10-28-11 Close Comments

[mnoel]

Thank you Mike for your generosity. This is very valuable information.

Martin

[nickola.pazderic]

Mike,

Your answer is certainly beyond the call of duty, and I'm humbled and cheered by it.

I hope I haven't been misunderstood, however. For as I noted in a previous post on EB's Forum:


EB--

..

Let me note: I think CAN SLIM is deceptively easy. In fact, I think it is the genius of O'Neil to make it look easy when it is not.

As I have also noted, I arrived at this site by way of O'Neil's book, IBD (indeed, I did subscribe to Market Smith), Morales/Kacher and HGSI. When I learned you are a forum leader, I recalled Kacher's warm and respectful reference to you in their book. So, please know I respect greatly your contributions and your willingness to share.

That said, perhaps my question is as idiotic as my approach to the market when it comes to the purchase of stock. Say, for example, I want to buy LULU because it shows pocket pivot signature volume and all fundamentals and market signs flash "BUY". In fact, say Morales and Kacher have sent an email informing their students that LULU is buyable. So, I turn to the intraday chart. I cannot decide when to buy it. The price is moving up or down or in consolidation intraday. It is above or below VWAP. Again, my response is perhaps moronic: I back off. Having bought and sold CAN SLIM leading stocks last fall, I realize that -- from my current perspective-- that on the intra-day scale I could have closed my eyes and simply pushed the buy button. Would this make a differece? Perhaps not. CAN SLIM is an intermediate term investment system. What does it matter if, due to my poor choice of intra-day buy points, I wake up the next day to a -3% position rather than a, say, -1% position? Perhaps it does. Because if the day after the market is down again and the stock falls 6-8% below my buy point, I may be forced to sell. Perhaps a more optimized intraday buy point would have kept me in the trade.

These concerns are based on my actual experience.

Many thanks always,

[Mike]

Mike,

Your answer is certainly beyond the call of duty, and I'm humbled and cheered by it.

I hope I haven't been misunderstood, however. For as I noted in a previous post on EB's Forum:


EB--

..

Let me note: I think CAN SLIM is deceptively easy. In fact, I think it is the genius of O'Neil to make it look easy when it is not.

As I have also noted, I arrived at this site by way of O'Neil's book, IBD (indeed, I did subscribe to Market Smith), Morales/Kacher and HGSI. When I learned you are a forum leader, I recalled Kacher's warm and respectful reference to you in their book. So, please know I respect greatly your contributions and your willingness to share.

That said, perhaps my question is as idiotic as my approach to the market when it comes to the purchase of stock. Say, for example, I want to buy LULU because it shows pocket pivot signature volume and all fundamentals and market signs flash "BUY". In fact, say Morales and Kacher have sent an email informing their students that LULU is buyable. So, I turn to the intraday chart. I cannot decide when to buy it. The price is moving up or down or in consolidation intraday. It is above or below VWAP. Again, my response is perhaps moronic: I back off. Having bought and sold CAN SLIM leading stocks last fall, I realize that -- from my current perspective-- that on the intra-day scale I could have closed my eyes and simply pushed the buy button. Would this make a differece? Perhaps not. CAN SLIM is an intermediate term investment system. What does it matter if, due to my poor choice of intra-day buy points, I wake up the next day to a -3% position rather than a, say, -1% position? Perhaps it does. Because if the day after the market is down again and the stock falls 6-8% below my buy point, I may be forced to sell. Perhaps a more optimized intraday buy point would have kept me in the trade.

These concerns are based on my actual experience.

Many thanks always,

Nicola, you are probably looking at too much. Forget intraday charts when CANSLIM investing forget the VWAP. I used to clutter my screens with intra-day data. No more. Analyze your bases and pick your buy points on weekly charts. Shift to a daily to watch the buy buypoint come to you on a small watchlist after you have decided what you want to buy using weekly charts and fundamentals. When the price and volume gets to your buy point buy it, no fuss. I do something else that I should bring up. It is in one of my presentations. I pyramid into positions. I buy 50% of a position at the proper buy point. I add 30% more when the position is up 2%. I add the final 20% when the position gains an additional 2%. This protects you from a prompt sell off on the breakout.

Something Dr. K told me once when he first started trading for O'Neil. O'Neil gave him 20-minute delayed quotes saying real-time would cause him to over trade. Think about this: Chris was trading O'Neil's money and O'Neil gave him 20-minute delayed quotes. Compare what you are doing with your money with this statement. I suggest you simplify. Pocket pivots give you addtitional buy points and these can only be seen using daily chart data. If you have narrowed down to ten stocks you wish to own using weekly charts and fundamentals then okay look at them with daily data and buy at a pocket pivot with the understanding that you are buying early in a set up.

O'Neil's watchlist is often around ten stocks. He is a master at finding companies that he wants to own. He can now focus on this short watchlist and the price and volume action of the market. When the market and the stock comes to him he is in. He has in history been able to concentrate his portfolio in a single stock on full margin. He has a cast iron stomach it seems. I think he had 200% of all IBD assets in AMGN when it was a leading stock of the early 90's.

Bill O'Neil learned his trade using weekly charts largely because when he started in the business he had to draw his own charts by hand. If you were drawing your own charts, how many stocks would you follow and what timeframe would you chart them? I have taken many seminars taught by Bill. I figured out his emphasis on weekly charts by noticing that was all he showed in his seminars. One day I said to myself: I guess I need to get out of the intra-day charting business that was clouding my thinking.

[nickola.pazderic]

You answered my question and then some.

Gratefully,

[asomani]

This is one great thread, Mike.

Thank you for your constant teaching and help. I always look forward to reading your posts and learning from you.

[adam ali]

Article written by Gil Morales and Chris Kacher:

http://www.marketwatch.com/story/gol...tom-2011-11-01