Presentation on theme: "CANSLIM-THE WHOLE STORY. WHERE ARE WE NOW? LOOK FAMILIAR?"— Presentation transcript:
CANSLIM-THE WHOLE STORY
WHERE ARE WE NOW?
M-MARKET Without the daily work that is needed to learn to read the market action through price and volume we cannot understand the current direction for stocks, you will be trading in the dark. You may rely on the Market Pulse for the current trend of the market, but you need to know how to read the market each day/week to enable yourself to make money in an uptrend, when or if to exit under pressure, or move to the sidelines in a correction. As well, you must be able to read the market chart for signs and clues of continuation of trend or potential end of trend.
The current environment “ when a leader offers an entry point u r comfortable with, I don’t think one should ever worry whether ‘it’s due’ for a correction. 1 should cross the correction bridge when 1 comes to it..we r not smart enough 2 know when that will b. Let the market decide that 4 u.” Kevin marderonthemarket
Reading the market in terms of price and volume takes the second guessing out of the equation—you do the work on CANSLIM for the stock you wish to take a position in, you do the technical analysis—chart pattern strength, sound base, you establish a buy point….then you prepare to enter and the second guessing begins. Price is too high, due for a correction, I’ll buy it lower, CNBC says the market is due for a correction, the news is terrible…the stock breaks out, you know the rest of the story. Well I do! When we know where the market is at this moment, we can confidently enter our positions and add to them—we know if things change we are prepared to exit by cutting losses short.
LET’S READ THE CURRENT MARKET
The News 2/17 a.m. Confidence among US Homebuiders Declines to 4 month low Empire State manufacturing survey, dropped sharply for February Libya’s chaos puts neighbors on alert as Italy weighs action Greek bank bonds drop as aid talks breakdown deepens exit risk Russia backed rebels claim victory as fighting rages on in Ukraine Egypt retaliates Christian beheadings with air strikes on ISIS in Libya
Nasdaq today's close
THINGS TO CONSIDER The markets never went back into correction, they stayed in market under pressure. A minor low was taken out but the major low remains in play. When the uptrend resumes the previous distribution count remains. Currently 6 spx and 5 naz. What will it take to change this high distribution count without a correction? More time or significant progress above 4867 So while we are currently in a confirmed uptrend-until distribution days begin to drop off we have to be cautious of position size and use tighter trade management.
THINGS TO LOOK FOR In a market uptrend the indexes close up on the day/week Volume is high on up days and low on down days. Occasional distribution is followed by strong up days/weeks. Indexes stay above the 10, 21 and 50 dma Trips to these averages take place on low volume and bounces occur on high volume. The number of days spent above these averages, adds strength to the uptrend and necessary time for reducing any distribution. Additional accumulation days occur providing opportunity for base building, adding to positions, and breakouts.
And More things to look for In a market uptrend, growth stocks lead the way. Growth stocks are the small universe of stocks that are capable of meeting the CANSLIM screening—they are high earnings with accelerating quarterly and yearly growth in earnings and sales, they are innovative companies and relatively new to the markets within the last 15 years, they are the leaders in their industry and their industry group is a leading industry, they have a high relative strength, strong ROE, low debt, they are near a new high, they are in demand, and under accumulation by the best mutual funds. Without the growth stocks leading the uptrend, it will not be a strong uptrend. You will start to see growth stocks forming sound bases and breaking out of these bases.
Clues to market strength Speculative and small caps participate in a market uptrend, look for this clue. Numerous growth stocks set up in sound bases. Earnings gap ups Growth stocks begin breaking out of sound bases and continue up in price Profits are easier to hold and profit taking at 20% is attainable. Few if any 8% stop outs
Clarifying CANSLIM Things I hear- I just buy and hold, it’s easier and I get a dividend F, GE,KO, BAC, BA, VZ, CSCO, NEM, XONE, MBLY, BABA, SFM,ZU It’s too high to buy AVGO, AAPL, BITA, PANW, CMG, BIIB, UA, NKE PE is too high PANW, LNKD, TSLA
Continuation of stage 2 base
CANSLIM Not a get rich scheme—profiting from growth stocks during a confirmed uptrend takes work and study, self discipline, and confidence in the edge that CANSLIM offers. It is not a purely technical method—the technical component of CANSLIM is in the context of fundamental strength of the stock, without which no technical information such as bouncing the ma, oversold stochastic, candle patterns, support and resistance have meaning. Once the strength of the stock or company is established then the technical information is of utmost importance for recognizing sound base patterns, buy points and then for adding to positions as the price moves above key averages, stays above them, returns to them—all the while understanding the role that volume plays in identifying the footprint of the key institutional support that is your tail wind. This is a proven, back tested and highly profit way to trade if you are prepared to do the work it takes to capitalize on an edge that pays 20% consistently in an uptrend and limits risk to 8% when the edge fails. And takes you out of the market to raise cash when the market goes to correction.