From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #720 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Thursday, October 14 1999 Volume 02 : Number 720 In this issue: Re: [CANSLIM] Knight/Trimark (NITE) [CANSLIM] Daily volume dry ups [CANSLIM] Off Topic - Internet Security on Your PC Re: [CANSLIM] Comments from WON ..., Craig Re: [CANSLIM] thqi,nsol,qcom Re: [CANSLIM] Daily volume dry ups Re: [CANSLIM] Knight/Trimark (NITE) [CANSLIM] aeos Re: [CANSLIM] aeos [CANSLIM] ANF, AEOS [CANSLIM] qcom Re: [CANSLIM] qcom Re: [CANSLIM] aeos Re: [CANSLIM] Comments from WON ..., Craig Re: [CANSLIM] qcom Re: [CANSLIM] Comments from WON ..., Craig Re: [CANSLIM] Comments from WON ..., Craig Re: [CANSLIM] qcom [CANSLIM] Holding on for long term gains ---------------------------------------------------------------------- Date: Wed, 13 Oct 1999 20:27:07 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] Knight/Trimark (NITE) >Not sure if this really belongs here but..... > >On the Raging Bull message boards (www.RagingBull.com), there has been >lots of talk about Knight/Trimark's downward movement. Some of it has >been attributed to market makers selling on Friday since that was option >expiration day and they wanted to force the July 55's to expire >worthless. Now people are thinking that today's 1-point drop (so far) >is due to the market makers trying to drive down the price before the >July 21 earnings announcement (trying to shake out some nervous >shareholders) so they (the market makers) can pick up some more shares >cheap. > >There's been lots of chat about NITE beating the whisper number (yes, I >know you can't trust everything you read online). So it seems to me >that when you look at the fundamentals of this company it's a long-term >buy. The charts tell me its oversold. So why does it drop? > >I know this sounds like a naive question but could this be the work of >market makers? If so, how often does this happen? > >NITE may be pulled down today due to the article in Barron's about the >online brokers growth slowing down a bit, but then NITE (which was NOT >mentioned in the article) has a slightly different business the OLB's. > >Any thoughts/comments would be appreciated. > >Dave NITE closed at 52 when the above was written. It is now at 25.5. This is good example of why it is NOT automatically OK to hold a stock for the long-term 'through thick and thin'. Been looking at a lot of charts lately. So if you'd like more examples of why long term holding is not always OK. And remember that the chart broke down LONG before the fundies did. So waiting for the fundies to confirm what the chart is telling you is a sure fire way to get to poor house fast. BTW, there is nothing spectacular about NITE. They are largely dependant on trading volume. If trading volume diminishes, so do their earnings. Do you see trading volume or trading costs go up tenfold in next couple of years? Then why bother with NITE? (Stirring up the pot a little. B^) - -- Johan - - ------------------------------ Date: Wed, 13 Oct 1999 15:21:53 EDT From: Mypiason3@aol.com Subject: [CANSLIM] Daily volume dry ups I am trying to understand the reasoning behind a stock's downturn after an advance. I'll try to explain what I mean using THQI, bear with me. The stock has turned down. I am trying to understand volume and what a volume dry up means. When trading is heavy and the stock is truning down does that mean more people are selling than buying causing the price to drop. I have noticed some large block buying, is this due to people having such large dollar amounts to invest that they buy during downward pressure and hold. I know day traders account for some. When it comes to trading volume dry ups, does it tend to show a reversal point? Does it show that the selling has stopped? What signals does one look for on trading volume dry ups ( etc no price drop, price increase) to enter the stock. If anyone can enlighten me it will be appreciated. - - ------------------------------ Date: Wed, 13 Oct 1999 18:44:08 -0400 From: Craig Griffin Subject: [CANSLIM] Off Topic - Internet Security on Your PC At one point there was a discussion on the group about firewalls and the possible access to one's computer from the internet by hackers or crackers. Here is a link to a related articles: http://www.idg.net/go.cgi?id=172083 http://www.pcworld.com/pcwtoday/article/0,1510,12300+1+0,00.html For the most useful info, go to this web site and click on "Shields Up": http://grc.com/default.htm Included is a test on the security of your PC. - - ------------------------------ Date: Wed, 13 Oct 1999 18:55:59 -0400 From: Craig Griffin Subject: Re: [CANSLIM] Comments from WON ..., Craig Barry, Sorry for the delay in answering. You wrote, >Also, could you talk about what would cause you to sell your stocks. Do you >follow WON's sell rules, or do you use a trailing stop of some kind? If so, >what rules do you follow for them? Barry, I am still trying to get that part right. I have used WON's selling rules on stocks a number of times to choose when to exit (and with good success). For example, in a post which I partially wrote, but never sent, I attempted to identify the dates on which WON might have sold his AOL at 150 and which selling rules and price/volume behavior he was reading. In summary, AOL clearly had a climax run, followed by a couple of downward pointing arrow days. The only thing it lacked was a huge volume reversal day at the top - but many other signs were there. I can see how he might have picked a sell point at 150 both a few days before and a few days after the actual top. Most of the time, however, it seems that the market gives a signal or acts in such a way that I decide to go to 50 or 100% cash based entirely on market action. WON does not advocate this except in stages (25% at each sell signal). By looking at past history, this is decidedly not the way to do it. I sleep better at night, but miss out on potential gains. I think O'Neil would say to take the approach of Sam Funchess and Tim Fisher: don't think too much about your stocks intra-day once you are ahead by 10% or so. Then just let them run unless selling rules come into effect OR the market gives a sell signal. On a market sell signal, just cut back on your weakest 1 or 2 or 3 stocks. Otherwise, how could one possibly get those 100%, 200%, 300%, and 1000% gains? (as Sam says in his post). So, right now, my stock picking is good (Canslim), my entry points are good (breakouts), but my long term holding is very poor. I have considered switching to position trading formally, since that seems to be more my natural inclination, but I am not sure I want to spend so much of my time trading. And, I believe that I may be able to make just as much money with longer term holds, if I can ever get the discipline on that score. BTW, I have never used a trailing stop. I only use a stop based on my initial purchase price and then apply O'Neil's selling "rules" (if the market doesn't "shake me out" first). Actually, they are more like guidelines than rules, because their applicability varies based on the exact situation one is in. This is why they often seem nebulous on the first read. They are perfect however, like Haiku almost. For example, one might have wanted to sell INTC recently at +25% if one was in a "scoop the profits" mode, given the current market and 2 or 3 of the shorter term selling rules which could be applied. OTOH, if one had held YHOO since it was $15, then one might want to only apply "rule" #35: ("After a prolonged upswing, if a stock's 200 dma ... turns into a downtrend ... "). Think about what that would take :). Finally, I ALWAYS use a stop when initially establishing a position of -8% from my initial purchase price. Once I am 8% underwater on a stock, I sell without question or reservation. In that way I do have good discipline. Then you might ask, what about the greater than 8% loosers in the two model portfolios which I posted? Well, they were just that, model portfolios, not my actual current portfolios. I continue to monitor them to see how they will perform in the intermediate term, but it is too much trouble to weed out the stocks that hit stops (keeping up with splits is enough trouble). Best Regards, Craig - - ------------------------------ Date: Wed, 13 Oct 1999 19:06:42 -0400 From: Craig Griffin Subject: Re: [CANSLIM] thqi,nsol,qcom At 10:50 PM 10/12/99 -0400, you wrote: >hello > > >I am looking to take a position in one of these stocks however I am concerned >about the market direction. Anyone have any suggestions. You are looking at some of the right data in your analysis. The market is acting so badly lately that I would be inclined to delay any new purchases for a while. Learn to identify the exact pivot point and buy within 5% of the pivot whenever possible (10% max in a strong market). This would exclude THQI unless it pulls back to give a second chance buy. Same deal with QCOM. (Both may have done so today with today's drops - haven't looked). NSOL has not broken out yet, so it is not eligible on that score. O'Neil says this is a good time for study due to current condition of market. - - ------------------------------ Date: Wed, 13 Oct 1999 19:20:28 -0400 From: Craig Griffin Subject: Re: [CANSLIM] Daily volume dry ups At 03:21 PM 10/13/99 -0400, you wrote: >I am trying to understand the reasoning behind a stock's downturn after an >advance. I'll try to explain what I mean using THQI, bear with me. > >The stock has turned down. I am trying to understand volume and what a >volume dry up means. When trading is heavy and the stock is truning down >does that mean more people are selling than buying causing the price to drop. Generally, there are the same number of buys and sells for a stock (unless the market makers decide to add or reduce inventory). Buying and selling is in an auction type of market, so price changes reflect the market's willingness to buy or sell at a given price. To use a gross example, if I have 1,000,000 shares of THQI to sell, I may find that the closest buyer available to take that large a block is a point or so below the current market. Therefore my trade will "move the market" because all buyers at the starting price and down a point will get filled by my selling. >I have noticed some large block buying, is this due to people having such >large dollar amounts to invest that they buy during downward pressure and >hold. I know day traders account for some. Sometimes. Blocks could be initiated by buyers or sellers or both. When stocks have large daily volume (relative to their average) and move up that is usually bullish. The converse is also true. This is a point made in isolation, there are many other factors. >When it comes to trading volume dry ups, does it tend to show a reversal >point? Does it show that the selling has stopped? Sometimes. O'Neil uses volume dryups in the handle (of a cup with handle formation) to indentify less and less sellers. But this is true (generally) because to get to the handle the stock has just advanced from the bottom of the cup and met resistance close to the old high. This resistance is the sellers at the old high price. The buyers at the old high price are what holds the stock in the handle. Once the sellars "dry up", the buyers have no stock available to buy at just below the old high price anymore. Therefore, a continued buying interest at that point can drive the stock into new high ground (a breakout). In the case of volume dryups in other situations, it can mean a dry up in buyers, sellers, or both (lack of interest in the stock). Once has to look at the dryup in terms of the market, the previous stock action (was it an advance or decline leading to the dryup period), and the stock's behavior coming out of the volume dryup period. IE. There are no simple and easy rules except that the dryup in the handle of a cup/handle formation is usually positive. >What signals does one look >for on trading volume dry ups ( etc no price drop, price increase) to enter >the stock. A breakout from a base pattern. >If anyone can enlighten me it will be appreciated. > >- - - ------------------------------ Date: Wed, 13 Oct 1999 19:26:57 -0400 From: Craig Griffin Subject: Re: [CANSLIM] Knight/Trimark (NITE) Johan, At 08:27 PM 10/13/99 +0200, you wrote: >NITE closed at 52 when the above was written. It is now at 25.5. > >This is good example of why it is NOT automatically OK to hold a stock for >the long-term 'through thick and thin'. > >Been looking at a lot of charts lately. So if you'd like more examples of >why long term holding is not always OK. And remember that the chart broke >down LONG before the fundies did. So waiting for the fundies to confirm >what the chart is telling you is a sure fire way to get to poor house fast. Couldn't agree more. I remember at the time that NITE was trading below its 50 dma and that the moving average had turned down - the definition of an intermediate/short term downtrend. Note that since then it has roughly paralleled the 50 dma on the downside. Best Regards, Craig - - ------------------------------ Date: Wed, 13 Oct 1999 20:20:02 EDT From: Mypiason3@aol.com Subject: [CANSLIM] aeos nice cup with handle break out. With a flat base of the hanlde lasting a month can a market drop break the support level? Any suggestions? - - ------------------------------ Date: Thu, 14 Oct 1999 06:05:56 +0100 From: "Marc Laniado" Subject: Re: [CANSLIM] aeos I bought this when it broke out AEOS fell on weakness in ANF, a related stock, based in rumour also Earnings and the rest of the fundamentals of AEOS are so strong, but this is an auction market. I suspect the market may crash down and then recover quickly again - and AEOS has the best chance of still being the leader in this group Marc - ----- Original Message ----- From: To: Sent: Thursday, October 14, 1999 1:20 AM Subject: [CANSLIM] aeos > nice cup with handle break out. With a flat base of the hanlde lasting a > month can a market drop break the support level? Any suggestions? > > - > > - - ------------------------------ Date: Thu, 14 Oct 1999 06:14:08 +0100 From: "Marc Laniado" Subject: [CANSLIM] ANF, AEOS Abercrombie Speaks Out By Dave Marino-Nachison (TMF Braden) October 13, 1999 In-crowd casual clothier Abercrombie & Fitch (NYSE: ANF), unlike many apparel retailers, doesn't issue regular same-store sales or earnings guidance, and the company's long-term focus alternately pleases and frustrates investors. "The company's view," said company Investor Relations and Communications Director Lonnie Fogel in a StockTalk interview with the Fool this summer, "is I think investors are very shortsighted. We're trying to get people to look beyond the current week, the current month, even beyond the current quarter." That changed today when the company sent out a press release saying third quarter-to-date same-store sales were up 12% after a "very strong" August and September back-to-school season. The back-to-school results, however, were offset in part by "less favorable" results from Abercrombie's regular October sales. Abercrombie also said it remains comfortable with First Call's $0.31 consensus estimate for the quarter, which would represent 29% year-over-year growth from last year's $0.24. Look for results Nov. 9. Why the sudden change of heart from Abercrombie? It's a little baffling, given that the news wasn't particularly earthshaking and that the company's statement that back-to-school sales were strong speaks well to Abercrombie's continued excellence in merchandising and marketing. Keep in mind that where apparel companies are concerned, it's really August and September that matter most anyhow. Nevertheless, somewhere along the line Abercrombie's information management went bad, forcing the company's hand. Starting sometime late last week -- presumably Thursday night or Friday -- the shares started falling like a fraternity pledge after too much paddling. Following today's move, during which nearly 20% of the company's market value was gone by lunchtime, Abercrombie stock was well off its trading range of last week, during which it hung around the upper $30s. Company officials heard enough and decided to stem the flow. Now, their job is to find out what happened and investors need to consider the likelihood that someone in the company -- not necessarily in upper management, it should be said -- leaked information to someone in the "investment community." While that may be par for the course in today's world, when a company works as hard as Abercrombie to manage information flow and something goes awry investors can really pay for it. In that context, Abercrombie's out-of-character move to pre-announce should probably be applauded. Of course, there's still the little matter of the company's quarter. Some will say today's move is basically an indicator that investors were hoping for Q3 results to outdo Street estimates, as if a company's growth is best measured by the computations of a few MBAs as opposed to its own performance and goals. Keep in mind these analysts don't -- or at least shouldn't -- get monthly sales updates either. Besides, as discussed by the Fool's Warren Gump in a recent Fool Plate Special, the company is an impressive performer and it looks to remain one for some time. The Q3 news doesn't appear particularly disappointing. Besides, the once white-hot shares had already been cooling of late, which makes the stock's fall over the last few days look especially outsized. Here's a clue: count the number of brokerages that lowered their long-term ratings on Abercrombie over the last few days. The answer? None. In fact, only one -- Brown Brothers Harriman & Co. -- did any downgrading at all with a short-term "strong buy" cut to "buy." To the contrary, many are urging their clients to start shopping Abercrombie immédiatement. That's more like it. Investors should probably consider Abercrombie stock a serious sale opportunity while supplies last. - - ------------------------------ Date: Thu, 14 Oct 1999 09:31:27 +0200 From: "David S. Pinhasik" Subject: [CANSLIM] qcom I got in at 198 15/16 and happily watched it soar to over 222 and then within 2 days sadly watched it swoosh down to 204. What have I done incorrectly and would it make sense to get out now before I lose money? Thanks! David - - ------------------------------ Date: Thu, 14 Oct 1999 05:55:47 EDT From: Mypiason3@aol.com Subject: Re: [CANSLIM] qcom You can only decide what to do ultimatley however the market has been in a major decline. It is a good company and just released a positive news release. If you sell now you may be shaken out. The news which the market is looking for which I read in a IBD is this Fridays producer prices 0.4 increase is expected and then the higher profile consumer number next Tuesday. A rise of 0.3% overall and 0.1% rise in the core rate are expected. With the action of the market lately and the considerable drop you may be shaken out if you sell now. QCOM is a good company with strong fundamentals. I don't know if this help or confuses you. Good Luck Frank - - ------------------------------ Date: Thu, 14 Oct 1999 11:47:09 +0100 From: Johan Van Houtven Subject: Re: [CANSLIM] aeos At 08:20 PM 13/10/99 EDT, you wrote: >nice cup with handle break out. With a flat base of the hanlde lasting a >month can a market drop break the support level? It can. But that does not mean it will always do that. You can do only one thing. Determine a stop loss, and sell once it gets hit. As always it all depends on your time frame. If you look at a 4 year chart for AEOS, then the return to the base (yesterday 10/13), is merily a blip on the chart. If one bought the breakout from the base approx 10 trading days ago, you probably aren't a happy camper right now. Because you now have a loss. While just a day or three ago you had a nice little profit. And the heavy volume on the return to base doesn't look to good to me, either. Do you know where AEOS will be in 4 years time? I don't. Do you know where the market will be 1, 3, or 6 months form now? I don't. So all one can do is define how much profits you are willing to let go off (in case you bought long ago) or how big of a loss you are willing to take, if you bought the recent breakout. - -- Johan - - ------------------------------ Date: Thu, 14 Oct 1999 15:54:13 +0100 From: Johan Van Houtven Subject: Re: [CANSLIM] Comments from WON ..., Craig Craig, At 06:55 PM 13/10/99 -0400, you wrote: >Most of the time, however, it seems that the market gives a signal or acts >in such a way that I decide to go to 50 or 100% cash based entirely on >market action. WON does not advocate this except in stages (25% at each >sell signal). > >By looking at past history, this is decidedly not the way to do it. I >sleep better at night, but miss out on potential gains. I think O'Neil >would say to take the approach of Sam Funchess and Tim Fisher: don't >think too much about your stocks intra-day once you are ahead by 10% or >so. Then just let them run unless selling rules come into effect OR the >market gives a sell signal. On a market sell signal, just cut back on your >weakest 1 or 2 or 3 stocks. Otherwise, how could one possibly get those >100%, 200%, 300%, and 1000% gains? (as Sam says in his post). That is something I've been wondering about for a long time. How does one get such enormeous gains while still adhering to WON's rules? For example: I can not see how one could have bought at 10 and held it until today, and claim that you have adhered to all of WON's rules. There have been many times where you should have sold YHOO if you look at all the selling rules (stock, group and market wise). On the other hand: There are very few stocks that go up as fast as YHOO did. So the change of picking such a stock and being able to hold it that long is very, very small IMHO. (But i would be VERY glad to be proven wrong. I strive towards being able to buy such stocks, do nothing, sleep well at night, and make gains like that. Don't we all?) >So, right now, my stock picking is good (Canslim), my entry points are good >(breakouts), but my long term holding is very poor. I have considered >switching to position trading formally, since that seems to be more my >natural inclination, but I am not sure I want to spend so much of my time >trading. And, I believe that I may be able to make just as much money with >longer term holds, if I can ever get the discipline on that score. Same here. I do NOT like to spend so much time researching stocks and watching their behaviour closely. I have a long list of things I'd rather do. The question is: Is it realisticly possible? In return for all my time and misery ;^), I demand high returns. I wouldn't bother for 20 or 25%. I'd buy a mutual fund or hand my money over to a capable money manager. Is the market still behaving the same as 5, 10, 20 years ago? I think not (although I haven't done any hardcore research. So this is more informed opinion, than exact science.) Volatily in the market and in individual stocks has increased. Corrections, bear markets are generally shorter than they where in the past. Some stocks make HUGE gains in a couple of days. Some stocks break down hard in just a day or two. Bases are becomming shorter. Some really hot stocks do not show the commonly recognized patterns anymore. The breakout before forming a textbook handle for example. Things are changing. And changes are comming faster and faster. Group rotation is also accelerating. No wonder. As more and more people know about certain patterns, TA, group rotation, etc, the big guys will have to find new and better way to stay ahead of the little guys. >BTW, I have never used a trailing stop. I only use a stop based on my >initial purchase price and then apply O'Neil's selling "rules" (if the >market doesn't "shake me out" first). Actually, they are more like >guidelines than rules, because their applicability varies based on the >exact situation one is in. This is why they often seem nebulous on the >first read. They are perfect however, like Haiku almost. For example, >one might have wanted to sell INTC recently at +25% if one was in a "scoop >the profits" mode, given the current market and 2 or 3 of the shorter term >selling rules which could be applied. OTOH, if one had held YHOO since it >was $15, then one might want to only apply "rule" #35: ("After a prolonged >upswing, if a stock's 200 dma ... turns into a downtrend ... "). Think >about what that would take :). If we had all bought CSCO, MSFT, SUNW, INTC, WMT, LU, etc five or more years ago, we probably wouldn't be on this list discussion issues like we have been discussion? Right? :) >Finally, I ALWAYS use a stop when initially establishing a position of -8% >from my initial purchase price. Once I am 8% underwater on a stock, I sell >without question or reservation. In that way I do have good >discipline. That is one of the few things I am very happy with myself. Having the discipline to sell at a 8% max loss. I know it has saved my *ss a couple of times. It is the main insurance one can 'buy' in the stock market in order to avoid a disaster. >Then you might ask, what about the greater than 8% loosers in >the two model portfolios which I posted? Well, they were just that, model >portfolios, not my actual current portfolios. I continue to monitor them >to see how they will perform in the intermediate term, but it is too much >trouble to weed out the stocks that hit stops (keeping up with splits is >enough trouble). I have been thinking about how to descrease the time i have to put into all of this. Lately I have been toying with the idea of establishing a fund like portfolio of stocks that for some reason (VERY SUBJECTIVE, that is the main reason I have done it yet) I like. Like QCOM, PHCM, NOK, and the likes. Buy small positions and hold for a long time. Haven't defined long, but would like it to be at least a year and preferrably 5 years. All ideas welcome! B^) Always a pleasure to read your posts (only worry about the time I put into posts like this :). - -- Johan - - ------------------------------ Date: Thu, 14 Oct 1999 16:05:04 +0100 From: Johan Van Houtven Subject: Re: [CANSLIM] qcom At 05:55 AM 14/10/99 EDT, you wrote: >QCOM is a good company with strong fundamentals. So is HIFN and SNDK (San Disk). I would like to be a stock holder of either at this moment however. - -- Johan - - ------------------------------ Date: Thu, 14 Oct 1999 11:04:58 -0400 From: Craig Griffin Subject: Re: [CANSLIM] Comments from WON ..., Craig Johan, Thanks for the response! I think you are missing something significant that was clearly referenced in today's IBD (see below). At 03:54 PM 10/14/99 +0100, you wrote: >That is something I've been wondering about for a long time. How does one >get such enormeous gains while still adhering to WON's rules? I'll let you know if I ever figure that one out :). >Is the market still behaving the same as 5, 10, 20 years ago? I think not >(although I haven't done any hardcore research. So this is more informed >opinion, than exact science.) Volatily in the market and in individual >stocks has increased. Corrections, bear markets are generally shorter than >they where in the past. Some stocks make HUGE gains in a couple of days. >Some stocks break down hard in just a day or two. The market is not behaving in a way that has been seen in a long time, BUT, it has behaved like this many times in the past. The market is showing signs of a classic speculative top. These types of tops are typically followed by a bear market of -25% to -50% from the top (about 30% is typical I think) and lasting for several months. We have not seen this in the US in at least a decade. All the signs point to us being in the first month or two of one now. If correct, this will be a slow, grind them out bear, not a quick, V type bear or correction like we have seen over the last few years. These tops often have the following characteristics: Deteriorating internals (advance/decline, new highs/new lows) for a long time before the averages ultimately top. Long rolling tops in the averages with distribution each time the markets start a new advance, so that the ultimate top looks like a long rolling pattern in the averages lasting months. Then it declines (with most stocks already well under water). Lots of speculation in low quality issues (like many of the current crop of internet IPO's). Lots of speculation in other, higher quality, issues (like QCOM and others) which are indeed high quality, but taken to excessive valuations (ultimately valuation does matter, but there are times that they look ridiculous and are actually ok, and other times they look ridiculous and they are just that, ridiculous). Most of the time these things start when the earnings cycles are just reaching their ultimate highs. It is not unusual for earnings to roar ahead for months after the bear market has started and only by the end of the bear market are the earnings actually deteriorating significantly (if they do even then). At that point everyone throws in the towel just as the market bottoms. The market has fully discounted stellar earnings prior to the beginning of the bear market, so ultimately, when those earnings come through it makes no difference. Remember that O'Neil says by the 3rd or 4th stage base, the stock has become too obvious and everyone jumps in, but it is too late. Those bases are prone to breakout failures - I am seeing that happen every day now. >Bases are becomming shorter. Some really hot stocks do not show the >commonly recognized patterns anymore. The breakout before forming a >textbook handle for example. These are either 1) classic signs of second stage bases near the beginning of a new bull market or 2) classic signs of excessive speculation. I choose #2 as best representing today's market. The fact that the tech stocks are the only ones left standing is also a classic sign of a speculative market. (Occassionally they are just an exceptionally powerful stock in the middle of a bull market, but these do not occur several stocks at the time as we are seeing now). >Things are changing. And changes are comming faster and faster. Group >rotation is also accelerating. No wonder. As more and more people know >about certain patterns, TA, group rotation, etc, the big guys will have to >find new and better way to stay ahead of the little guys. The rotation is also possibly a sign of everyone being confused by the current market and jumping to anything that seems like it might work. It is a trading driven market, not a fundies driven market. O'Neil says when the old dogs perk up their heads you can be sure the bull is on its last feeble legs. The old dogs I see now that are perking up their heads again are the Oils and the Semiconductors. They were great groups, then they were dogs, now they are back again (but for leadership groups, they are mighty wimpy). All of the above is opinion on my part, but only slightly. Most of it is gleaned from recent reading and from talking heads on CNBC who seem to know what the score is IMHO (about 1 out of 20 of their guests - like John Murphy the technician, for whom I have great respect). I have brought it together into a cohesive picture which is my current view of the market (opinion). Remember that a typical bear market squeezes you to death (like a bear hug). It takes 1 step forward and 2 steps back. It looks like everything is getting ok, and then you more major deterioration. Then you bounce back most of the way and you think, oh, another shakeout (but it doesn't come all the way back). It nibbles you to death if it doesn't get you with some big bites (like HIFN). Ultimately, they get them all (O'Neil and others say). There is the very rare exception (like CSCO in the past maybe) that comes through a bear ok. The great news is, IF this is a typical bear mkt, after 4 to 9 months we will get another bull mkt lasting a couple of years (with some big money to be made at the beginning of it). >If we had all bought CSCO, MSFT, SUNW, INTC, WMT, LU, etc five or more >years ago, we probably wouldn't be on this list discussion issues like we >have been discussion? Right? :) Right ;). I will be working on that - trying to determine how one holds for that period. As O'Neil says, looks like a good time for study. >Always a pleasure to read your posts (only worry about the time I put into >posts like this :). Yours too, thanks for taking the time. BTW, Today's IBD was exceptional on the General Markets page in showing that rolling top I was talking about and flagging the distribution days. For those of you who are out of the country, and can't get IBD, I will be glad to convert it to a gif or jpg. Email me privately (cagriffin@mindspring.com) if you want a copy (it may take me a day or two or three). The rest of you should make certain to read today's IBD (Investors Corner has been excellent over the last few weeks as it is today, and the General Markets page is required for today). Remember, the library usually has back issues for a month or so. Best Regards, Craig - - ------------------------------ Date: Thu, 14 Oct 1999 12:01:37 -0400 From: Craig Griffin Subject: Re: [CANSLIM] Comments from WON ..., Craig I wrote: >The great news is, IF this is a typical bear mkt, after 4 to 9 months we >will get another bull mkt lasting a couple of years (with some big money >to be made at the beginning of it). Upon re-reading my post, its sounds too certain that we are headed into a bear mkt. Remember, it is just my OPINION. Reading the market indicators and charts is a fact - which you should do for yourself daily. For all I know, things will look terrible in a week or two and we will thus be at a bottom with a followthrough to the upside shortly thereafter. But that is not my main "bet". Simply put, I will change my opinion as soon as the market seems to signal a new uptrend, whether tomorrow, or in 3 months. Just a warning that I do not wish to lead anyone to any rash actions (make your own decisions based upon YOUR read of the market charts and upon the behavior of your stocks - as always). Best Regards, Craig - - ------------------------------ Date: Thu, 14 Oct 1999 12:18:38 -0500 From: "MindSpring User" Subject: Re: [CANSLIM] qcom David, You raise and excellent question that many people never deal with in a disciplined driven way. Anybody can buy a stock but exiting a stock is a nasty little job and plays with your emotions. I believe the Holy Grail lies much closer to the exit than the entrance. First of all I must congratulate you on an excellent buy on a great CS growth stock. By no means am I am authority but I could not have bought it better and, in fact, I did not, getting filled at 204. ******************************************************* So now you are in......what to do? First, you must define your loss and know enough about yourself to decide if you should enter hard stops or mental stops. Most people simply don't have the mental discipline (I don't) to execute mental stops. You must decide. Ideally, you want to look at this loss point as a risk reward ratio. For instance, don't risk more than 10% to make 25%. Result..you are stopped out..fine there is another train leaving the station. ****************************************************** So you have a profit.... what do you do? This depends on your time horizon but I will assume you are the typical CS'er, looking to cut losses at 8-10% and take 25-30% profits most of the time while hanging on to the true leaders for long-term capital gains. In the case of a profit you have to decide how much of your open equity is yours and how much is the markets. For example, a stock rallies 5% from your buy point....should you raise your stop? Well, if you can find a new support area that is about 5% higher you could make your stop loss smaller. In the case of QCOM the only technical stop point was the 9/30 low. Based on your purchase of 199 it was a 9% stop. The time between 0-10% profit is the most difficult time to pick your exit because you have a profit and don't wish to give it all back in exchange for a loss but you also know the stock could move higher. For me anything after a 10% profit I move my stop to breakeven. This rule is simple and effective and yes, it causes me to be shakeout sometimes but the peace of mind of having a risk free trade is more important to me. In the case of QCOM you would have been stopped out today at breakeven because you had a 10% profit at 10/11, causing the breakeven rule to come into effect. After about 15% profit or 2 weeks of trading you can likely start using technically based stops to methodically lock in profits or take your profit at the designated 25-30% level. Whenever you can find a technically based stop it is better to us it rather than a raw percentage that means nothing to the market. In the case of a stock you may think is going to be a huge winner it is better to use a moving average based stop(20- 50 day for example) to give the stock more room. In the case of windfall profit..... they should always be taken for a least half the position. In the case.... of a stock that gaps down against you like HIFN sell at the market and save yourself from further problems. These are simple money management rules I use to help me manage profits and losses. I don't claim to be an expert but thought I you might benefit from my previous mistakes that caused me to follow these rule. By no means did I author any of these rules I simply stole them from much smarter market operators than I. Good Trading, Dave Squires - ----- Original Message ----- From: David S. Pinhasik To: Sent: Thursday, October 14, 1999 2:31 AM Subject: [CANSLIM] qcom > I got in at 198 15/16 and happily watched it soar to over 222 and then > within 2 days sadly watched it swoosh down to 204. > What have I done incorrectly and would it make sense to get out now before I > lose money? Thanks! > David > > > > - > - - ------------------------------ Date: Thu, 14 Oct 1999 18:37:51 +0100 From: "Marc Laniado" Subject: [CANSLIM] Holding on for long term gains Hi all, I am exasperated as everyone. I suspect we have all studied extensively and for the market to be have this way is incredibly frustrating. I would suggest reading the book by Harry Dent - 'The Roaring 2000's investor'. It indicates areas around the world likely to benefit from demographic changes over the next 30 years. It also explains why large growth stocks have outperformed over recent years and why the bull market should continue in the USA till 2008. It's fascinating. Anyhow, I will be looking to invest in mutual funds in Asia, but not Japan, in the near future. Marc - - ------------------------------ End of canslim-digest V2 #720 ***************************** 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.