CANSLIM Course, second installment

[Mike]

CANSLIM_2 Oct 2010.pdf

The attached continues the CANSLIM education series.

[Billy]

Mike,

Thank you so much for sharing your work and expertise.
This series goes far beyond what we could ever have hoped for.
And furthermore, you are available here for answering all questions!
Hats off with immense respect!
Billy

[adam ali]

Thanks, Mike.

Have a couple questions for you: was yesterday a distribution day under the CANSLIM methodology and therefore negated the (barely) FTD we had last week?

Also, has the Coppock Curve indicator given a buy signal?

[Jerry Samet]

Adam, the weekly Coppock did give a signal last week. Jerry

[mnoel]

Thank you so much Mike. It is well appreciated.

Martin

[adam ali]

Thanks, Jerry.

My comment about the action on Monday negating the FTD we received last week: "negated" was too strong a word. What I am interested in is advice on how to think about a day like Monday, i.e., a large percentage drop in the indices that in hindsight appears to be an effort to shake out weak longs, under CANSLIM methodology.

[Mike]

Thanks, Mike.

Have a couple questions for you: was yesterday a distribution day under the CANSLIM methodology and therefore negated the (barely) FTD we had last week?

Also, has the Coppock Curve indicator given a buy signal?

Adam, yes 10/17/11 was a distribution day. It does not negate the FTD. A distribution day that occurs within the first three days of a FTD usually inicates a rally failure. Yesterday however would qualify as a FTD. So if a rally is going to succeed with early distribution, this is how it would happen. Most bear markets test the 200-day on the S&P500, which is 4% above. I would guess that we will do that again and then the market will tell us which road it is on.

[adam ali]

Thanks, Mike.

Are you suprised that Gil and Dr. K are still on the sidelines here? Is there a dichotomy in the CANSLIM community right now as to the market's direction and how to invest?

[Mike]

Thanks, Mike.

Are you suprised that Gil and Dr. K are still on the sidelines here? Is there a dichotomy in the CANSLIM community right now as to the market's direction and how to invest?

Adam, I am not really surprised. I believe Dr. K's market direction model would be on a buy signal today but he seems to have overridden the mechanical signal. IBD doesn't overide their mechanical model at least very often. We are supposed to do our own analysis. Having a follow-through day is part of the story. Having leading stocks breaking out of sound bases and moving up is the rest of the story. That is what is missing in today's market and IBD has said so. So IBD says we are in a confirmed rally (and the market is rallying) but they also say the leadership isn't there. We are supposed to then decide if we wish to enter the market or not on our own. Dr. K has basically said the same thing with an emphasis on the glass being half empty (or mostly empty).

I would suspect that some of the O'Neil money managers are in the market but not very far in. Bill tends to give his money managers hard upper bounds when the market looks like it does today. He may for example say: no more than 20% or 30% portfolio exposure. The follow-through day on 10/12 was controversial at best and it came on the $NYA which today is a lagging index. Yesterday's market action qualifies as a second FTD on much broader in scope and much more unambiguous. The leadership still isn't there so my conclusion is that we are experiencing another junk off the bottom rally. I hold partial positions in SBH and DLTR. I am also short FOSL. Pascal mentioned that FOSL may be a beneficiary of European bailouts, so my positon may overcome by events...

[buzzman]

Hi Mike,
I've misplaced the first installment and unable to find it on the site. Is it still up?
Thanks for the informative work.
Buzz