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CANSLIM BASICS PRESENTED AT THE FIRST MEETING OF WALNUT CREEK IBD MEETUP GROUP THURSDAY MAY 17 2012.

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Presentation on theme: "CANSLIM BASICS PRESENTED AT THE FIRST MEETING OF WALNUT CREEK IBD MEETUP GROUP THURSDAY MAY 17 2012."— Presentation transcript:

1 CANSLIM BASICS PRESENTED AT THE FIRST MEETING OF WALNUT CREEK IBD MEETUP GROUP THURSDAY MAY

2 Current & Annual Earnings The best earnings performance now, not just a promise of future earnings. Quarterly earnings-per-share growth of at least 25% vs. the same quarter the year before. Preferably, accelerating earnings in recent quarters. Annual earnings-per-share gains of at least 25% in the past three years. Firms with IBD EPS Ratings of 80 or higher. Current & Annual Earnings The best earnings performance now, not just a promise of future earnings. Quarterly earnings-per-share growth of at least 25% vs. the same quarter the year before. Preferably, accelerating earnings in recent quarters. Annual earnings-per-share gains of at least 25% in the past three years. Firms with IBD EPS Ratings of 80 or higher. The C & A in CANSLIM

3 The N in CANSLIM New New products or services New industry conditions can send stocks soaring New 52 week high in price New management Companies featured in IBD's The New America and the Internet & Technology pages

4 Supply & Demand Volume % Change is the percent change above — or below — a stock’s average trading volume over the last 50 trading days. Price increases should be accompanied by increases in volume. Price declines should come in lower volume, which tells you there’s no significant selling pressure. If a stock’s price plunges as its volume surges higher, it may be a sign big investors are heading for the exits. Institutional investors will often buy shares when a stock dips to a key moving average line. The Accumulation/Distribution Rating tracks a stock’s supply and demand. Look for stocks with an A or a B Rating. The S in CANSLIM

5 Leadership When choosing investment candidates, stick with the leaders. These tend to be firms with in-demand products or services. Steer clear of lagging stocks. They’ll likely remain laggards. Don’t overlook a stock simply because its shares have already logged some big gains. Many of the largest winners were already outperforming the market when they launched their big price moves. The L in CANSLIM

6 Institutional Sponsorship Follow the lead of big institutional investors. Their buying power can propel a stock higher or send it falling. Institutional investors tend to buy stocks priced at least $15 on the Nasdaq and at least $20 on the NYSE. They also opt for stocks that trade at least 300,000 shares a day on average. IBD’s Sponsorship Rating evaluates the quality of the mutual funds that own a stock. It runs from A to E, with A being the best. The I in CANSLIM

7 o Market Direction Don’t fight the market’s trend — follow its lead. Buy when the market is in an uptrend and sit on the sidelines when it’s working through a correction. The follow-through day occurs sometime after the third day of an attempted rally, when one of the four major stock indexes climbs sharply and volume rises from the previous session. Not every follow-through day guarantees a rally — some fail. But no new bull market has started without one. A distribution day occurs when one of the major stock indexes falls more than 0.2% in one day on higher volume than the previous session. When the market piles up four or five distribution days in just a few weeks, and the uptrend seems to have stalled, chances are it’s heading into a correction. IBD’s The Big Picture column helps you size up the market’s daily action. The M in CANSLIM


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