Some more random thoughts RE: [CANSLIM] VIX (CBOE's Volatility Index) [CANSLIM] Re. IBD 8/25 Investors Corner Article [CANSLIM] RUT revisited Re: [CANSLIM] RUT revisited Re: [CANSLIM] Re. IBD 8/25 Investors Corner Article Re: [CANSLIM] RUT revisited Re: [CANSLIM] RUT revisited RE: [CANSLIM] RUT revisited RE: [CANSLIM] RUT revisited ---------------------------------------------------------------------- Date: Mon, 24 Aug 1998 12:36:23 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] VIX (CBOE's Volatility Index) <> If you could remember what was said, perhaps I can clarify. A weekly MACD is, IMO, very basic. As to Elder's use of the MACD-Histogram, he does seem to use it as a short-term indicator, since it wouldn't take more than a relatively brief period of time for a buy signal to turn into a sell signal. Whereas a trader--which is what Elder is--might look at a pullback as a signal to exit, an intermediate-term investor might look at the same pullback as an opportunity to pyramid. This is why I prefer to use a weekly MACD, followed by a daily stochastic, followed by a short-term MA crossover to point the way to a possible entry. Once I'm in the stock, I don't sell it as long as the weekly MACD is still positive and/or no major support has been violated. In fact, if the stock corrects a bit and the weekly MACD is still strong or even divergent, I'll add to the position. I've done far better this way and had to spend far less time at the computer. It's not "hot", but I'm happy with it. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Mon, 24 Aug 1998 16:17:03 -0400 (EDT) From: Deepak Kapur Subject: Re: [CANSLIM] VIX (CBOE's Volatility Index) Does any one know what happened to REXI, Resource America? It had a wild ride on Friday: between 25 and 36? And, today, again, 19 1/4 to 29? The company claims it does not know of any news? Thanks, Deepak - - ------------------------------ Date: Tue, 25 Aug 1998 07:29:29 -0400 From: "Tom Worley" Subject: [CANSLIM] Some more random thoughts Looks now like we have had a third, and successful, retest of the recent lows, and this third time is more encouraging as the selling pressure appears to have substantially dried up. After the initial wakeup call on Latin American debt, intl mkts appear to be reacting with more confidence to the Russian economic problems and the decision to further float the ruble, along with restructuring their debt, and again changing the govt. LATAM problems will continue throughout the region so long as commodities prices remain depressed. This includes not just oil, but also gold and other precious metals, copper, and some other less important commodities. The entire region's economy is commodities based, and the weaker demand from Asia in particular is devastating the financial picture. Commodities prices have also hurt Canada, where once again, despite currency intervention, Canada's dollar hit a new all time low against the US dollar, and at a time when the US dollar was not even at its peak. Japan continues to threaten intervention with words, but the threat is losing its impact, as the yen weakened overnight against other currencies. Lately it has been appearing that the Japanese mkt reflects domestic sentiment, while the yen reflects intl sentiment, and they have been working at cross purposes. I also noted that while Japan managed to climb back over 15,000 it still failed to hold onto most of its overnight gains. Hong Kong is again in the mkt buying its blue chips with some success. Currencies are also in trouble in S. Africa and Australia, among others. Asia had a decent day, Europe for once is responding in kind (Germany, Switzerland and France all up over 2% last time I looked). And the futures, tho off their earlier highs, are indicating a positive opening. Looks to me like some of the froth and chaos in the various mkts is calming down, however VIX still hovering around 30 so quite volatile. To my friends along the Eastern Seaboard, keep an eye on Hurricane Bonnie, tho I do believe it will do no worse than sideswipe Cape Hatteras before turning out to sea. With more trouble brewing in the tropics, my attention is now on Danielle. Tom W - - ------------------------------ Date: Tue, 25 Aug 1998 07:07:29 -0700 From: Brian Nash Subject: RE: [CANSLIM] VIX (CBOE's Volatility Index) I was also curious about this, since I once owned it. Apparently, a short-seller's newsletter (which I never saw named) pointed out that 2 transactions made up the bulk of REXI's top-line growth last quarter, and that, without them, the company's revenues would have been reduced by 99%. It also made some ugly insinuations about Cohen and his wife. This has become a battleground; I wouldn't play until everyone else is out of ammo. > -----Original Message----- > From: Deepak Kapur [SMTP:kapur@cs.albany.edu] > Sent: Monday, August 24, 1998 4:17 PM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] VIX (CBOE's Volatility Index) > > Does any one know what happened to REXI, Resource America? It had > a wild ride on Friday: between 25 and 36? And, today, again, 19 1/4 > to 29? The company claims it does not know of any news? > > Thanks, > > Deepak > > - - - ------------------------------ Date: Tue, 25 Aug 1998 10:16:33 EDT From: Subject: [CANSLIM] Re. IBD 8/25 Investors Corner Article Canslim Readers: For those who are overly concerned with "the count" or when it might start, today's Investors Corner article gives another perspective on when a bull might be expected: If the market's long-term moving average line could talk, it'd be telling bullish investors to be very careful. Just what is a moving average line? It's a technical tool used by analysts to help judge a market or stock trend. The calculation is simple. For a 200-day moving average, you take the last 200 closing prices, add them up and divide by 200. Repeat that each day, plot the values and what emerges is a line that smooths out the daily ups and downs. I N V E S T O R ' S C O R N E R Moving averages can be set to any time period. The 200-day moving average is a popular choice for looking at the long term; the 50-day is often used to examine a shorter-term trend. When a moving average is rising, you have an uptrend. A declining moving average signals a downtrend. Knowing the trend is a key element to making money in stocks. In recent weeks, there have been some important developments concerning the stock market's trend. The Dow Jones industrial average last week closed below its 200-day moving average line for the second week in a row. That's a first since the powerful bull-market phase began in late '94. The significance? It says the bull market in the blue chip sector has lost its momentum. Undercutting the 200-day is significant because it's a long-term indicator. It does not necessarily mean the blue chips will go into a bear market. But it does say the trend is flattening. The Dow closed twice below the 200-day in January, but those breaches were separated by one week. Prior to that, it had gone three years without violating its long-term moving average on a weekly closing basis. The more time that elapses with the Dow at or below the 200-day moving average, the more likely the trend will flatten out, says technical analyst Ricky Harrington of Interstate/Johnson Lane in Charlotte, N.C. The weekly close of the broader S&P 500 index has been holding just above its rising 200-day the past two weeks. However, Harrington believes the S&P will undercut its 200-day within the next few weeks. He bases that on the large number of divergences showing up in the market. ''The blue chip stocks are holding up in a classic manner, while secondary stocks as measured by the Russell 2000 index are in a downtrend,'' Harrington said. ''It is similar to the 1972-1973 top. ''The stock market has been overval- ued for several years. There have been negative developments - both technical and fundamental. The market is heading into September and October, historically weak months. So one has to be cautious. Also, analysts will be reeval- uating their forecasts of earnings for the third and fourth quarter.'' The Nasdaq composite index is holding above its 200-day moving average. However, Harrington sees the Nasdaq as a distorted index. He feels it's more a technology index because of the heavy weighting of stocks like Microsoft, Intel and Dell Computer. The Nasdaq is more volatile. It cut below its weekly 200-day line three times in the past three years. Each time, though, it bounced back and headed higher. While the major market averages are toying with their 200-day lines, the situation is bleaker for individual stocks. ''The 200-day moving average is a mechanical tool for spotting a trend,'' said Frank Gretz, market analyst with Shields & Co. in New York. ''My work shows that the average stock is in a bear market.'' The percentage of NYSE stocks trading above their 200-day is only 26% according to data compiled by IBD, down from 85% in October. That means 74% of all NYSE stocks are now in long-term downtrends. That's the most bearish reading since late '94, when stocks were in a ''stealth'' bear market by some analysts' readings. The popular stock market averages, then and now, camouflaged the real damage. The stage is being set for a market turnaround, Gretz says. The put-call ratio hit 0.94 last week. That means investors bought almost as many puts as calls, indicating they're bearish. But taken as a contrary indicator, that's bullish. The current ratio is just under the 12-month high of 0.95 reached in December, about four weeks before the market took off in January. Still, the market hasn't turned the corner. ''I try to make the distinction between the market averages and the average stock,'' Gretz said. ''It is only in the last month that the averages have been weak. The average stock, though, is in a bear market. Nasdaq breadth is horrible. ''I think we are closer to a bear market ending than a bear market beginning when one looks at the average stock. The way one gets hooked in this kind of market is that as long as the averages act well, most people try to hold their stocks. The right way to do it, though, is to sell your stock if it is not acting right.'' //////////////////////////////////////////////////////////// Copyright (c) 1998 Investors Business Daily, All rights reserved. Investor's Business Daily - Investor's Corner (08/25/98) Toying With Long-Term Moving Averages By Leo Fasciocco 08/24/98 20:41 jans - - ------------------------------ Date: Mon, 24 Aug 1998 22:48:59 -0500 From: Dave Cameron Subject: [CANSLIM] RUT revisited There have been several messages floating around lately regarding RUT and various offshoots thereof. I've gleaned most of these through the archives because I've been on vacation. But... gotta add my two cents. 1. To Rich's question - I don't think that using RUT as your market indicator is playing fast and loose with WON's rules for "M" as long as you are investing in stocks that behave similarly to RUT. As an example, I am doing positively miserably this year. I have seriously underperformed the S&P and DJIA. However, my returns correlate well with the Russell 2000. I've been using the larger-cap indices as a somewhat indicator for "M" and it has hurt me. If I'd used RUT instead, I might actually be in positive territory for the year. 2. Regarding support for RUT - I don't see any. I'm not really proficient at technical patterns such as the aforementioned triangle, but I see a big concave parabola. When RUT dropped below 407 - it took out any support I was "seeing". If I had ANY sense, I'd be totally out of the market now - but: a. I can't believe an inverted yield curve can last for long. I've rarely (if ever) seen the 30-yr. bond rate BELOW the fed funds rate! I expect something to break - people might start buying eurodollars - but not long-term bonds. b. Almost every stock I have on my watch list is at a 2-yr low for P/E ratio. I don't put a lot of credence into this, because usually that signals an earnings drop - but, hell, its never happened for virtually ALL my stocks - just a select few. 3. Now that I've convinced everyone that I'm a total idiot, I've also looked at some of the top small cap funds over the last 5 years - most have tanked over the last month - much more than the DJIA, S&P, NASDAQ, etc... This is further evidence that one should use the index which most neatly correlates with one's stock selection technique. Caveats to this whole thing: I'm not very good at judging "M". I have not outperformed the big cap indices since '95 - when I trounced it. I am quite averse to buying big caps - because I'm a bit myopic in seeing big growth there when many of these companies are so big already - so I'm biased. Cheers, Dave C. - - ------------------------------ Date: Tue, 25 Aug 1998 10:53:52 -0400 (EDT) From: Deepak Kapur Subject: Re: [CANSLIM] RUT revisited Dave, > As an example, I am doing positively miserably this year. I have seriously > underperformed the S&P and DJIA. However, my returns correlate well with > the Russell 2000. Thanks for your honest posting. I can assure you that you are not alone. Here is another idiot joining your company, in case you needed it. > I've been using the larger-cap indices as a somewhat indicator for "M" and > it has hurt me. If I'd used RUT instead, I might actually be in positive > territory for the year. That might be the key point you are making. I think if we wish to use CANSLIM, we should be either using RUT or NASDAQ (at best). You are right about the mutual funds. You just have to look at PBHG Growth, American Century Ultra to see what is going on in the broader market. Regards, Deepak - - ------------------------------ Date: Tue, 25 Aug 1998 08:29:52 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Re. IBD 8/25 Investors Corner Article A very timely post, considering the discussions we've been having on the variety of indices and averages and the relationship between the behavior of a stock or group and the behavior of a "market" average. Thanks. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Tue, 25 Aug 1998 08:37:27 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] RUT revisited <<> I've been using the larger-cap indices as a somewhat indicator for "M" and > it has hurt me. If I'd used RUT instead, I might actually be in positive > territory for the year. That might be the key point you are making. I think if we wish to use CANSLIM, we should be either using RUT or NASDAQ (at best).>> That may depend on how you define CANSLIM. Considering the relatively dramatic changes O'N has made in the criteria over the past year, I'd be interested to know how purists and non-purists alike are defining the strategy for themselves. Is it to be modified as market conditions change? If so, how is one to know what modifications to make and when? Or is it to be a mechanical system with well-defined rules that is to be used only when the market favors the kinds of stocks touted by the original book? Or can certain elements of CS be used no matter what the market cycle? Or is CS not really an exclusively micro/small-cap strategy at all? And I agree that Dave is a brave man. Compared to last year, my results haven't been anything to write home about, either. But some valuable lessons have been learned. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Tue, 25 Aug 1998 19:28:29 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] RUT revisited At 10:48 PM 24-08-98 -0500, you wrote: > As an example, I am doing positively miserably this year. I have seriously > Now that I've convinced everyone that I'm a total idiot, Actually, I think you are way above the majority of investors. You admitted openly that your investing performance is not the way you want it to be. How many people out there are able to do just that? I firmly believe that being able to admit that this-or-that is not the way you want it to be, is a definite requirement for future change and a positive step in the direction towards improvement. Analogy: "A drunk that can't admit his alcohol abuse, has practically no chance of curing his alcohol problem." Admitting it is a necessary step. Johan Van Houtven / CLICK! N.V. - - ------------------------------ Date: Tue, 25 Aug 1998 10:41:12 -0700 From: Brian Nash Subject: RE: [CANSLIM] RUT revisited It seems clear to me that it's O'Neill who has changed. Last year about this time, in a satellite conference, he changed the wording of "I" to "at least one". This business about "buying only the largest, most liquid names" is a "unique" construal of "S". I understand that everyone is subject to style drift. But, if this continues, CANSLIM threatens to become a cult of personality rather than an the objective system of stock selection I understood it to be. Having worked my tail off and only narrowly avoiding disaster during the most recent downturn, I think my next trade will be Spiders. We'll see how that works for a while. I prefer small caps, there's nothing in the world like them when they're running, but I won't commit new money to individual small-cap stocks, or serious money to the markets in general until there's evidence that elephants are grazing in the RUT again. Here we are again today (about 1 PM EST), with the Down up 1.19%, the S&P up 1.48% and the Nas up 1.17%. The RUT is up less than .5%. > -----Original Message----- > From: dbphoenix [SMTP:dbphoenix@yahoo.com] > Sent: Tuesday, August 25, 1998 11:37 AM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] RUT revisited > > > > <<> I've been using the larger-cap indices as a somewhat indicator > for "M" > and > > it has hurt me. If I'd used RUT instead, I might actually be in > positive > > territory for the year. > > That might be the key point you are making. I think if we wish to use > CANSLIM, > we should be either using RUT or NASDAQ (at best).>> > > That may depend on how you define CANSLIM. Considering the relatively > dramatic changes O'N has made in the criteria over the past year, I'd > be interested to know how purists and non-purists alike are defining > the strategy for themselves. Is it to be modified as market > conditions change? If so, how is one to know what modifications to > make and when? Or is it to be a mechanical system with well-defined > rules that is to be used only when the market favors the kinds of > stocks touted by the original book? Or can certain elements of CS be > used no matter what the market cycle? Or is CS not really an > exclusively micro/small-cap strategy at all? > > And I agree that Dave is a brave man. Compared to last year, my > results haven't been anything to write home about, either. But some > valuable lessons have been learned. > > --Db > > > > > > _________________________________________________________ > DO YOU YAHOO!? > Get your free @yahoo.com address at http://mail.yahoo.com > > > - - - ------------------------------ Date: Tue, 25 Aug 1998 17:12:54 -0700 (PDT) From: TM Subject: RE: [CANSLIM] RUT revisited "I think my next trade will be Spiders" Brian- With Spiders you will have something to show for it--dividends, even if the stock languishes. TM - ---Brian Nash wrote: > > It seems clear to me that it's O'Neill who has changed. Last year about this > time, in a satellite conference, he changed the wording of "I" to "at least > one". This business about "buying only the largest, most liquid names" is a > "unique" construal of "S". I understand that everyone is subject to style > drift. But, if this continues, CANSLIM threatens to become a cult of > personality rather than an the objective system of stock selection I > understood it to be. > > Having worked my tail off and only narrowly avoiding disaster during the > most recent downturn, I think my next trade will be Spiders. We'll see how > that works for a while. I prefer small caps, there's nothing in the world > like them when they're running, but I won't commit new money to individual > small-cap stocks, or serious money to the markets in general until there's > evidence that elephants are grazing in the RUT again. > > Here we are again today (about 1 PM EST), with the Down up 1.19%, the S&P up > 1.48% and the Nas up 1.17%. The RUT is up less than .5%. > > > -----Original Message----- > > From: dbphoenix [SMTP:dbphoenix@yahoo.com] > > Sent: Tuesday, August 25, 1998 11:37 AM > > To: canslim@lists.xmission.com > > Subject: Re: [CANSLIM] RUT revisited > > > > > > > > <<> I've been using the larger-cap indices as a somewhat indicator > > for "M" > > and > > > it has hurt me. If I'd used RUT instead, I might actually be in > > positive > > > territory for the year. > > > > That might be the key point you are making. I think if we wish to use > > CANSLIM, > > we should be either using RUT or NASDAQ (at best).>> > > > > That may depend on how you define CANSLIM. Considering the relatively > > dramatic changes O'N has made in the criteria over the past year, I'd > > be interested to know how purists and non-purists alike are defining > > the strategy for themselves. Is it to be modified as market > > conditions change? If so, how is one to know what modifications to > > make and when? Or is it to be a mechanical system with well-defined > > rules that is to be used only when the market favors the kinds of > > stocks touted by the original book? Or can certain elements of CS be > > used no matter what the market cycle? Or is CS not really an > > exclusively micro/small-cap strategy at all? > > > > And I agree that Dave is a brave man. Compared to last year, my > > results haven't been anything to write home about, either. But some > > valuable lessons have been learned. > > > > --Db > > > > > > > > > > > > _________________________________________________________ > > 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 - - ------------------------------ End of canslim-digest V2 #367 ***************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.