10-5-2013 Comments
I updated my watch lists for the Models area, it may take a while for Pascal to update the site. I am doing this weekly, usually over the weekend.
CANSLIM investing is a medium-term investing style where stocks are held for weeks to many months. Normally positions are held for 20% profit unless the stock is somehow deemed special such as TSLA which I own from the 107.23 buy point. Even though I include a short watch list in the models area I don't believe short taking is the place to focus right now. When shorts start working, perhaps then. In the QE infinity environment I don't know when this will be. That being said, I am noticing quite a few stocks breaking out of high-tight flag patterns. This pattern Bill O'Neil notes is the strongest of all patterns often leading to a double to triple in price. TSLA is an example with a breakout on 6/23/13. A high-tight flag goes up in price by 100% or more in 4-8 weeks and then consolidates tightly for 3-5 weeks and then breaks out to new high ground. These stocks are showing enormous strength. I have never seen so many high-tight flags form at the same time before. I suspect that the market is in a blow-off stage of a 4 1/2 year bull market similar to 1999 and September-October 2007. This is just an opinion based on what I am witnessing. So if volatility increases a time to short may come.
I have noticed that even though the market indexes had a pull back that most leading stocks are extended above safe levels to buy. Quite a few leading stocks held up in a tight pattern called "3-weeks tight". This is a pattern on a weekly chart where the stock closes almost at the same price three weeks in a row (+/- 1.5%). This is evidence of institutional accumulation. It is okay to buy stocks that exhibit this trait as they break above the pattern into new high ground.
Mike Scott
Cloverdale, CA
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