CANSLIM & Momentum Investing 02 (Aug 09 - Dec 24)

Re: CANSLIM & Momentum Investing 02 (Nov 09 - Dec 11)

Postby kennynah » Tue Sep 20, 2011 4:33 am

well, i suppose if you are young fellow, in your twenties, then by all means, buy and hold for 50 years... and historical data does support the notion that markets will be higher by then...

but you see, not every one has that 10mil from the start to invest... most people trade for a living...to pay bills, etc. so, the buy and hold concept is theoretically nice.
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Re: CANSLIM & Momentum Investing 02 (Nov 09 - Dec 11)

Postby winston » Tue Sep 20, 2011 5:44 am

sesdaqfan wrote:
winston wrote:TOL:-

If you think that Market Direction is not really that important, this past few weeks is proof that Market Direction is very important.


how do u propose to determine that. (the market direction)


I lent my O'Neil's Book out to a friend.

Anyway, in that book, he has a chapter on Market Direction. Whenever the market is down >0.3% per day, a few times over the past 2 to 3 weeks , Market Direction is weak.

I think millionairemind would be able to comment more on this. He has been an avid follower of this rule.
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Re: CANSLIM & Momentum Investing 02 (Nov 09 - Dec 11)

Postby iam802 » Tue Sep 20, 2011 10:03 am

On 'when to sell' (from CANSlim).

CANSlim has a whole chapter on 'when to sell' and quite an extensive list of signals to look out for.

But, here's the gist.

1. Stop-loss of 7-8%; sell when you are wrong

2. Know when to buy and you have to worry less about when to sell

3. If you gains is more than 20%, take it off the table. He has some rules to this as well. If it moves up 20% in a very short timeframe, it could mean institutional is buying and this could be the big winner. Under this, it is good to hold.

4. A fair number of technical signals to look for. Volume, distribution, price action, channels etc.

5. And I believe, one of the point not explicitly highlighted is know your timeframe from the beginning.
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: CANSLIM & Momentum Investing 02 (Nov 09 - Dec 11)

Postby kennynah » Tue Sep 20, 2011 10:15 am

impressive 802...

itchy mushroom, canslim, and a host of tech indicators, all oso boleh 8-)
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Re: CANSLIM & Momentum Investing 02 (Nov 09 - Dec 12)

Postby winston » Sun Dec 11, 2011 9:32 pm

Why This Market Truism Just Isn’t True by Alexander Green,

In my first book, The Gone Fishin’ Portfolio, I made a confession that startled some readers…

I retired from the investment services industry while I was still in my early 40s, but many of my clients had not become financially independent. This was not because I advised them poorly. I dealt with my clients honestly and gave them the best advice and service I could.

Yet, in many ways, they operated at a disadvantage. Some had a poor understanding of investment fundamentals. Others found it impossible to commit to a long-term investment plan. Many were simply too emotional about the markets, running to cash at the first hint of danger.

Contrarian instincts are rare, too, I learned. Few people are emotionally stirred by low stock prices. But every time there was a correction, a crash, or financial panic, my Scottish blood would surge, my pulse would rise, I’d rub my hands together, and start buying.

My clients, on the other hand, often did just the opposite, sometimes because they were too nervous but often because they bought into the old chestnut that a good investor doesn’t buy into a market downturn.

“The trend is your friend,” they’d say. Or “Don’t try to catch a falling knife.” This is surely the conventional wisdom in some quarters, but it’s not particularly wise. Here’s why …

For the last several months, traders have obsessed over problems in the Eurozone and the strength (or perceived weakness) of the U.S. economy.

Taking a decidedly downbeat view, the market had a pretty horrendous November. But sentiment can turn on a dime and stocks can put on a furious – and completely unexpected – rally.

If you don’t already own stocks, it’s tough to catch the train after it has left the station.

Yet many gurus, including growth-stock advocate William O’Neill and his widely read publication Investor’s Business Daily, often insist that you shouldn’t but a stock unless the market itself is in a confirmed uptrend.

That may make sense in theory, but it often fails in practice. For instance, on page one each day, that paper reports whether the market is in a confirmed uptrend or downtrend. (And sometimes hedges, using language such as “Uptrend Under Pressure.”)

As we all know, this has been a volatile year for the market with the major indices bouncing up and down repeatedly. But you could hardly have chosen a worse strategy than to wait until the market was in a confirmed uptrend before buying.

All that meant was that you bought into every short-term spike and then hit your trailing stops over and over again. (It must feel like banging your head against the wall.)

The Oxford Club has hit a number of its stops this year, too, sometimes protecting profits, other times protecting principal. But by buying great companies when the market was under pressure, we ended up with a lot of attractive entry points and plenty of both realized and unrealized profits.

True, if stocks go into a secular bear market, you can end with losses no matter how well you timed your entry points. However, you can never know whether a market drop is merely a correction or something more ominous until you are looking in the rear-view mirror.

You have to stick your neck out occasionally, pick your spots and buy stocks. If you don’t, what are you going to do? Buy bonds yielding 2.5 percent? Hold a money market paying less than one-tenth of one percent? It’s tough to beat inflation or meet your financial goals that way.

Let me make one thing clear, however. It’s most definitely a mistake to buy a troubled company that’s in a downtrend, no matter which way the broad market is heading. (That only works for those with exceptionally long time horizons – and often not even then.)

But buying great companies when the broad market is a downtrend gives you a chance to obtain good prices on fine long-term investments and take advantage of tradable short-term rallies, too.

The next two months are traditionally one of the strongest periods for the stock market. No one can say, of course, whether that tradition will hold. But it’s a reasonable strategy to buy great companies when the market is down.

If your goal is to sell high, you have to start by buying low. And market corrections – like the one we’ve seen lately – give you an excellent opportunity to do just that.

http://www.investmentu.com/2011/Decembe ... -true.html
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Re: CANSLIM & Momentum Investing 02 (Aug 09 - Dec 12)

Postby winston » Wed Apr 18, 2012 6:51 am

TOL:-

Are you really that smart to be able to tell where's the momentum ?

Just when you think it's going to drop, it goes up 1.5%. And when you think it was going up, it drops 1.5%.

However, "Momentum Investing" may still be useful for very short term trading.

But the time span for trading has been shrinking.

Nowadays, short term trading means either Scalping or Day-Trading.

Try Swinging in this type of market and you will be caught on the wrong side of the trade ....
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Re: CANSLIM & Momentum Investing 02 (Aug 09 - Dec 12)

Postby winston » Sun Jun 10, 2012 5:15 pm

"An object at rest tends to stay at rest, an object in motion tends to stay in motion."

- Isaac Newton
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Re: CANSLIM & Momentum Investing 02 (Aug 09 - Dec 13)

Postby winston » Mon Feb 25, 2013 6:18 am

The Five Characteristics of Momentum by Dr. Scott Brown

The beauty of momentum stocks is there are very simple ways to find them…


Momentum Stock Factor #1: Rising Trend

One of the key traits of a good momentum stock, is a rising stock price for a few weeks or even months.

Solution: Target stocks in a recently rapid-rising uptrend. You can see this by looking at a daily, weekly, or monthly chart looking back over the prior 12 months. The stock is in an uptrend if the current price is higher than any price over the last year.


Momentum Stock Factor #2: Institutional Ownership

The real forces behind stock market momentum are the big institutional players, mutual funds and hedge funds that trade in and out of stocks slowly, compared to the momentum players.

Solution: When large investment houses buy and hold huge blocks of shares, it exerts heavy upward pressure. So look for a strong trend that institutional ownership has been recently increasing.

However, you need to make sure institutions don’t already own too much stock. You don’t want a bunch of paper-profit-rich fund managers who are eager to dump on the public.


Momentum Stock Factor #3: Earnings Surprises

Academic studies of a phenomenon called the “post-earnings announcement drift” have shown that you should search out companies that have beaten analysts’ earnings expectations. Those stocks are the most likely candidates for stellar momentum-based returns over the course of a few weeks or months.


Momentum Stock Factor #4: Brace for Price Reversals (Know When to Fold)

The same studies I mentioned above also show momentum stocks can unexpectedly reverse into a downtrend. For this reason, you should never buy and hold a momentum stock.

Instead, use moving averages as an exit signal. (I recommend five days for the fast-moving average and 20 days for the slow one.) If you see the fast-moving average drop below the slow-moving average, get out immediately.

An even simpler strategy is to trail your stop below the support of the current or prior price consolidation. Don’t crowd the position.

Legendary momentum trader Nicolas Darvas trailed his stops as wide as 19% once his position became profitable.

Solution: Watch for a crossover where the fast-moving average crosses below a slower-moving average.


Momentum Stock Factor #5: Use Trailing Stops

A big problem with momentum stocks is they often drop like a rock after reversing. For that reason, you should always place an initial stop below your entry price. This doesn’t mean you’ll necessarily exit there; you’ll most likely sell on the moving average exit signal before this.

Setting your stops relative to a prior price consolidation allows you to ratchet down your initial risk. Nicolas Darvas used an initial stop that was normally about 5% below his entry price. Very occasionally he accepted a risk up to 9%.

Well-known contemporary momentum trader William J. O’Neil never sets an initial stop lower than 7% below his entry point. This may sound impossible to you if you’re not used to using chart patterns to set your initial stops. This is quite easy once you learn how.

Solution: Stops protect you from heavy losses and take the emotion out of the sell decision.

http://www.investmentu.com/2013/Februar ... stock.html
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Re: CANSLIM & Momentum Investing 02 (Aug 09 - Dec 13)

Postby winston » Sun Aug 03, 2014 8:51 am

The Momentum Effect in the Stock Markets

http://www.youtube.com/watch?v=Hw0EeEpHqAI
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Re: CANSLIM & Momentum Investing 02 (Aug 09 - Dec 14)

Postby winston » Sun Aug 03, 2014 8:54 am

It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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