CANSLIM & Momentum Investing 01 (May 08 - Jul 09)

[Aspellian]

Its also mentioned in the M of CANSLIM that in an indicator sign that Bear Market is here is when stock rally is led by the weaker stocks instead of the Leaders with strong earnings.

This set me thinking when i read CNBC's headline relating to yesterday US market performance:
- "Stock Rally Fizzles but Financials Still Shine"

It seems that there is similarity here. The Curreent Weaklings of the Market are leading the stock rally. I wonder how long this "rally" last...

[iam802]

Aspellian,

I made the same observation for SGX counters today.

Quite a fair number of smaller counters on the Top Volume.

Another round of 'musical chairs' going to start soon.

[kennynah]

...I wonder how long this "rally" last...

haha.... what rally? oh, you mean the Mar rally... party over long long time ago...

[millionairemind]

Its also mentioned in the M of CANSLIM that in an indicator sign that Bear Market is here is when stock rally is led by the weaker stocks instead of the Leaders with strong earnings.

This set me thinking when i read CNBC's headline relating to yesterday US market performance:
- "Stock Rally Fizzles but Financials Still Shine"

It seems that there is similarity here. The Curreent Weaklings of the Market are leading the stock rally. I wonder how long this "rally" last...

Hello A Bro,

Last night even though the mkt did not tank as much (<1% for all 4 indices), but the leading group of stocks classified by IBD100 DIVED 2.9%... The leaders also foretell the mkt direction, that is a stealth sell off..

When leaders go, so does the stock market...

This correction started on May22... I am still waiting to see when the turnaround will happen...

Looks like this round it is going to be a while cos' Winston might be correct to say that it could be the Chinese Water Torture..

We all have to be careful out there... The NYSE Public/Specialist Short ratio moved up from <14 to 17.43... Specialists are covering their shorts while Public is increasing theirs... very soon I hope to see a big break and an intermediate bottom and some sort of technical rebound... (maybe?)

cheers,
mm

[Aspellian]

haha.... what rally? oh, you mean the Mar rally... party over long long time ago...

Hi Kenny,

haha, didnt really mean Mar rally, more refering to last night increase in banks stocks holding up the index.

Hello A Bro,

Last night even though the mkt did not tank as much (<1% for all 4 indices), but the leading group of stocks classified by IBD100 DIVED 2.9%... The leaders also foretell the mkt direction, that is a stealth sell off..

When leaders go, so does the stock market...

This correction started on May22... I am still waiting to see when the turnaround will happen...

Looks like this round it is going to be a while cos' Winston might be correct to say that it could be the Chinese Water Torture..

We all have to be careful out there... The NYSE Public/Specialist Short ratio moved up from <14 to 17.43... Specialists are covering their shorts while Public is increasing theirs... very soon I hope to see a big break and an intermediate bottom and some sort of technical rebound... (maybe?)

cheers,
mm

Hi MM bro,

maybe there will not be a major selloff... but market always catches everyone by surprise with one of its mood swings, so prob there will be a big drop - maybe a regional govt toppled from inflation strikes... I'm still holding to my agric/ O&G counters as their charts/fundamentals looks ok.. but M of CANSLIM did advocate that one should invest with wind behind your sails.... hmmm... i will rethink my strategy.

Thanks for your advice.
Hope that I will be careful enough

[winston]

I would like to pick your brains on the "N" of CANSLIM.

From the earlier interview with one of the star traders that use CANSLIM:-
<< N is for New Product or Service. Two things here:-
1) the company should be offering a new product or service that is driving earnings and
2) the stock should be emerging from a consolidation range or chart pattern en route to a potential new high

For "N", I normally look for a short-term catalyst that would propel the stock upwards. This could be:-
1) A new legislation
2) A new product or service
3) Positive news flow eg. series of contract wins
4) Announcement by company that they would be looking to do something strategic ie. M&A
5) A potential bidding war for their assets
etc..

What else do you all look for ?

[kennynah]

perhaps....

a new sales territory....

eg...say, aapl, penetrated russia market via a tie up with their national telco to offer 3G iPhone

[helios]

New energy.

2 meanings here:

- new discovery of energy sources/ alternatives?
or
- restructuring, e recruitment/ appointment of new blood?

[iam802]

for 'new product'...

would one consider a new plant (in the case of manufacturers) to be in this category?

new plant = increase capacity (assuming the plant is not build to replace the old one)

[millionairemind]

W,

You covered almost all the bases.

I also look for changes in how they do their existing business.

For eg., I got into STX PO, Courage Marine, DRYS and Diana shipping last year because the BDI was going off the roof. Nothing has changed in their business model, except that the game plan has changed (commodities boom). There is also a difference between them being on spot rates vs contract rates. DRYS and STX PO mostly on SPOT rates so the boom in BDI was good for them.

When BDI tanked, I got out..

Got back into them again in May when I posted on the Bulk Shippers news. The Indian shipper Mercator was easy for a 30-50% pop in 3 weeks when you can back-calculate their earnings just before they release it.

I guess they must have a product/service that is in demand by the market to make it valuable in order for their earnings to accelerate.

Hope this helps.

Regards,
mm