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

[Aspellian]

Hi OE2008,

I gained more than I lost following it. But I could not adopt a stragegy of immediately going long on a FTD or going short as soon as they signal a downtrend.

Hi BlackCat,

am curious to know why you mentioned you could not adopt a strategy of immediately going LONG on FTD ... ?

Cheers!
aspellian

[Aspellian]

So far I havent had this problem, as since I've been following IBD (abt 18 months), the trends have been long lasting and clear enough that the times I've been 'saved' (from the big bad bear markets) have made up for the whipsaws.

What I fear most is volatility. Non trending markets could kill me slowly.

BC,

Just curious, what were the broad market calls of IBD in the 17 months bear market and did it call the bottom at anytime from Mar 09 upto date. Hope you could share if it is not in breach of their proprietary rights (only the past will do; no need for current view).

I am considering whether it is worth subscribing to?

Hi OE2008,

Some of the IBD dates are stated in this thread. you can use them as a guide to do back-testing. I did my testing. minimum results being that there's no loss in last 3 years vs conventional buy-and-hold from same starting point. Cheers!

[Aspellian]

Hi MM,

In your previous post in US directions you mentioned the following:

Dow 9,505.96 +155.91 (1.67%)
S&P 500 1,026.13 +18.76 (1.86%)
Nasdaq 2,020.90 +31.68 (1.59%)
****

If the US market moves higher by another 4% this week or next, then almost all the distribution days will drop out of sight.
_________________________

May I ask you as to how you derive at the 4% number? is it based on CANSLIM's counting of distribution days or is it technical indicators or from experience?

Cheers
Aspellian

[millionairemind]

Typically its 5% from the last distribution day. If mkt moves higher by 5% from last distribution day, this will negate all the previous Dday.

This 4% is just my estimation cos' the market has already moved higher by more than 1% from the start of the day they called correction.

Hence 1 + 4 = 5

[Aspellian]

So using 5% from last distribution day as a guide:
Last distribution day (correction started) will be 17th Aug - Dow closed at 9135.
5% advancement will be 9592 (9135 * 105%) - round off to 9600 points.
Dow closed last night at 9509 - which is <100 points from 9600 or around 1% away.

So am i right to say we are just 1% off the point when all previous Ddays will be write-off? instead of 4%??

MM, is my above calculation, analysis in line with your understanding?

[millionairemind]

A bro - I think your methodology is correct. I believe they count from the close of the day before the correction... (but I might remember wrongly), don't quote me on this one hor

If I am not wrong, I think they count from each individual distribution day. There was a Dday on Aug 14 with DOW at 9321.

[-dol-]

They eliminate the distribution days one-by-one as time passes and the market advance higher. Yesterday, they drop one ditribution day count from the NYSE.

CANSLIM is not cast in stone. You will note that it has evolved over the years in response to market conditions.

Normally after a correction and a new rally starts, they would have junk all the distribution days. This time, perhaps because the correction is so short when they expected something worse, they have retained the distribution days. So one can perhaps interpret that the correction might not have really cleared the way for a fresh rally - so this current rally could still be "under observation".

That's for the US market. For the individual Asian markets, it's still better ultimately to focus on the market itself. Each market still has its own peculiar characteristics.

From my observation, Europe and US seems stronger the past 2 weeks. So markets could be at various stages of their own path.

US can be in uptrend mode, but if there is minimal fund flows into Singapore and people over here are just shifting around their funds and not committing more, then we are not going to go anywhere far as a market for the time being.

[OE2008]

Hi OE2008,

The follow thru day for the current rally was 12th Mar, and it only broke last week (probably a false signal as it turned out).

So they did call the bottom. BUT there were false signals before that (sometime in June 08, 29th Jul 08, 2nd Dec 08), which I lost money on as they were not big enough to be 'tradable rally' (for me: 20% and at probably at least 4 weeks). Before this there was a small tradable rally in comodity stocks (Mar to Jun 08) correctly flagged where I made a bit.

In addition, some of what I recorded end of last year: http://profithunting.blogspot.com/2008/12/ibds-follow-through-day-does-not-work.html. Its point is that the FTD indicator is not to be followed blindly - from memory, IBD was even saying things like 'our indicator has turned positive but from market conditions we dont take this to be a rally'.

Sorry I don't have records of all their calls (other forumers may be able to help?) or time to collate them (on holiday now).

I gained more than I lost following it. But I could not adopt a stragegy of immediately going long on a FTD or going short as soon as they signal a downtrend.

Hi BC,

Good enough for me, thanks. I had a look at your blog (good stuff); will spend more time to look through those periods where FTDs failed to give tradeable buy. I am thinking of applying EWaves pattern as a filter to confirm or reject these FTDs, especially when volumes are not showing adequate strength/conviction.

Hi Asp,

Will do likewise with some of the FTDs identified by MM.

[BlackCat]

am curious to know why you mentioned you could not adopt a strategy of immediately going LONG on FTD ... ?

Hi Aspellian,

I did this when I started.. lost money due to too many false signals. Found it better to wait at least a few days (after the FTD or start of correction) before starting to buy/sell. This eliminated most of the false signals.

[Aspellian]

am curious to know why you mentioned you could not adopt a strategy of immediately going LONG on FTD ... ?

Hi Aspellian,

I did this when I started.. lost money due to too many false signals. Found it better to wait at least a few days (after the FTD or start of correction) before starting to buy/sell. This eliminated most of the false signals.

Hi Blackcat,
thanks for your reply. usually during the few days that you wait, do you also incorporate for eg. having a certain % gain/loss of indexes?
Take for example current uptrend, are you still waiting or already taken the plunge in the swimming pool?
i will like to learn from your experience.