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

Re: CANSLIM & Momentum Investing

Postby winston » Wed Jul 02, 2008 3:05 pm

Hi San, k, 802 and MM. Thxs for the kind comments. Take care, Winston
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118541
Joined: Wed May 07, 2008 9:28 am

Re: CANSLIM & Momentum Investing

Postby Aspellian » Fri Jul 04, 2008 12:25 am

Hi MM bro,

I will like to seek your advice on the following CANSLIM questions:

1) is it possible for formation of cup and handle in a bear market / turbulent market? and if so, do we still follow the signs or its less effective?

2) in a bear market scenario, most stocks that meet "CAN" will have fallen off their peak and drifted down. even when a cup handle is formed, the breakout will not be a "new high" so there's great resistence. does it mean that CANSLIM does not work well in such a bear environment?

- assume that in both scenario that market tide turns for a rebound of share price and "M" is fulfilled within a bear market.

:)

PROMISE, PASSION, PEACE, POWER, PURPOSE, PLAN, PATIENCE, PERSEVERANCE, PROTECTION
DELIGHT, DISCIPLINE, DILIGENT, DETERMINATION, DESIRE

"Its not whether you're right or wrong thats important, but how much money you make when you're right and how much you lose when you're wrong." - Warren Buffet
User avatar
Aspellian
Boss
 
Posts: 1552
Joined: Fri May 23, 2008 8:53 am

Re: CANSLIM & Momentum Investing

Postby millionairemind » Fri Jul 04, 2008 9:02 am

Hi A Bro,

In the mkt anything is possible.

The only problem is that if the mkt is in a down trend, it is very difficult for a stock to blast out of the gate with strong institutional support. 3 out of 4 growth stocks follow the market trend.

The stocks that a CANSLIM practitioner will buy are usually market leaders. For eg., Mastercard, DRYS (last year), Potash, Visa etc... When market leaders break down like it is doing right now, the overall market follows.

I don't open long positions in the US market when mkt is in a correction.

CANSLIM followers will raise cash once distribution days starts appear frequently and go to full cash (if possible) in a correction.

I guess the bottom line is, you want the overall market trend to be up before going long cos' it is like having tail wind or wind beneath your wings... helping you soar even higher.

I hope this helps.

Regards,
mm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
User avatar
millionairemind
Big Boss
 
Posts: 8183
Joined: Wed May 07, 2008 8:50 am
Location: The Matrix

Re: CANSLIM & Momentum Investing

Postby kennynah » Fri Jul 04, 2008 9:50 am

hi mm :

i know u r a good canslim practitioner, so like to tap on your expertise here...

so, it is true then that canslim method does not work on a downtrending market? afterall, how can firms be in good earnings shape when overall economy is suffering from protracted downturn.... right?

thanks.
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 16005
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: CANSLIM & Momentum Investing

Postby millionairemind » Fri Jul 04, 2008 10:13 am

Hi Towkay K,

Me no expert here but willing to share what little I know.

In downtrending market, because mutual funds in the US have a mandatory ruling to be vested, they usually sell growth stocks and go defensive with stocks like P&G.

Yes, from the little bit I know about CANSLIM, when market direction is down (typically with economy also down), very few institutional quality good growth stocks have the earnings to make the CUT as a market leader.

There will of course be stocks that remain pretty strong, like POT... but holding them in downturns is dangerous cos' many times, they will follow the mkt down if the mutual funds need to sell them to raise cash to fund redemptions.

I hope this helps.

mm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
User avatar
millionairemind
Big Boss
 
Posts: 8183
Joined: Wed May 07, 2008 8:50 am
Location: The Matrix

Re: CANSLIM & Momentum Investing

Postby kennynah » Fri Jul 04, 2008 10:28 am

thanks MM ....

actually i was reiterating what aspelian was asking earlier....that is, canslim methodology is not applicable to identify "breakdowns" but only "break outs", right?

thanks again for this clarification...

cheers man
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 16005
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: CANSLIM & Momentum Investing

Postby millionairemind » Fri Jul 04, 2008 10:45 am

K,

Breakdowns identification for overall market is done by identifying distribution days.

Break down in stocks is when the stock reverses and tanks in high volume. The typical stock has a 50DMA that supports it. In an uptrend, leading stocks are bounded by the 50DMA. At times they might blob up and down the 50DMA. That is when the funds will come in and add to their positions. Once the 50DMA is breached with high volume, the stock is going to the poor house.

Bill did write a book How to make money selling stocks short. In it, he mentioned that most investors in US markets do not know how to sell short a stock well and advises investors to wait for next uptrend.

I can pass you that book if you are interested the next time we drink kopi.

Majority of the leading stocks usually topped together with the market. When Nasdaq peaked in March 2000, all the leading tech stocks run into climatic tops and reverses together with the Nasdaq.

I hope this answers your question.

Cheers,
mm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
User avatar
millionairemind
Big Boss
 
Posts: 8183
Joined: Wed May 07, 2008 8:50 am
Location: The Matrix

Re: CANSLIM & Momentum Investing

Postby kennynah » Fri Jul 04, 2008 11:04 am

mm...thanks again for this prompt clarification and the kind offer....haha...i super lazy to refer to his books...u become a convenient source for summary of his techniques...

back to a finer point...

whilst oneil states clearly the few discernable patterns to ascertain possible breakups, like cup-with-handle, saucer-with-handle, double-bottom, flat-base, high-tight flag and ascending bases, he does not define breakdown patterns, except for volume "distribution" as the only phenomenon to determine a possible breakdown of prices? am i right to understand this point?

domo many arigatoes...

regards...
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 16005
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: CANSLIM & Momentum Investing

Postby millionairemind » Fri Jul 04, 2008 2:51 pm

K,

A picture tells a 1000 words. Here is the weekly chart of Precision Cast Parts with a 50DMA. I used to own this stock last year.

It was formerly one of the leading stocks last year. You can also see that during Jul/Aug period, it hobbled around the 50DMA and did not break down cos' institution was still supporting this stock.

See how when it breaks 50DMA on high volume, it went straight to the poor house and never recovered?

Image

I hope this helps answer your question.

Cheers,
mm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
User avatar
millionairemind
Big Boss
 
Posts: 8183
Joined: Wed May 07, 2008 8:50 am
Location: The Matrix

Re: CANSLIM & Momentum Investing

Postby kennynah » Fri Jul 04, 2008 3:41 pm

MM : many thanks.... picture always tell a perfect story....
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 16005
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

PreviousNext

Return to Other Investment Instruments & Ideas

Who is online

Users browsing this forum: No registered users and 18 guests

cron