From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #794 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 Wednesday, January 12 2000 Volume 02 : Number 794 In this issue: [CANSLIM] AOL, the Nets and 'M' [CANSLIM] M Re: [CANSLIM] Why are futures down this morning? Re: [CANSLIM] YHOO & M Re: [CANSLIM] M [CANSLIM] M Theorizing - Zoran - Volatility (OFF TOPIC) [CANSLIM] Re. DG-Online Re: [CANSLIM] M - and the crowd [CANSLIM] 'M' and the 4 policemen [CANSLIM] 'M' and the 4 policemen Re: [CANSLIM] 'M' and the 4 policemen Re: [CANSLIM] 'M' and the 4 policemen Re: [CANSLIM] 'M' and the 4 policemen [CANSLIM] Charts vs. fundamentals Re: [CANSLIM] YHOO [CANSLIM] adv/decline line ---------------------------------------------------------------------- Date: Tue, 11 Jan 2000 22:34:24 -0500 From: Walter Stock Subject: [CANSLIM] AOL, the Nets and 'M' In spite of all the hype, I see the AOL/Time Warner deal as a disaster for Net stocks. AOL has lost $22 billion in market cap since the announcement (according to Tradehard tonight). Because many Nets are market leaders I believe that this may bode ill for 'M' in a wider context. Took some meager profits from the two day rally today. Trading account 100% cash now for the first time since October. Key for tomorrow: the Investor's Intelligence sentiment numbers come out. If you don't want to wait for them in the Thursday IBD, you can check them at: http://www.proinvest.com/home/bulls.htm As usual, these numbers along with close scrutiny of the indices and leadership stocks will be my guide as to when I think 'M' is back. January has been unbelievable so far. Have gone from fully invested, to mostly out, to fully invested again and completely out again in less than two weeks. I'm not recommending this. (Am still down 6% on the year.) Walter Stock Oakville, ON, Canada - - ------------------------------ Date: Tue, 11 Jan 2000 22:57:24 -0500 From: "Zoran Mitrovski" Subject: [CANSLIM] M A thought just hit me. I'll try to write it down as it slowly blurs away from my mind. If more and more people are getting more educated and informed about various do's and don'ts related to trading/investing, what will the market do to continue defying the crowd's consensus? It is a well known fact that historically there has never been this much correlation between the crowd's well-being and the market's rise. At the same time, through the information revolution the crowd is becoming more educated, informed, and armed with various proven and tested "can't fail" strategies. But, weren't these strategies tested over periods during which they were not so well accepted by the crowd and when they actually presented ways for the market to (as usual) defy the crowd's consensus? Hasn't it become excruciatingly easy for the crowd to "make money" in the stock market today? Isn't the crowd's consensus that this should actually be the natural state of affairs? Zoran - - ------------------------------ Date: Tue, 11 Jan 2000 23:41:52 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] Why are futures down this morning? Hi Dan, I didn't see a vocalized reason for it, tho didn't search real hard for one as I expected it. Actually, there was a fairly strong recovery that started in around 7AM or so. I did note that Asia had a bad night of it, and Europe was falling as well by the time I woke up, with no evidence of a recovery there. I would imagine the usual pundits about profit taking after yesterday's strong advance on the Naz. And I consider the quality and quantity of new highs, most esp on Naz, as highly questionable. Upcoming earnings jitters also doesn't help. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: Dan Musicant To: canslim@lists.xmission.com Date: Tuesday, January 11, 2000 9:30 AM Subject: [CANSLIM] Why are futures down this morning? I see the CME futures are sharply off this morning but I don't see anything "on the wire" about it. Does anyone know what's up with that? IBD's "Big Picture" was very bullish. http://www.cme.com/market/gflash.html ? Dan - - - - ------------------------------ Date: Wed, 12 Jan 2000 00:01:32 -0500 From: "Tom Worley" Subject: Re: [CANSLIM] YHOO & M Could be an interesting opening, Tim, and maybe give us a glimpse of just how much money is sitting on the sidelines. There will be the usual "sell on news" now that earnings are out. If they really did fail the whisper nrs, then there will be the predictable conflict between those that just go by the official forecasts, and feel good, and those that rely on the whispers. There will be those that like to buy splits, anticipating the common runup before the split date, and of course there will be those who can't buy big quantities, so a split makes them feel like they have more shares if they buy a little now. Personally, I think the chart looks pretty "toppy", so combined with the after mkt trading, would have to bet on a down day for Yahoo on Wed. Whether it moves down enough for someone selling in the aftermarket to feel good about that sale remains to be seen. Tom Worley stkguru@netside.net chat with me at ICQ # 5568838 get ICQ software at http://www.icq.com/icqhomepage.html - -----Original Message----- From: Tim Fisher To: canslim@lists.xmission.com Date: Tuesday, January 11, 2000 5:25 PM Subject: [CANSLIM] YHOO & M OK prognosticators, tell me what YHOO beating first call by 4 cents but missing whisper numbers by 1 cent and announcing a 2:1 split instead of a 3:1 or even 4:1 ala QCOM does for the market tomorrow? Exuberance? Fear? Irrelevant? P.S. it's trading at 371 on Instinet. Tim Fisher Ore-Rock-On and Pacific Fishery Biologists WWW Sites Tim@OreRockOn.com WWW: http://OreRockOn.com See naked fish and rocks! - - - - ------------------------------ Date: Wed, 12 Jan 2000 12:27:41 +0100 From: Johan Van Houtven Subject: Re: [CANSLIM] M At 05:26 PM 11-01-00 -0500, you wrote: >At 10:44 PM 1/11/00 +0100, you wrote: >>Correction: >> >>At 10:29 PM 11-01-00 +0100, you wrote: >> >Good work, Tamas. >> > >> >It is not a rally failure yet. To get a counter-trend rally failure we have >> >to drop and close below the low of the latest counter-trend rally. >> >>... to drop and close below the low of THE START of the latest >>counter-trend rally. > >Could you explain the difference Johan? When would the low of the latest >counter-trend rally not be the low of the start of the rally? The only >time I can imagine this being true is if the rally starts with a gap up >from the previous day's close. Is there another circumstance? Craig, It is the same indeed. Upon rereading my post I thought my explanation was not clear enough - that's why I added the words THE START. Although anyone with a chart of the Nasdaq could have seen what I meant since in mentioned the exact figure of the recent low: 3711.09. Sorry for the confusion. - -- Johan - - ------------------------------ Date: Wed, 12 Jan 2000 09:49:26 -0500 From: Craig Griffin Subject: [CANSLIM] M Theorizing - Zoran - Volatility (OFF TOPIC) Zoran, You inspired me to pen some thoughts. Most of the following is a kind of market "thought experiment" (aka B.S. session) trying to explain certain market behavior. Not mostly opinion, ALL opinion. Guessing at structural forces, rather than trying to form a directional guess on the current market. Thanks for posting - good to hear from you again. Zoran wrote: >A thought just hit me. I'll try to write it down as it slowly blurs >away from my mind. If more and more people are getting more educated >and informed about various do's and don'ts related to >trading/investing, what will the market do to continue defying the >crowd's consensus? For example, instead of extreme volatility "often" representing some sort of topping action, perhaps that could be flipped on its head. IE. the market could "use" extreme volatility to shake out the weak holders, and use a smooth rounded curve to represent topping action - wait it already does that too, aka rounded top. Or maybe it could just not top, but drop 40% one day following a new high - it never does that (and probably will not barring some catastrophe out of left field). My thoughts are that most of the market's behavior is based on crowd psychology COMBINED with the perceived fundamentals of the economy and individual companies. The market's "style" (manic, depressive, uncertain, analytical) varies with that perception, but there is rarely anything really new. Because the psychology of people doesn't change that much over time (are we more enlightened now than 100 yrs ago, 50 yrs ago? ... do the new antidepressants, like Prozac, affect things much? ... not IMHO). Also, the economy is well known to cycle, driven by population growth, wars, technology, natural resources, energy (so the cycle is a lot longer this time IMHO due to strong educated population growth, accelerating innovation, lack of major wars, adequate resources and energy). If the Fed does not allow too much (or too little) money to be printed, and the terrorists don't nuke some major cities, and a metor doesn't strike, then that fellow, Dent ("The Great Boom Ahead") may be right. Therefore, in general, the same things will continue to work in the market, in slight variations, IMO. One possible scenario that explains volatility at the top is: The institutions, etc have decided to lighten their positions and take profits. They do so on advances like we had Friday and Monday, often at predetermined price ranges for their holdings. So, if their holding drop below certain prices, they stop selling (things look cheap enough to hold again). If prices advance to a certain point they sell. But, here is where the volatility theory comes in, they don't buy when the market is dropping because they are simply waiting for it to go back up so they can sell some more ... they are no longer looking to buy. Therefore, drops are exacerbated, even when on lower volume (not many buyers around). Overnight, the bulls look for the bargains and do their buying the next morning. By late in the session, they have spent their bullets and the bears are continuing to sell, overwhelming them and the market drops late in the day. Volatility can, of course, also simply be caused by uncertainty. Now that earnings season is upon us, there is lots of repositioning, both before a company announces, and then once they announce based on the new information. Therefore an earnings season can lead to volatility, especially with a sharp advance leading into it. In that case, most of the preceding paragraph possibly would not apply. Best Regards, Craig - - ------------------------------ Date: Wed, 12 Jan 2000 15:05:31 EST From: JANSI1AUG1@aol.com Subject: [CANSLIM] Re. DG-Online Group: This might apply to some of you. I asked Dan from DG if I could copy and paste his comments on DG's connectivity relating to using AOL as the DG-Online subscriber's ISP, and this is what he said: One thing that I did want to tell you is that while you communicate directly with our mainframe to log in, in the coming months we will move to a browser (Web) based program. Please keep this in mind as we will then only use port 80, the WWW to use our service [Presently DG uses port 1066 for its charting, and port 80 for some of the other DG-Online services]. It is for this reason that you might consider finding a free service as a back up until we are all port 80. AOL is much better with this path, though they do have congestion on their network at various times. (This was in reply to my question why I couldn't get on sometimes using AOL) Also, since I'm writing anyway, Mary made a good point as to adhering to a mentioned stock without investigating the stock recommended/suggested by members of this group. Tom, in my opinion, is a very good analyst, and I like reading his weekly stock lists. However, I analyze the stocks headlined before I consider investing in them. Even if a stock is a very good buy, it is reckless to invest/speculate because Tom, Johan, Earl and the others who provide stocks (which act I am not criticizing at all; after all that is why there is a Canslim stock group. However, while I look at each stock that is mentioned, I will then evaluate it myself) cannot tell when to sell, or if they misanalyzed the stock they cannot tell you immediately to get out of it. jans - - ------------------------------ Date: Wed, 12 Jan 2000 15:17:18 -0500 From: Walter Stock Subject: Re: [CANSLIM] M - and the crowd Hi Zoran, Thank you for a thought provoking post. I am not sure that it is all that easy for the crowd to make money in the market today. Although I made over 100% last year, this year so far I am down about 6% and have moved to cash because of 'M'. I think I am in a minority. Everything I see and hear tells me that the crowd is still very heavily invested, with many on margin. Today's Investor Intelligence survey shows the bullish majority increasing to 54.5% and the number of bears down to 26.4%. The earlier AAII survey shows bulls at 75% (an all time record), and bears down to a paltry 13%. So I don't think that the final chapter is yet written. True, many have made good money in '99, and some have made a lot of money, but a point to remember is that the crowd is not always wrong. During a bull trend, the crowd is always right for a time just as the top is approached, and people are still busy joining the bullish majority. Once bullish consensus peaks, and the supply of fresh bulls and fresh money runs out, in that moment the crowd is at its biggest... and becomes wrong. The final proof comes when a long term trendline is broken, confirming that the dominant market crowd has lost its power. Walter Stock Oakville, ON, Canada Zoran Mitrovski wrote: > A thought just hit me. I'll try to write it down as it slowly blurs > away from my mind. If more and more people are getting more educated > and informed about various do's and don'ts related to > trading/investing, what will the market do to continue defying the > crowd's consensus? It is a well known fact that historically there has > never been this much correlation between the crowd's well-being and > the market's rise. At the same time, through the information > revolution the crowd is becoming more educated, informed, and armed > with various proven and tested "can't fail" strategies. But, weren't > these strategies tested over periods during which they were not so > well accepted by the crowd and when they actually presented ways for > the market to (as usual) defy the crowd's consensus? Hasn't it become > excruciatingly easy for the crowd to "make money" in the stock market > today? Isn't the crowd's consensus that this should actually be the > natural state of affairs? > > Zoran - - ------------------------------ Date: Wed, 12 Jan 2000 15:33:04 -0500 From: Walter Stock Subject: [CANSLIM] 'M' and the 4 policemen I will make this brief as I have been taking up too much bandwidth recently. I spoke to a broker friend yesterday evening, and he told me that on Monday, four uniformed policemen came into his brokerage office together... to open up trading accounts! Seems that just about everyone and Aunt Mabel are flooding into his brokerage and clamoring for trading accounts. His comment? "Once we start signing up the uniformed cops, I know the end is near." Walter Stock Oakville, ON, Canada - - ------------------------------ Date: Wed, 12 Jan 2000 15:33:42 -0500 From: Walter Stock Subject: [CANSLIM] 'M' and the 4 policemen I will make this brief as I have been taking up too much bandwidth recently. I spoke to a broker friend yesterday evening, and he told me that on Monday, four uniformed policemen came into his brokerage office together... to open up trading accounts! Seems that just about everyone and Aunt Mabel are flooding into his brokerage and clamoring for trading accounts. His comment? "Once we start signing up the uniformed cops, I know the end is near." Walter Stock Oakville, ON, Canada - - ------------------------------ Date: Wed, 12 Jan 2000 21:37:24 +0100 From: Johan Van Houtven Subject: Re: [CANSLIM] 'M' and the 4 policemen At 03:33 PM 12-01-00 -0500, you wrote: >His comment? "Once we start signing up the >uniformed cops, I know the end is near." LOL! I'll give it my best shot at guessing when the REAL end of this multi-decade bull run might end: The end is near once this mailing list is littered with NRA's like me. B^) - -- Johan - - ------------------------------ Date: Wed, 12 Jan 2000 12:52:22 -0800 (PST) From: Anindo Majumdar Subject: Re: [CANSLIM] 'M' and the 4 policemen Are you shorting anything ? Looks like that might be profitable. The fact that YHOO and ARBA tanked after great earnings shows that there is more downside left amongst the internet leaders. > > At 03:33 PM 12-01-00 -0500, you wrote: > >His comment? "Once we start signing up the > >uniformed cops, I know the end is near." > > LOL! > > I'll give it my best shot at guessing when the REAL end of this > multi-decade bull run might end: > > The end is near once this mailing list is littered with NRA's like me. > > B^) > > > > -- Johan > > > > - > > > - - ------------------------------ Date: Wed, 12 Jan 2000 16:01:40 -0500 From: Sam Funchess Subject: Re: [CANSLIM] 'M' and the 4 policemen Being a long term investor of YHOO, I can tell you that over the past 1 1/2 years of earnings reports, YHOO has gone down on most if not every earnings announcement. So I would not perceive this to be a market indication. Sam Anindo Majumdar wrote: > Are you shorting anything ? Looks like that might be profitable. The fact that > YHOO and ARBA tanked after great earnings shows that there is more downside > left amongst the internet leaders. > > > > > > At 03:33 PM 12-01-00 -0500, you wrote: > > >His comment? "Once we start signing up the > > >uniformed cops, I know the end is near." > > > > LOL! > > > > I'll give it my best shot at guessing when the REAL end of this > > multi-decade bull run might end: > > > > The end is near once this mailing list is littered with NRA's like me. > > > > B^) > > > > > > > > -- Johan > > > > > > > > - > > > > > > > > - - - ------------------------------ Date: 12 Jan 2000 14:10:16 -0800 From: "Tim Fisher" Subject: [CANSLIM] Charts vs. fundamentals Cramer had an excellent article yesterday about charts vs. fundamentals. I think he is right on. Trends, Charts and Earnings Season By James J. Cramer 1/11/00 7:45 AM ET Just when we thought we only had to worry about charts and momentum, earnings season begins anew. We've been on "trend" holiday, meaning that we can buy or sell whatever we want regardless of the near-term fundamentals. But once earnings season kicks in, we have to worry about nitty-gritty expectations and cold, hard facts. Believe me, it is much more fun to worry only about trends and charts. On our TV show, there's this great segment in which Adam Lashinsky and Gary B. Smith go at it about the charts. Smith is so confident about his charts and Lashinsky so confident about his facts that you would think these two are describing different animals entirely. And they are. Smith is describing the pattern that a company's chart makes. Lashinsky is trying to figure out how a company is doing. For most of the past 200 years, these two, the chart and the fundamentals, went hand in hand. But now, the reason why this one segment is so fascinating is that the two rarely have that much to do with each other. Except during earnings season. During this period, it is difficult for the fundamentals and the charts not to intertwine because the fundamentals are so in your face. Analysts directly assess whether a stock should continue to be held, whether it should be dumped or whether more should be bought. Take Yahoo! (YHOO:Nasdaq - news), which is first on the earnings docket. For most of the year, I just stay long Yahoo!, buying it on the dips, letting some go on extreme enthusiasm. I am pretty fearless about it. During earnings period, though, I fear the stock. Yahoo!'s brilliant stock action creates its own benchmark. It makes it so there is no room for disappointment from the benchmarks that are set for it. And what exactly are those benchmarks? That's another difficult part of earnings season: The benchmarks are fluid and always getting tougher intraquarter. Let's take a nonearnings benchmark, like Christmas sales for Amazon (AMZN:Nasdaq - news). As we got closer and closer to the date when the sales were about to be released, I kept hearing about the bar being raised and raised again, to the point that there was no way that Amazon could trump expectations. Yahoo! is a bit like that. I think there are people out there who now have expectations that couldn't possibly be exceeded. That makes for bogus disappointment, but disappointment nonetheless. To make matters worse, with most of the "new" companies, earnings season brings another period of supply. I don't even bother to look at the lockup arrangements with Yahoo! anymore; I just figure that a whole new tranche of stock can enter the market that wasn't there before. In fact, I worry about it less with Yahoo! because so far every venture capitalist and insider who has sold stock has sold it wrongly. The stock has continued to climb. But let's get back to that Chart vs. Fundy thing again. In this market, for 361 days of the year, I now believe that Gary B. Smith's view may be more important than Adam Lashinsky's. (I know that might be shocking for the fundamentalists out there, but what can I say? This market has changed in many ways.) But four times a year, Lashinsky's ilk rules. Those are the times when the companies report. During those days, the market reverts to its old self, with quick judgments that violate trends and interrupt patterns. Tim Fisher Ore-Rock-On and Pacific Fishery Biologists WWW Sites Tim@OreRockOn.com WWW: http://OreRockOn.com See naked fish and rocks! - - ------------------------------ Date: 12 Jan 2000 14:14:00 -0800 From: "Tim Fisher" Subject: Re: [CANSLIM] YHOO Most long term holders (not to mention every analyst that spoke up) perceive this to be a rare buying opportunity for YHOO. I am waiting patiently. If M doesn't tank I'm looking to put some of my Dell cash into that volatile piece of, well, you know. If ya can't beat em... On 01:01 PM 1/12/00 , Sam Funchess Said: >Being a long term investor of YHOO, I can tell you that over the past 1 >1/2 years >of earnings reports, YHOO has gone down on most if not every earnings >announcement. So I would not perceive this to be a market indication. > >Sam > >Anindo Majumdar wrote: > > > Are you shorting anything ? Looks like that might be profitable. The > fact that > > YHOO and ARBA tanked after great earnings shows that there is more downside > > left amongst the internet leaders. > > > > > > > > > > At 03:33 PM 12-01-00 -0500, you wrote: > > > >His comment? "Once we start signing up the > > > >uniformed cops, I know the end is near." > > > > > > LOL! > > > > > > I'll give it my best shot at guessing when the REAL end of this > > > multi-decade bull run might end: > > > > > > The end is near once this mailing list is littered with NRA's like me. > > > > > > B^) > > > > > > > > > > > > -- Johan > > > Tim Fisher Ore-Rock-On and Pacific Fishery Biologists WWW Sites Tim@OreRockOn.com WWW: http://OreRockOn.com See naked fish and rocks! - - ------------------------------ Date: Wed, 12 Jan 2000 21:14:47 -0800 From: "Patrick Wahl" Subject: [CANSLIM] adv/decline line Interesting comment in Business Week - they point out that the NYSE has 884 preferred stocks listed, and they tend to trade more like bonds than stocks, therefore, as likely to track the bond market as the stock market, and with the recent decline in bond prices they have trended down as well. So they say the A/D line on the NYSE is not as bad as it looks, since so much of it can be attributed to falling bond prices. Speaking of which, I'm sure most have noticed that 30 yr. bond yields have risen to 6.7%, quite a rise, probably explains quite a bit of recent troubles in the stock market. - - ------------------------------ End of canslim-digest V2 #794 ***************************** 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.