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

[helios]

yo guys,

i was reading through the O'Neil book; to be exact, @ Chapter 4 (When to Sell & Nail down your profit while you still have it).

i did some homework, and elaborated on some points. [Ref. MM's Pot Chart earlier]

mei mei has to ask MM ge whether the chart is correct?

1. assuming Dow had just had its follow-through, and confirmed the beginning of a new uptrending market, the Sept entry is a re-confirmation signal. as one can see, there are some time [& opportunity cost] gained when one would wait for another ascending cup base to form;

2. as for K question on whether the earlier May-signal is an entry? Yes, i believe it is an entry. however, this would really be judgemental and subjected to individual's risk appetite. EG: One might be able to sit through the general market shakeoffs during May-Aug period, if one believed this stock was a big leader winner eventually (ok, maybe based on the stock fundamentals and ratios? were there any FA changes in the 3 months period in relations to the general market? etc).

thanks in advance.

[millionairemind]

San,

You are learning very fast leh

For a leader stock, they are almost always bounded by the 50DMA. The periods that you mentioned with selloffs coincided with periods of market corrections.

Feb 28 - March 22 2007
Jul 26 - Aug 29, 2007
Nov 9 - Nov 28, 2007
Jan 3 - Mar 24, 2008

Sorly to reuse the chart I posted b4.


Just correlate the period and you can see that the 50DMA supports this stock (and other leading stocks).

When this happens, the institutional funds will come in and buy when the stock hits the 50DMA.

Once that breaks, gone case liao.. like the recent breakdown..

Hope this helps.

Regards,
mm

[helios]

nope,

we all must learn from MM ge ... 吸功大法 。。。

i wonder how is our Rider doing?

[RidingOnTop]

gleaning from the side.. 吸功大法 II.

This discussion is helping to clear up my primitive ideas TA.

Thanks for sharing the need for the ascending cup base to form... good point.
Are these covered in SGX's Analyzing the Stock Market with Technical Analysis?

* seriously very distracted lately.. matters of the heart. see market also sian.

[bertyeo]

WAH STI dont have a single follow thru siah...
from bad to worst ....
no eye see market...
actually no time computer to see market also..hee

gd luck to luck $ .hope all huat huat!

[bertyeo]

sigh when are we going to see such nice charts again

[helios]

sigh when are we going to see such nice charts again

yo, must ask our MM Ádvisor lor ... he draws ang kong, or at least we can constantly learn from him.

flip to page 159: the author, William J. O'Neil has an analogy to playing tennis (anyone play tennis?)

The reason CAN SLIM works so well when all of its seven steps are put together and carefully followed is that it is based solely on meticulous research into how the market has worked, cycle after cycle, for the last 50 years ... It's the combination of all of the seven key factors together that creates real success. It's analogous to tennis. You can't just hit a good forehand shot and expect to win. You also have to have a good backhand, a lob shot, an overhead shot, a midcourt volley, a good first serve, and a good second [spin] serve that is different from your first serve.

if the court is the market,
and the ball is your capital,
net is the resistance,
game strategy is the support,
first serve, is the entry point,
second serve, is the combo of supply and demand,
forehand is the market direction,
backhand is the institutional sponsorship,
lob shot is the current quarterly earnings,
overhead shot is the annual earnings,
volley is the chosen leader,
extra spin is the new product, new management, new highs,
- a rally will come.

[winston]

Breaking Down an "Obvious" Rule of Investing
By Andrew M. Gordon

Invest in strong sectors. Avoid weak ones.

This seems obvious, yes? But too often, people invest in weak sectors and avoid strong ones. Here are some of the culprits behind this backward thinking:

Bargain hunting. Strong sectors are expensive. Weak sectors are cheap. Unfortunately, when you invest in sectors where demand and other fundamentals are deteriorating, you often get what you pay for.

Bottom fishing. Does it get any uglier than banking? But investors have been recently pouring into banking in the belief that bank stocks have bottomed and are gearing up for a nice climb up the charts. Even if they do start to climb, it will be a sucker's rally. Weak sectors are afraid of heights.

Buying yesterday's news. High prices reflect a strong sector? Yes they do... until, that is, prices overreach and fall back to earth because the fundamentals of the market don't support them. The housing market is a great example. At the top, prices were no longer based on affordability or equivalent rent rates. Look forward, not backward, when you choose a sector to invest in.

There are other reasons, too, why people make the mistake of investing in weak sectors. A sector may be popular, fashionable but not strong - like the dot-com sector. Or investors buy on rumors, not fundamentals. (That's a dangerous game that can turn against you very easily.) And investors just pick up wrong information. (You can't believe everything you hear and read.)

So, what seems like a simple rule isn't so simple to follow, after all. But truly strong sectors can really help your portfolio grow. And truly weak ones can help kill it.

A final word of caution: If you're not quite sure if a sector is strong or weak, let it go. It's not worth the risk.

[kennynah]

so, what's a strong sector now and gg fwd?

theory always very good....practical more realistic though...

[winston]

In the US market Direction thread, I've been posting the New Highs and New Lows.

Biotechs have been making new highs, week in and week out for the past few weeks..