From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #737 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 Friday, November 5 1999 Volume 02 : Number 737 In this issue: [CANSLIM] Cup & Handle Question [CANSLIM] CANSLIM Screening Approach Question [CANSLIM] CANSLIM Screening Approach Question Re: [CANSLIM] Cup & Handle Question Re: [CANSLIM] Cup & Handle Question Re: [CANSLIM] setting a stop? Re: [CANSLIM] ATR Stops Re: [CANSLIM] setting a stop? RE: [CANSLIM] CANSLIM Screening Approach Question RE: [CANSLIM] Cup & Handle Question RE: [CANSLIM] CANSLIM Screening Approach Question Re: [CANSLIM] seasonal behavior and interesting c&h Re: [CANSLIM] CANSLIM Screening Approach Question Re: [CANSLIM] setting a stop? ---------------------------------------------------------------------- Date: Thu, 4 Nov 1999 19:11:37 EST From: FBNAirPlt@aol.com Subject: [CANSLIM] Cup & Handle Question Would AIF (Acceptance Insurance COs (AIF) INSURANCE - Property & Casualty Insurance) be considered a C&H pattern or would it have failed because the right side did not make it back to 15.50 just 14.93? I know the rest of the numbers are not canslim (49/34/c/c/b). I am mainly trying to figure out how much above/below the right side can be in relation to the left side before it would not be considered a C&H formation. Thanks Robert - - ------------------------------ Date: Thu, 04 Nov 1999 16:58:03 -0800 From: Earl Setser Subject: [CANSLIM] CANSLIM Screening Approach Question In the months I've been working with CANSLIM, I have developed a set of "screening" rules that I use to augment the information I get in IBD. Specifically, I look at quarterly and annual earnings growth, and ROE. In many cases, stocks with 85+ EPS numbers in IBD don't show good earnings growth when I check. In other cases, stocks with A/B SPR ratings have ROE well under 17%. My question, for the group: Should I be doing the extra screening? Should I accept an 85+ EPS as the only data I need to verify good earnings growth? And should an A/B SPR rating be the only data I need to verify sales growth and good management? I have often wondered if I'm not pushing some great stocks out with these checks (i.e. QCOM hasn't passed these 2 tests over the last 3 months, but is certainly one of the market leaders. I know IBD factors various numbers together to get their ratings, and maybe that 85+ is really telling me that the overall picture is such that it overrides the shortcomings of one of the numbers. In addition, removing this screening would reduce the time it takes to generate my watch list somewhat (although I would end up with more stocks to look at the charts, so maybe it's really a break-even.) Please let me know what you guys (and gals) think. I have received some excellent advice here in the past, and I'm counting on you all. THANKS!! - - ------------------------------ Date: Thu, 04 Nov 1999 16:58:03 -0800 From: Earl Setser Subject: [CANSLIM] CANSLIM Screening Approach Question In the months I've been working with CANSLIM, I have developed a set of "screening" rules that I use to augment the information I get in IBD. Specifically, I look at quarterly and annual earnings growth, and ROE. In many cases, stocks with 85+ EPS numbers in IBD don't show good earnings growth when I check. In other cases, stocks with A/B SPR ratings have ROE well under 17%. My question, for the group: Should I be doing the extra screening? Should I accept an 85+ EPS as the only data I need to verify good earnings growth? And should an A/B SPR rating be the only data I need to verify sales growth and good management? I have often wondered if I'm not pushing some great stocks out with these checks (i.e. QCOM hasn't passed these 2 tests over the last 3 months, but is certainly one of the market leaders. I know IBD factors various numbers together to get their ratings, and maybe that 85+ is really telling me that the overall picture is such that it overrides the shortcomings of one of the numbers. In addition, removing this screening would reduce the time it takes to generate my watch list somewhat (although I would end up with more stocks to look at the charts, so maybe it's really a break-even.) Please let me know what you guys (and gals) think. I have received some excellent advice here in the past, and I'm counting on you all. THANKS!! - - ------------------------------ Date: Thu, 4 Nov 1999 17:42:22 -0800 (PST) From: rolatzi Subject: Re: [CANSLIM] Cup & Handle Question i'm not sure that this issue is really that the right side didn't make it exactly back to the left side value. I can't seem to find in HTMMIS where he specifies. The major problem is the overhead supply all the way down from 24.5. In fact the pattern looks more like a W or even a triple bottom 4/23, 9/17 10/22 on the weekly chart. At the moment the excursion up to near 15 just about attains the middle of the W but then fails back. A close above 15 would be very constructive and would be clear sailing to 18.5 or so where you would encounter resistance. That's how i would analyze the chart. BTW it is clear that the overhead supply has been taken care of for BRCM. Good call at a good time. That sucker should take off from here. About CREE: it has topped off just around where the upper channel line is. I looks like a reentry point should be around 38-39. Ciao, rolatzi - --- FBNAirPlt@aol.com wrote: > Would AIF (Acceptance Insurance COs (AIF) INSURANCE - > Property & Casualty > Insurance) be considered a C&H pattern or would it have failed > because the > right side did not make it back to 15.50 just 14.93? I know > the rest of the > numbers are not canslim (49/34/c/c/b). I am mainly trying to > figure out how > much above/below the right side can be in relation to the left > side before it > would not be considered a C&H formation. > > Thanks > Robert > > - > > ===== __________________________________________________ Do You Yahoo!? Bid and sell for free at http://auctions.yahoo.com - - ------------------------------ Date: Thu, 4 Nov 1999 19:51:52 -0800 From: "Patrick Wahl" Subject: Re: [CANSLIM] Cup & Handle Question From: FBNAirPlt@aol.com Date sent: Thu, 4 Nov 1999 19:11:37 EST > Would AIF (Acceptance Insurance COs (AIF) INSURANCE - Property & Casualty > Insurance) be considered a C&H pattern or would it have failed because the Nope, definitely nothing like a C&H. Remember, a C&H is first of all a correction to a previous advance, so AIF fails this first criteria, forgetting anything else about the pattern. Take a look at Nokia (NOK) for a very good example of what a C&H should look like. You can see the previous advance that stopped and became the left side of the cup around 7/19, the correction that took the stock down to 81, so about a 17% correction, which isn't bad, right side of cup formed on 10/11, then the handle and breakout on heavy volume. BTW, thanks to whoever posted the note on Nokia a couple of weeks ago, I hadn't been tracking it until then. - - ------------------------------ Date: Thu, 4 Nov 1999 22:22:26 EST From: CHaines427@aol.com Subject: Re: [CANSLIM] setting a stop? I would appreciate learning where one finds ATR for a stock? - - ------------------------------ Date: Thu, 4 Nov 1999 21:25:12 -0600 From: "John Adair" Subject: Re: [CANSLIM] ATR Stops I have also been using the Tharp method of stops and so far I have 60 stocks in a papertrade account .it appears it will be very successful. - ----- Original Message ----- From: Bob Amend To: Sent: Wednesday, November 03, 1999 7:37 PM Subject: Re: [CANSLIM] setting a stop? > Earl, > > Please keep us informed how this method is working out. > > ----- Original Message ----- > From: Earl Setser > To: > Sent: Tuesday, November 02, 1999 10:44 PM > Subject: Re: [CANSLIM] setting a stop? > > > > I am playing around with an ATR approach. (Average True Range). What I > am > > doing is using Stock Closing High - 3.5 X ATR to set a stop. When the > > market shows weak, I am using 2.5 X ATR. Note, it might be better to use > > daily high, but I'm only using closing prices to generate the stop and to > > evaluate when the stock has gone below the stop. I've only just started > > this a month or so back, so I'm not gonna tell you this is a great > > approach. The goal is to give the stock room to move within a range > larger > > than its normal daily volatility. FWIW, I am using the 20 day ATR. This > > is just one idea for you to consider, as always, make ya take your own > > chances. > > > > For CREE, the ATR is 2.4 right now. The highest close is today's close > 45.25 > > > > 45.25 - 2.4*3.5 = 36.85 (3.5 ATR Stop) > > 45.25 - 2.4*2.5 = 39.25 (2.5 ATR Stop) > > > > There were some other factors suggested on this group a while back. I > > think someone suggested a higher ATR for a hard stop while using a smaller > > multiplier as a mental stop. GOOD LUCK!! > > > > > > > > At 11:45 AM 11/2/99 -0500, you wrote: > > >Hi, > > > > > >I bought CREE at $38.50, so right now I'm up about 16%. Any advice on > > >where to set a stop loss order? Would it be a good idea to set it for > > >the 13-day or 50-day EMA (I get these numbers from ClearStation) and > > >adjust it up daily? Or would I be better off just making sell decisions > > >based on the closing price, and entering sale orders overnight? Any > > >advice would be appreciated. Thank you. > > > > > > > > > > > >- > > > > > > > > > > > > > > > - > > > > > > > - > > - - ------------------------------ Date: Thu, 04 Nov 1999 21:46:06 -0800 From: Earl Setser Subject: Re: [CANSLIM] setting a stop? I use charts at Marketwatch. They aren't the main charts anymore, but are still accesible. You can try: http://cbs.marketwatch.com/data/_charts/achart.htx The defaults setup doesn't seem to work consistently. I generally go in and set up a 20 day ATR as default, and then run through the stocks I am holding. At 10:22 PM 11/4/99 EST, you wrote: >I would appreciate learning where one finds ATR for a stock? > >- > > > - - ------------------------------ Date: Thu, 4 Nov 1999 22:17:24 -0800 From: "mikelu" Subject: RE: [CANSLIM] CANSLIM Screening Approach Question "In other cases, stocks with A/B SPR ratings have ROE well under 17%." Do you mean the SMR rating? I've been using Daily Graphs EPS>= 75 and RS>=80 (75 sometimes) and SMR=A-B to make a list of around 200 stocks that I do daily scans against. (I'm doing a little differently than CANSLIM, looking for 20-day breakouts.) Anyway, then I check my list of breakouts for the day against Daily Graphs for Funds <= 30%, ROE>=17%. I have also noticed stocks where the SMR didn't seem to fit with the ROE. JDSU, for example, has SMR A, but ROE is only 3%. Part of this could be explained by SMR being a relative ranking comparing stocks in the same group. Still, I've generally been screening out stocks with ROE < 17% and Funds > 30%, and it still leaves plenty to buy. Mike - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Earl Setser Sent: Thursday, November 04, 1999 4:58 PM To: canslim@xmission.com Subject: [CANSLIM] CANSLIM Screening Approach Question In the months I've been working with CANSLIM, I have developed a set of "screening" rules that I use to augment the information I get in IBD. Specifically, I look at quarterly and annual earnings growth, and ROE. In many cases, stocks with 85+ EPS numbers in IBD don't show good earnings growth when I check. In other cases, stocks with A/B SPR ratings have ROE well under 17%. My question, for the group: Should I be doing the extra screening? Should I accept an 85+ EPS as the only data I need to verify good earnings growth? And should an A/B SPR rating be the only data I need to verify sales growth and good management? I have often wondered if I'm not pushing some great stocks out with these checks (i.e. QCOM hasn't passed these 2 tests over the last 3 months, but is certainly one of the market leaders. I know IBD factors various numbers together to get their ratings, and maybe that 85+ is really telling me that the overall picture is such that it overrides the shortcomings of one of the numbers. In addition, removing this screening would reduce the time it takes to generate my watch list somewhat (although I would end up with more stocks to look at the charts, so maybe it's really a break-even.) Please let me know what you guys (and gals) think. I have received some excellent advice here in the past, and I'm counting on you all. THANKS!! - - - - ------------------------------ Date: Thu, 4 Nov 1999 22:27:31 -0800 From: "mikelu" Subject: RE: [CANSLIM] Cup & Handle Question I wanted to mention that cup and handle isn't the only pattern to look for. In my notes from a WON workshop, he mentioned cup and handle, saucer and handle, and flat base. I think the important thing is closing above the pivot on high volume. Mike - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of FBNAirPlt@aol.com Sent: Thursday, November 04, 1999 4:12 PM To: canslim@lists.xmission.com Subject: [CANSLIM] Cup & Handle Question Would AIF (Acceptance Insurance COs (AIF) INSURANCE - Property & Casualty Insurance) be considered a C&H pattern or would it have failed because the right side did not make it back to 15.50 just 14.93? I know the rest of the numbers are not canslim (49/34/c/c/b). I am mainly trying to figure out how much above/below the right side can be in relation to the left side before it would not be considered a C&H formation. Thanks Robert - - - - ------------------------------ Date: Fri, 05 Nov 1999 09:11:53 -0800 From: Earl Setser Subject: RE: [CANSLIM] CANSLIM Screening Approach Question Yes, I did mean SMR. And I've also noticed that there are stocks with good SMR ratings, but low ROE. A quick check of last weeks screen shows that I looked at 51 stocks that had passed my initial screen and an EPS check. Of these 51, 16 failed the ROE check. I actually look at SMR after this, however, ALL of these 16 passed the SMR A/B test. 10 of these stocks ranked an A, 5 were a B, and one had no rating (ASE). IBD defines SMR as a combination of 4 factors: Sales growth for the last 3 qtrs, before and after tax margins and ROE. I'm guessing that these companies with low ROE and high SMR have excellent sales growth and profit margins or maybe an expanding ROE. At 10:17 PM 11/4/99 -0800, you wrote: >"In other cases, stocks with A/B SPR ratings have ROE >well under 17%." > >Do you mean the SMR rating? I've been using Daily Graphs EPS>= 75 and RS>=80 >(75 sometimes) and SMR=A-B to make a list of around 200 stocks that I do >daily scans against. (I'm doing a little differently than CANSLIM, looking >for 20-day breakouts.) Anyway, then I check my list of breakouts for the day >against Daily Graphs for Funds <= 30%, ROE>=17%. I have also noticed stocks >where the SMR didn't seem to fit with the ROE. JDSU, for example, has SMR A, >but ROE is only 3%. Part of this could be explained by SMR being a relative >ranking comparing stocks in the same group. > >Still, I've generally been screening out stocks with ROE < 17% and Funds > >30%, and it still leaves plenty to buy. > >Mike >-----Original Message----- >From: owner-canslim@lists.xmission.com >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Earl Setser >Sent: Thursday, November 04, 1999 4:58 PM >To: canslim@xmission.com >Subject: [CANSLIM] CANSLIM Screening Approach Question > > >In the months I've been working with CANSLIM, I have developed a set of >"screening" rules that I use to augment the information I get in IBD. >Specifically, I look at quarterly and annual earnings growth, and ROE. In >many cases, stocks with 85+ EPS numbers in IBD don't show good earnings >growth when I check. In other cases, stocks with A/B SPR ratings have ROE >well under 17%. My question, for the group: > >Should I be doing the extra screening? Should I accept an 85+ EPS as the >only data I need to verify good earnings growth? And should an A/B SPR >rating be the only data I need to verify sales growth and good management? > >I have often wondered if I'm not pushing some great stocks out with these >checks (i.e. QCOM hasn't passed these 2 tests over the last 3 months, but >is certainly one of the market leaders. I know IBD factors various numbers >together to get their ratings, and maybe that 85+ is really telling me that >the overall picture is such that it overrides the shortcomings of one of >the numbers. > >In addition, removing this screening would reduce the time it takes to >generate my watch list somewhat (although I would end up with more stocks >to look at the charts, so maybe it's really a break-even.) > >Please let me know what you guys (and gals) think. I have received some >excellent advice here in the past, and I'm counting on you all. THANKS!! > > >- > > >- > > > - - ------------------------------ Date: Fri, 5 Nov 1999 12:30:37 -0600 From: "walter nusbaum" Subject: Re: [CANSLIM] seasonal behavior and interesting c&h - ----- Original Message ----- From: rolatzi To: Sent: Sunday, October 31, 1999 12:12 PM Subject: [CANSLIM] seasonal behavior and interesting c&h (Snip) > I run my 403B with only Fidelity Mutual funds (since I am > restricted to that) and concentrate on Select funds which are > all sector funds. Last week I jumped into FSTCX, which is > Fidelity Select Telecommuncations which I note has traced out a > perfect cup and handle, to wit, the left side on 7/16/99 at > 79.68 which bottomed on 8/10/99 at 67.90 which formed the right > side on 10/11 at 78.15 and which broke out on 10/28 at 78.30. I > mention this because perhaps it is useful for people interested > in buying into the leading sectors on strong advance. The 10 top > holdings of this fund are: (Snip) > Another fund which traced out almost as classic a cup and > handle was FSDCX (Fidelity select Developing communications). > Its 10 top holdings are (Snip) > In looking over the top 10 holdings, i thinkg the FSDCX is > actually more promising and may pick some up on Monday. > > Ciao, > Rolatzi Rolatzi, Thanks for sharing the C&H approach to mutual funds. I too hold Fidelity's Selects, but also the Van Wagoner(VWEGX) and Profund(UOPSX) families. I use a modified Pankin System for fund selection. http://www.Pankin.com It was specifically developed for use with the Selects, but I find it useful for all the funds in my "universe". After looking over the system, if you think you'd be interested, I have all the numbers that make it work, and I'd be happy to send them to you. Since this is pretty far off list, you may want to dial: wnusbaum@airmail.net FWIW, and if nothing changes today, Pankin's rankings would be: 1. FSLBX(Brokerage) 2. FSPCX(Insurance) 3. FIDSX(Fina Svcs) 4. FSDCX(Dev Comms) 5. FSRBX(Banking) 6. FSPTX(Technology) Best wishes, Walt - - ------------------------------ Date: Fri, 5 Nov 1999 20:23:29 -0000 From: "Marc Laniado" Subject: Re: [CANSLIM] CANSLIM Screening Approach Question Dear Earl, I think the CANSLIM approach is excellent, but it is very difficult to find stocks which match its criteria and still do very well. After finding stocks in good groups, good market (!) and RS > 80, I look for companies providing a product or technology application. Service industries are more difficult. I prefer these companies if they are in a horizontal industry (eg operating systems (MSFT, PHCM), ERP software (SEBL, MSTR), E-business applications (BVSN, CMRC). I check that revenue is increasing fast (>80% and quarterly growth >= annual growth). This is very important as it indicates increasing demand and in technology those with the greatest sales in a single industry (ie market share) have most power and command greatest investor return. I then do a greater fundamentals check which is more sophisticated than the SMR rating and EPS ranks. I specifically look for: 1) gross margins > 40% 2) increasing (consistently) operating and net margins even if initially low (its the increase that's important) 3) low or falling flow ratio (preferably < 2.5) defined as (total current assets - cash and cash equivalents) / (total current liabilities - short term debt) 4) cash and cash equivalents / long term debt ratio >10 5) positive cash flow 6) falling receivables in relation to sales 7) falling inventory in relation to sales These factors usually result in huge earnings increase even when the EPS rank is 70 or so. This is harder work, but more rewarding. I have created a spreadsheet into which I copy and paste information from MS investor so this takes about 1 minute in all for each stock (honest!). Read Red Herring magazine - this is brilliant at finding new companies. Good luck, Marc - ----- Original Message ----- From: Earl Setser To: Sent: Friday, November 05, 1999 5:11 PM Subject: RE: [CANSLIM] CANSLIM Screening Approach Question > Yes, I did mean SMR. And I've also noticed that there are stocks with good > SMR ratings, but low ROE. A quick check of last weeks screen shows that I > looked at 51 stocks that had passed my initial screen and an EPS check. Of > these 51, 16 failed the ROE check. I actually look at SMR after this, > however, ALL of these 16 passed the SMR A/B test. 10 of these stocks > ranked an A, 5 were a B, and one had no rating (ASE). > > IBD defines SMR as a combination of 4 factors: Sales growth for the last 3 > qtrs, before and after tax margins and ROE. I'm guessing that these > companies with low ROE and high SMR have excellent sales growth and profit > margins or maybe an expanding ROE. > > > > At 10:17 PM 11/4/99 -0800, you wrote: > >"In other cases, stocks with A/B SPR ratings have ROE > >well under 17%." > > > >Do you mean the SMR rating? I've been using Daily Graphs EPS>= 75 and RS>=80 > >(75 sometimes) and SMR=A-B to make a list of around 200 stocks that I do > >daily scans against. (I'm doing a little differently than CANSLIM, looking > >for 20-day breakouts.) Anyway, then I check my list of breakouts for the day > >against Daily Graphs for Funds <= 30%, ROE>=17%. I have also noticed stocks > >where the SMR didn't seem to fit with the ROE. JDSU, for example, has SMR A, > >but ROE is only 3%. Part of this could be explained by SMR being a relative > >ranking comparing stocks in the same group. > > > >Still, I've generally been screening out stocks with ROE < 17% and Funds > > >30%, and it still leaves plenty to buy. > > > >Mike > >-----Original Message----- > >From: owner-canslim@lists.xmission.com > >[mailto:owner-canslim@lists.xmission.com]On Behalf Of Earl Setser > >Sent: Thursday, November 04, 1999 4:58 PM > >To: canslim@xmission.com > >Subject: [CANSLIM] CANSLIM Screening Approach Question > > > > > >In the months I've been working with CANSLIM, I have developed a set of > >"screening" rules that I use to augment the information I get in IBD. > >Specifically, I look at quarterly and annual earnings growth, and ROE. In > >many cases, stocks with 85+ EPS numbers in IBD don't show good earnings > >growth when I check. In other cases, stocks with A/B SPR ratings have ROE > >well under 17%. My question, for the group: > > > >Should I be doing the extra screening? Should I accept an 85+ EPS as the > >only data I need to verify good earnings growth? And should an A/B SPR > >rating be the only data I need to verify sales growth and good management? > > > >I have often wondered if I'm not pushing some great stocks out with these > >checks (i.e. QCOM hasn't passed these 2 tests over the last 3 months, but > >is certainly one of the market leaders. I know IBD factors various numbers > >together to get their ratings, and maybe that 85+ is really telling me that > >the overall picture is such that it overrides the shortcomings of one of > >the numbers. > > > >In addition, removing this screening would reduce the time it takes to > >generate my watch list somewhat (although I would end up with more stocks > >to look at the charts, so maybe it's really a break-even.) > > > >Please let me know what you guys (and gals) think. I have received some > >excellent advice here in the past, and I'm counting on you all. THANKS!! > > > > > >- > > > > > >- > > > > > > > > > - > > - - ------------------------------ Date: Fri, 5 Nov 1999 21:44:18 -0600 From: "John Adair" Subject: Re: [CANSLIM] setting a stop? ATR is a standare indicator in metastock. you may find The formula is in the metastock website www.equis.com and look for free stuff and indicators. - ----- Original Message ----- From: To: Sent: Thursday, November 04, 1999 9:22 PM Subject: Re: [CANSLIM] setting a stop? > I would appreciate learning where one finds ATR for a stock? > > - > > - - ------------------------------ End of canslim-digest V2 #737 ***************************** 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.