John: A few comments to keep the discussion going.
First, the only CANSLIM "M" indicator which works, that I know of, is at:
accessone.com
I've posted this several times. Check it out, the "market comments" and "NasBar" sections are really something to consider. It is O'Neill's formula applied through Trade Station. It works, every time, so far this year.
I agree that most CANSLIMers can't master the "M", but I disagree that one shouldn't try. It is the single most important concept, and I think it should be applied to the PB, long and short. As you know, I can't just mindlessly play the PB system. I watch too closely, and I just don't like what it offers me when the market is super hot, or super cold. And needless to say, we haven't seen too much in the way of "just right" as long as I've been playing the game.
Of course, timing it this way makes room for error. For example, the 10/8 signal was not evident to me, and according to O'Neill and my buddies who run the "Farmer" site, that type of signal usually doesn't create an avalanche like we are seeing. If I'd been short all along, I'd have caught the type of returns your posting. Instead, I was gambling trying to get to cash and missed what may end up being the best entries if this correction is short lived.
Second, don't get overexcited about the returns your posting. They really started at the time the market first turned, or was just getting ready to turn (10/8). I mean, you should be excited, just don't think the system produces this type of result on a regular basis. In fact, I haven't seen it perform well at all since the last significant signial given at the address posted above (late Jan.97). But when it works, oh BOY!!
Third, I'll be looking at charts and industry groups. I think there are some suggestions in the guide (just as in the long system) that Ford uses charts on the shorts (particulary for stop placement). I think industry groups like oil, which continue to hold up well, should be avoided. You may miss the point when they first start to break down, but you'll avoid getting stopped out on a routine basis. Of course, with the group so strong, it may be that you won't find any oils that give a signal.
Fourth, the watch list is first comprised of those which have given no signal on either indicator, right? Did you start with stocks that had one indicator giving a signal?
Fifth, this is a tangent from my third comment above. If you keep close track of the watch list as the market corrects, you should see the new leaders emerge from this group as the market turns upward again. Add in 80 plus EPS to those candidates which never gave a signal and formed nice bases in the correction and look for the first to break out on the follow through days. The last time we had a clear bottom and "follow through" day (around 4/25) stocks like ORBKF and MIND broke out and lead this market. Now they are on the watch list for shorts after having tripled in 6 months!!!
Jeff |
