William Oneil - CANSLIM

Quote from cmikhailov:

Is it possible that breakout profit was a bit overstated in a great bull market…?
Since breakouts don’t offer any profit target, maybe it’s safe to assume that problem with “failed” breakouts is not that they failed but reached their maximum potential, which , in reality may not be much at all…?
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I doubt that. Especially considering Nicholas Darvas's book about how he made over 2 million. A great economy it's just about figuring out where money is flowing towards and pyramiding your profits. You start off with a small position and add to the winners, stopping out when you've been stopped. You are wrong more often than right with longer term systems, but the rewards are much larger when you are right.

Robert
 
When I originally started trading I traded a long term breakout system. I took 2000 and had 100% returns each year growing it into about $19,000 within a few years.

The system has potential but we need the correct fundamentals.

Right now it's about tightening our belts as things are tight and the weaker competitors in every industry are going to be taken out.

Robert
 
Quote from rtharp:



I've stopped posting strategies a lot too. I've realized I'm trying to buy 3000 shares and only 400 are available. Why create competition when there is little benefit?

Robert
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rtharp, you need to post some bs so you can get those 3k
when you need them... :D
 
easyguru,

You memtioned you use IBD and have been profitable on both long and short side. And The IBD stocks are very vulnerable to short attacks. It seems very interesting! I am wondering you could elaborate a little bit:

1. how to find stocks for sell short. As IBD does not have bottom 5 in a group unless you have access to Daily Graphs Industry Groups Subscription, how do you select groups.

2. Do you find any number like
99 99 92 A+ A C UOPX

can be help to identify candidates for sell short.

3. Any TA patterns most repeatly can be used for finding an entry.

Your experience comments will be appreciated,
 
Quote from honghsu:

easyguru,

You mentioned you use IBD and have been profitable on both long and short side. And The IBD stocks are very vulnerable to short attacks. It seems very interesting! I am wondering you could elaborate a little bit:

1. how to find stocks for sell short. As IBD does not have bottom 5 in a group unless you have access to Daily Graphs Industry Groups Subscription, how do you select groups.

2. Do you find any number like
99 99 92 A+ A C UOPX

can be help to identify candidates for sell short.

3. Any TA patterns most repeatly can be used for finding an entry.

Your experience comments will be appreciated,
More...

Without giving away the complete strategy here are the key elements of what I use.
1 Only track companies with 98-99 EPS . This reduces the universe to around 50 to 60 companies. I do not look at other indicators. Obviously one is looking at companies trading at or near 52 week high.
2 I do some fundamental analysis. What I look for is which Industry group. What is revenue of the company how does it compare to market leader or number two. The Gross and net margins. I have some hypothesis based on past years I have tracked about certain industry group to avoid for shorting or atleast have smaller position size and tighter stops. If you read William Oneil carefully it is not very difficult to figure this out. I spend a lot of time on this the central hypothesis of IBD system is the earning momentum will continue or increase thats why price will keep on increasing.
3 As a result of above the list gets narrowed to around 25 to 30 companies. Within this I prefer stocks with options. But thats not essential criteria.
4 On this list I use technical analysis. The indicator I use on my charts are OBV, stochastics and MACD (the last two in multiple time frame). I have played around with the stochastic a lot and found something which is reliable.
5 The signal is generated using primarily a modified 4MACD system in TC2000 along with stochastic. Other things I look for are earning dates and round numbers resistance.
6 http://groups.yahoo.com/group/swing-trader/message/1240
Discusses the 4MACD system .
7 The trade last 3 to six month. The system is not for short term trading. The exit signal also is derived using 4 MACD.
8 Why use these stocks to short because they go down fast as momentum investor bail out.
 
easyguru,

Appreciate your comments. It is surprise that companies with 98-99 EPS, rather than 30-50 EPS' companies, are selected for sell short. Your approach really picks up strong EPS companies' momentum, rather than selecting a company which starts to lose its fundamental strength. Here I have two questions.

Do you have rules to pick up middle or low industry ranking companies for sell short? For instance, do you prefer to use 139th ranking of Shoes & Rel Apparel group, 195th ranking of Medical Hospitals, or group ranking doesn't count.

Would you share a couple of stocks you picked in the past with us to show what these stocks look like?

Many thanks,
 
I do not look at the industry ranking. In fact I buy IBD only once a month to find their EPS ranking.
The basic hypothesis of IBD is that stocks with earning momentum will continue to have earning momentum in future as a result they will continue to rise in price. At 98-99 EPS ranking what is the probability of that? So basically one is looking for stocks where the probability is low. The fundamental analysis helps you identify that.
Visit this site to understand better what I am saying
http://www.stockciphering.com/whatis.htm
I don't use the sites service but the logic is what I have used to develop my methodology.
As to specific example of stock just go back to last years stocks rated 98-99 EPS in january 2002 there were 60 stocks with 98-99 rating. After one year 7 had a gain of 20 % plus. While 30 had a loss of 20 percent plus. And 13 had more than 50 % loss.
Now go back and see what were the EPS ranking of these companies a year ago that is in 2001 and so on you will understand that by the time most of them got their 98-99 ranking the market had already priced in that .
If you do this analysis you will also find a methodology to go long . The IBD methodology works much better in anticipating which stocks will get higher rating and taking position ahead of time. So many of those stocks will have low EPS rating and their industry group will be out of favor.
Do your own analysis and see if this is right you will be convinced.
You will need old issues of IBD . I found them in a University library.
 
Oneil says to sit out bear markets. Canslim is working great, your flat while the 95% of the rest of the world has flushed their money down the toilet.

Brandon
 
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