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Subject:   canslim Digest V1 #33
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canslim Digest             Friday, 3 January 1997       Volume 01 : Number 033

In this issue:

    Re: [CANSLIM] Final Market Comments Dec 31, 1996
    Re: [CANSLIM] Stops, Education
    [CANSLIM] Stop Question
    Re: [CANSLIM] Stop Question
    Re: [CANSLIM] Stop Question
    Re: [CANSLIM] Stop Question
    [CANSLIM] Sell Programs
    Re: [CANSLIM] Stop Question
    Re: [CANSLIM] Stop Question
    Re: [CANSLIM] Sell Programs
    Re: [CANSLIM] Stops, Education
    Re: [CANSLIM] Stops, Education
    Re: [CANSLIM] Stops, Education
    [CANSLIM] NYSE STOP BAN RULE 80A
    Re: [CANSLIM] NYSE STOP BAN RULE 80A
    [CANSLIM] Stocks which gap downward

See the end of the digest for information on subscribing to the canslim
or canslim-digest mailing lists and on how to retrieve back issues.

----------------------------------------------------------------------

From: "tom worley" <[e-mail]>
Date: Wed, 1 Jan 1997 20:52:59 -0500
Subject: Re: [CANSLIM] Final Market Comments Dec 31, 1996

John,
Don't you hate it when you drop that deck of punch cards and got to try and
get them all back in order? I know I did it a few times back at the Coast
Guard Academy, which was my first training on a computer. I eventually
learned to be real careful with them, bad enough that the program doesn't
run, worse still when the cause is a card out of order.
Sounds like some good CANSLIM picks for '97. Anybody else got some
favorites?

tom w

- ----------
> From: John Iding <[e-mail]>
> To: [e-mail]
> Subject: Re: [CANSLIM] Final Market Comments Dec 31, 1996
> Date: Wednesday, January 01, 1997 4:21 PM
>
> Tom ... there are some other antiques in the crowd ... punched cards for
> loading programs to mainframes ... before the 300 baud modems ... we're
> dating ourselves ... ended the year with plans for canslim activity in
'97
> .. but ended year with some long term MSFT ... CSCO ... and INTC action
> just to ring out the old year ... keep up the good work ... I for one am
> listening ... and occasionally joining ... John
>


------------------------------

From: charles bumpass <[e-mail]>
Date: Thu, 02 Jan 1997 00:17:40 -0600
Subject: Re: [CANSLIM] Stops, Education

Thanks for the education Tom.  I printed out your reply to save in my
trading notebook.

I promise to stop lurking...So I will ask some more questions.

So an uptick on a stock would be a 1/8 pt gain?

When drawing a trendline how do you know at which bottom or top to
start at and end at. What time period should I use...50 days?
Usually this is not to much of a problem when
looking at the history of a stock except when the trend suddenly
breaks high. So, is this a new higher trendline or just the price moving
away from the current uptrend and it will eventually return?

I have a lot of trouble determining where support and resistance is
in an uptrend or downtrend.  It is easy to spot them when the stock is
trending.

I read in one book that support or resistance is at the yesterday's
closing price:

    open today higer than yesterday then close is support.

    open today lower than yesterday then close is resistance.

    open at same as yesterday...both.

When to take profits....Support and Resistance

How do you use support and resistance for setting profit targets?
I have seen several people say the target will be a couple of points
higher but they give no reason why.

I believe O'neil uses the depth and length of a cup or base to get an
idea.  But I don't see it.


thanks for the help,

charles

------------------------------

From: "Richard S." <[e-mail]>
Date: Thu, 2 Jan 1997 00:26:53 -0600
Subject: [CANSLIM] Stop Question

I've got a question about stops.  After buying a stock, if you want to
put a stop in, should you wait one day after the buy before you put the
stop in?  I guess I'm wondering if there is any way the stop could
execute before the buy order does if they were put in on the same day?
Or is this technically impossible?

<<  Richard S.  >>


------------------------------

From: "tom worley" <[e-mail]>
Date: Thu, 2 Jan 1997 07:39:03 -0500
Subject: Re: [CANSLIM] Stop Question

If you are buying using a limit, then I would not enter a stop until I got
confirmation that I had bot the stock. How quickly you get this report
depends on how realistic the limit is to where the stock is trading. If you
buy as a market order, then I would enter the initial stop order at the
same time since it will presumably be several points below the current
market, depending on where the base is. If you were to enter both a buy
limit and a stop sell, the stop couldn't be executed first unless it's
limit was higher than your buy limit, which wouldn't make any sense. It
also would be a violation of the exchange rules because you would have done
a "short sale" without first borrowing the stock and also without obeying
the "uptick" rule.

tom w

- ----------
> From: Richard S. <[e-mail]>
> To: CANSLIM <[e-mail]>
> Subject: [CANSLIM] Stop Question
> Date: Thursday, January 02, 1997 1:26 AM
>
> I've got a question about stops.  After buying a stock, if you want to
> put a stop in, should you wait one day after the buy before you put the
> stop in?  I guess I'm wondering if there is any way the stop could
> execute before the buy order does if they were put in on the same day?
> Or is this technically impossible?
>
>
> <<  Richard S.  >>

------------------------------

From: Jeff Beckham <[e-mail]>
Date: Thu, 2 Jan 1997 09:44:38 -0700
Subject: Re: [CANSLIM] Stop Question

My broker won't accept a stop order on a security until it shows up in my
account.  If I try to enter a buy order and a stop on the same stock, at the
same time, I will get a message back that the stop order was an improper
trade, and cancelled.  If I put hard stops on my holdings I usually do it
the next day to avoid this.

Jeff Beckham

At 12:26 AM 1/2/97 -0600, you wrote:
>I've got a question about stops.  After buying a stock, if you want to
>put a stop in, should you wait one day after the buy before you put the
>stop in?  I guess I'm wondering if there is any way the stop could
>execute before the buy order does if they were put in on the same day?
>Or is this technically impossible?
>
>
><<  Richard S.  >>
>


------------------------------

From: Hemant Rotithor <[e-mail]>
Date: Thu, 02 Jan 1997 12:10:22 -0500
Subject: Re: [CANSLIM] Stop Question

If you enter buy and stop orders before the trade the results seem like
an undeterministic phenomenon and the exact action depends on the
brokerage house.
I had done this once with etrade with the intention of going long on a
stock, but guess what they did, they sold the stock short at my stop
price.
When I called them they said that for the stock that has not been bought
the order in which it was executed was not deterministic (I don't buy
that argument because their menu (I did a telephone order) cleary has
different keys for selling short and a STOP so it seemed like a fault
with their implementation; their broker did not carefully see).
This was around Sept 1996 period, I am not sure if they have changed
since then but I have, and I wait at least until I get a confirmation
that the stock has been bought before I put a STOP.
Just one more data point.

Hemant Rotithor
Jeff Beckham wrote:
>
> My broker won't accept a stop order on a security until it shows up in my
> account.  If I try to enter a buy order and a stop on the same stock, at the
> same time, I will get a message back that the stop order was an improper
> trade, and cancelled.  If I put hard stops on my holdings I usually do it
> the next day to avoid this.
>
> Jeff Beckham
>
> At 12:26 AM 1/2/97 -0600, you wrote:
> >I've got a question about stops.  After buying a stock, if you want to
> >put a stop in, should you wait one day after the buy before you put the
> >stop in?  I guess I'm wondering if there is any way the stop could
> >execute before the buy order does if they were put in on the same day?
> >Or is this technically impossible?
> >
> >
> ><<  Richard S.  >>
> >

------------------------------

From: Joan Sherman <[e-mail]>
Date: Thu, 2 Jan 1997 13:34:10 -0400
Subject: [CANSLIM] Sell Programs

Here's my question -

    This AM (Thursday) CNBC reported that there had been "two killer
sell programs" that brought the dow etc, down considerably.  Who or what
triggers these programs and why?  Are they pre-registered with the
exchange therefore advance knowledge of numbers watchers know about
entry and exit points beforehand? Please anyone fill me in, Thanks, Joan


 Joan Sherman,   /\~~~/\            /\~/\    /\~/\   and
                >       <  Babe,     ^ ^      ^ ^    Courtney and
               >   * *   <  our                      Clapton, a Calico and
                           Samoyed                    Maine Coon

                        Our wonderful rescues!
                 And our newest sweet Sammy, Lucky!



------------------------------

From: "tom worley" <[e-mail]>
Date: Thu, 2 Jan 1997 18:59:44 -0500
Subject: Re: [CANSLIM] Stop Question

My knee jerk reaction to this would be to get a better broker. Many firms,
including my clearing house (Bear Stearns) have upgraded their systems to
show near-live activity in accts, thus the buy would then show. Besides, if
the broker just bot the stock for you, he knows you are long. If the
"system" is rejecting the stop, it's his job to find a way to "beat the
system". I have entered GTC sell orders on stocks I had just bot 5 minutes
earlier, and that's before the system went "live". Granted, if you are
picking your entry point correctly, you aren't taking much risk in a day's
exposure without a stop, but then why should you have to?

tom w

- ----------
> From: Jeff Beckham <[e-mail]>
> To: [e-mail]
> Subject: Re: [CANSLIM] Stop Question
> Date: Thursday, January 02, 1997 11:44 AM
>
> My broker won't accept a stop order on a security until it shows up in my
> account.  If I try to enter a buy order and a stop on the same stock, at
the
> same time, I will get a message back that the stop order was an improper
> trade, and cancelled

------------------------------

From: "tom worley" <[e-mail]>
Date: Thu, 2 Jan 1997 19:06:47 -0500
Subject: Re: [CANSLIM] Stop Question

Sounds like a flawed program to me. For example, let's say the stock is
trading at 37, you enter a buy limit at 36 1/2 hoping it will pull back a
little and also enter a stop (or stop limit, doesn't matter for this
example) at 35. For the stop to be executed, the stock must trade 35, which
means the buy order is executable or has already been executed. With this
example, the only way you could have sold before buying is if the stop was
instead treated as a short sale, thus a sale above 36 1/2 was possible
without reaching your buy limit as well. I think the order was either
entered incorrectly or was not executed right. Of course, I wasn't there
entering the order so mistakes are certainly possible (IMHO).

tom w

- ----------
> From: Hemant Rotithor <[e-mail]>
> To: [e-mail]
> Subject: Re: [CANSLIM] Stop Question
> Date: Thursday, January 02, 1997 12:10 PM
> I had done this once with etrade with the intention of going long on a
> stock, but guess what they did, they sold the stock short at my stop
> price.
> When I called them they said that for the stock that has not been bought
> the order in which it was executed was not deterministic (I don't buy
> that argument because their menu (I did a telephone order) cleary has
> different keys for selling short and a STOP so it seemed like a fault
> with their implementation;

------------------------------

From: "tom worley" <[e-mail]>
Date: Thu, 2 Jan 1997 19:20:58 -0500
Subject: Re: [CANSLIM] Sell Programs

Personally, I think "computer driven programs" may eventually be the death
of the market as we know it today. I will try to keep this simple.
Institutional players often have set up "baskets" of stocks, or even
individual stocks, on which orders will be automatically inputted to the
floor specialist if a given point is hit. The point can be a reading on the
DOW 30, the OEX, or the SPX (these would be the most common used, anyway).
If the trigger is hit, these "computer driven" orders are sent rapidly and
electronically to the floor and executed and can consist of a million
shares or more usually of large cap stocks. These "programs" can be buy or
sell programs, the idea is for the institutional player to make a little
money on a lot of shares. Some of these institutional players, by the way,
include most of the best known wire houses trading for their own accts.
Since just one program is capable of moving the mkt, it can often trigger
another program, and another, which had nearby trigger points.
As far as I am aware, the size, scope, and trigger points are a closely
guarded secret. To give away this info would be to give away a trading
advantage. Of course, each of these traders are looking at the same market,
and have experience at their competitor's strategies, so nearby trigger
points aren't just a possibility, they are a reality. When the current 50
point "circuit breaker" is tripped, what it does is stop the automated
entry of these buy/sell orders and require them to be entered in a more
conventional fashion. This doesn't prevent the order entry just slow it
down somewhat. I would bet most of the houses now have computer support
that still speeds these orders to the floor. And guess who are the biggest
advocates of changing the "circuit breaker" from the present 50 pt
threshold to anywhere from 100 to 250. Can you imagine the daily volatility
if computer programs were allowed until the DOW moved 250 in a day???

tom w
- ----------
> From: Joan Sherman <[e-mail]>
> To: [e-mail]
> Subject: [CANSLIM] Sell Programs
> Date: Thursday, January 02, 1997 12:34 PM
>
> Here's my question -
>
>     This AM (Thursday) CNBC reported that there had been "two killer
> sell programs" that brought the dow etc, down considerably.  Who or what
> triggers these programs and why?  Are they pre-registered with the
> exchange therefore advance knowledge of numbers watchers know about
> entry and exit points beforehand?

------------------------------

From: "tom worley" <[e-mail]>
Date: Thu, 2 Jan 1997 19:50:30 -0500
Subject: Re: [CANSLIM] Stops, Education

I have no problem in answering questions (hopefully correctly) nor in
sharing my experience as an investor, a broker, and as an operations clerk.
On the other hand, this group is not premised on education, as I understand
it. It is designed to discuss CANSLIM philosophy in general and CANSLIM
qualified stocks in particular. Hence, to avoid boring the group and taking
up space in your INBOX, I am going to make a request. Send your "education"
questions directly to my email address. I will respond directly back to you
within a day or so, unless I see a number of members asking the same
question. In that case, I will respond to the group at large, unless I get
objections from the group. There are two prerequisites for my "course": you
MUST have diligently read O'Neill's book (this means highlighting and
making margin notes) AND you must be serious about gaining knowledge about
the market and its actions. I cannot pick stocks for anyone except myself,
nor can I casually give opinions. I am a licensed broker in several states,
altho I have no clients, and of course have no idea what states most of you
are in. Nor are any of you my clients, nor do I have the "know the
customer" knowledge it takes to make suitable recommendations. So,
"educational" type questions are welcomed here, but I want to take them off
the entire group net.

Here are some quick answers to the latest set I received:
- ----------
> So an uptick on a stock would be a 1/8 pt gain?
an uptick iS any price increase of any increment from the last trade,
unless you refer to the "uptick rule involved in shorting stocks, then the
definition varying between NYSE/AMEX and NASDAQ.
>
> When drawing a trendline how do you know at which bottom or top to
> start at and end at. What time period should I use...50 days?
2 questions - I tend to draw "channels", since stocks tend to move within
ranges. As long as the stock price stays within the established channel I
know what I am doing. I draw the lines more or less parallel and across the
periodic highs and lows. I use both the 50 and 200 dma, same as O'Neill,
for the same reasons.
> Usually this is not to much of a problem when
> looking at the history of a stock except when the trend suddenly
> breaks high. So, is this a new higher trendline or just the price moving
> away from the current uptrend and it will eventually return?
depends on the stock, too general a question to answer easily. If it breaks
a pattern, it must be evaluated.
>
> I have a lot of trouble determining where support and resistance is
> in an uptrend or downtrend.
we all do, unless there is a clearly defined base. That is part of what
this group is all about, to challenge each other's thinking and
interpretation.
>
> I read in one book that support or resistance is at the yesterday's
> closing price:
I don't follow this approach, maybe day traders do. One day's action does
not establish a trend. In fact, for a stock trending sharply upward, a down
opening is positive, a gap upward is, to me, a sell signal.

> When to take profits....Support and Resistance
> How do you use support and resistance for setting profit targets?
I generally don't set profit targets, except when playing a microcap which
is severely undervalued and "undiscovered". These are not CANSLIM stocks
and don't apply. On a CANSLIM stock, I let the stock set its target, using
the moving averages and charts to tell me when to get out (of course aided
by stops).

> I believe O'neil uses the depth and length of a cup or base
The shape, duration, and depth of a cup and handle formation can aid you,
but few stocks present a typically perfect cup and handle. When you find
one, watch it like a hawk cuz it's rare. I have only found a few since I
started doing CANSLIM and made money on every one. The most important thing
to learn is that CANSLIM is a tool, an aid, a philosophy, a body of rules
which you can violate at your own risk. It is not a final judgement or
decision maker, it is designed to assist you, and I mean YOU, in your
judgement and decision making.

good luck to all, let's take the classroom to private lines unless there is
mass appeal.

tom w


------------------------------

From: [e-mail] (hemant g rotithor)
Date: Thu, 02 Jan 1997 20:40:49 EST
Subject: Re: [CANSLIM] Stops, Education

Tom

Your posts have been very useful, I would love to see your educational
posts
sent to this discussion list so everyone has a chance to see them rather
than sent to just the originators.
People can always ignore a post that is not of interest, so I don't think
that should be a point of concern.

Actually posts from you, Craig Griffin, Mike Langston, and others make
reading this
list a useful exercise.

By the way of intro, I am an engineer by profession in NH and have been
interested and invested  in the market for the past few years and trying
to learn from as many sources as I can. I have not used CANSLIM so far in
my selections but used other styles (based on
value/momentum/fundamentals/TA etc; hope to use CANSLIM in the near
future.

Hemant Rotithor

On Thu, 2 Jan 1997 19:50:30 -0500 "tom worley" <[e-mail]>
writes:
>I have no problem in answering questions (hopefully correctly) nor in
>sharing my experience as an investor, a broker, and as an operations
>clerk.
>On the other hand, this group is not premised on education, as I
>understand
>it. It is designed to discuss CANSLIM philosophy in general and
>CANSLIM
>qualified stocks in particular. Hence, to avoid boring the group and
>taking
>up space in your INBOX, I am going to make a request. Send your
>"education"
>questions directly to my email address. I will respond directly back
>to you
>within a day or so, unless I see a number of members asking the same
>question. In that case, I will respond to the group at large, unless I
>get
>objections from the group. There are two prerequisites for my
>"course": you
>MUST have diligently read O'Neill's book (this means highlighting and
>making margin notes) AND you must be serious about gaining knowledge
>about
>the market and its actions. I cannot pick stocks for anyone except
>myself,
>nor can I casually give opinions. I am a licensed broker in several
>states,
>altho I have no clients, and of course have no idea what states most
>of you
>are in. Nor are any of you my clients, nor do I have the "know the
>customer" knowledge it takes to make suitable recommendations. So,
>"educational" type questions are welcomed here, but I want to take
>them off
>the entire group net.
>
>Here are some quick answers to the latest set I received:
>----------
>> So an uptick on a stock would be a 1/8 pt gain?
>an uptick iS any price increase of any increment from the last trade,
>unless you refer to the "uptick rule involved in shorting stocks, then
>the
>definition varying between NYSE/AMEX and NASDAQ.
>>
>> When drawing a trendline how do you know at which bottom or top to
>> start at and end at. What time period should I use...50 days?
>2 questions - I tend to draw "channels", since stocks tend to move
>within
>ranges. As long as the stock price stays within the established
>channel I
>know what I am doing. I draw the lines more or less parallel and
>across the
>periodic highs and lows. I use both the 50 and 200 dma, same as
>O'Neill,
>for the same reasons.
>> Usually this is not to much of a problem when
>> looking at the history of a stock except when the trend suddenly
>> breaks high. So, is this a new higher trendline or just the price
>moving
>> away from the current uptrend and it will eventually return?
>depends on the stock, too general a question to answer easily. If it
>breaks
>a pattern, it must be evaluated.
>>
>> I have a lot of trouble determining where support and resistance is
>> in an uptrend or downtrend.
>we all do, unless there is a clearly defined base. That is part of
>what
>this group is all about, to challenge each other's thinking and
>interpretation.
>>
>> I read in one book that support or resistance is at the yesterday's
>> closing price:
>I don't follow this approach, maybe day traders do. One day's action
>does
>not establish a trend. In fact, for a stock trending sharply upward, a
>down
>opening is positive, a gap upward is, to me, a sell signal.
>
>> When to take profits....Support and Resistance
>> How do you use support and resistance for setting profit targets?
>I generally don't set profit targets, except when playing a microcap
>which
>is severely undervalued and "undiscovered". These are not CANSLIM
>stocks
>and don't apply. On a CANSLIM stock, I let the stock set its target,
>using
>the moving averages and charts to tell me when to get out (of course
>aided
>by stops).
>
>> I believe O'neil uses the depth and length of a cup or base
>The shape, duration, and depth of a cup and handle formation can aid
>you,
>but few stocks present a typically perfect cup and handle. When you
>find
>one, watch it like a hawk cuz it's rare. I have only found a few since
>I
>started doing CANSLIM and made money on every one. The most important
>thing
>to learn is that CANSLIM is a tool, an aid, a philosophy, a body of
>rules
>which you can violate at your own risk. It is not a final judgement or
>decision maker, it is designed to assist you, and I mean YOU, in your
>judgement and decision making.
>
>good luck to all, let's take the classroom to private lines unless
>there is
>mass appeal.
>
>tom w
>
>

------------------------------

From: David Peterson - FDC <[e-mail]>
Date: Thu, 2 Jan 1997 17:09:42 -0800 (PST)
Subject: Re: [CANSLIM] Stops, Education

>
> good luck to all, let's take the classroom to private lines unless there is
> mass appeal.
>
> tom w
>
>

Most of the time I benefit from reading the "classroom" answers, so I would
vote to keep them public.  It's pretty easy to use the delete key if you're
not interested.

Dave


------------------------------

From: "Richard S." <[e-mail]>
Date: Fri, 3 Jan 1997 00:07:29 -0600
Subject: [CANSLIM] NYSE STOP BAN RULE 80A

I received a notice from e-schwab this morning that the "NYSE STOP BAN
RULE "
was in effect.  Among other things it said that 'retail brokerage
customers may place new stop and stop limit orders *only* for 2,099
shares or less' .  It went on to say that the rule takes effect if the
S&P 500 drops 12 points, this correspons to a 70-90 point drop in the
Dow Jones Industrials.  Said, the rule will be in effect for the rest
of the day.

Is this some kind of new rule, I've never heard of it before and I've
never received a notice of it before from e-schwab.


<<  Richard S.  >>


------------------------------

From: "tom worley" <[e-mail]>
Date: Fri, 3 Jan 1997 06:59:55 -0500
Subject: Re: [CANSLIM] NYSE STOP BAN RULE 80A

No, this was one of several new procedures put in place after they studied
the 87 crash and tried to fix some blame. The best known new rule is the 50
pt circuit breaker, which cuts out automated program trading until/unless
the mkt moves back within 25 pts of the prior day closing nr. Rule 80A
(also known as the sidecar rule) is designed as the second tier to the
circuit breaker, further tightening access to the market against high
volume orders. BTW, a 12 pt move on the s&p 500 is closer to 100 on the Dow
30, at least that's where I equate it in my mind.
I do find it interesting that schwab even sent this notice out, that's
actually pretty sophisticated and I am not aware of any other firm that
alerts its clients, mostly just the brokers are told, if that, since it
only applies to orders of 2100 shares or greater.

tom w

- ----------
> From: Richard S. <[e-mail]>
> To: CANSLIM <[e-mail]>
> Subject: [CANSLIM] NYSE STOP BAN RULE 80A
> Date: Friday, January 03, 1997 1:07 AM
>
> I received a notice from e-schwab this morning that the "NYSE STOP BAN
> RULE "
> was in effect.  Among other things it said that 'retail brokerage
> customers may place new stop and stop limit orders *only* for 2,099
> shares or less' .  It went on to say that the rule takes effect if the
> S&P 500 drops 12 points, this correspons to a 70-90 point drop in the
> Dow Jones Industrials.  Said, the rule will be in effect for the rest
> of the day.
>
> Is this some kind of new rule, I've never heard of it before and I've
> never received a notice of it before from e-schwab.
>
>
> <<  Richard S.  >>

------------------------------

From: "David F. Cameron" <[e-mail]>
Date: Fri, 3 Jan 97 9:00:59 CST
Subject: [CANSLIM] Stocks which gap downward

Hey gang,

I'm starting to feel like this group is becoming "Ask the Professor"
with your host: Tom Worley.    Don't get me wrong though, I think
that Tom's postings are very good, and backed with insightfulness
and experience.  I just hope others will start contributing more
to the discussion again.

Today's topic is Stocks that Gap Downward (Putting on my OWN
professor cap...)  For those of you that don't recall, I've
been investing for 8 (now 9...) years.  My best year was 1995
where I doubled my money by basically using CANSLIM principles,
or my interpretation of them.  My worst year was 1996 - yes
worse than 1994 or 1990 - both years in which I was active.
This is relevant, because I hope you can learn from my mistakes,
and I can reinforce my learning by putting this in writing.

The main reason I lost money in '96 was "Stocks that Gap Downward".
I'm the other FTPS victim. (BTW, Tom, its FTPS not whatever you
transposed it to... it stands for FTP Software)  FTPS was a CANSLIM
stock.  Throughout most of '95 it built a base between 25-29.   In
November of '95 it broke 30 on high volume.  I looked at earnings,
read the press releases, looked at institutional holdings, and
bought at 32.   This was at a point where my confidence was at an
all-time high due to the fact I was up over 100% forthe year.
Then... one day early in '96, FTP suddenly pre-announced that
earnings would fall far short of expectations.   The stock was
not extended.  One could argue it had pulled back a bit, but
on light volume.  The stock opened trading 70%(!) lower. Like,
Patrick, I sold - but I waited for a bounce that never came.
This news provided an unavoidable (in my mind) loss for me.

BUT.... what WAS avoidable was where I compounded my error.
1. When I bought, since my confidence was at an all-time high,
I bought with 30% of my equity.  Thus, the 70% loss on FTPS
reduced my equity by 21%.
2.  Finding this emotionally difficult to take, I became
determined to makeit back to the breakeven point. BIG mistake!
This caused me to make dumb trades in an effort to makeeasy
money rather than rationally evaluating investment opportunities.
BTW,  this is a difficult thing for me to swallow my pride and
admit I made this compounded mistake.
3. By mid-year, I got back to CANSLIM principles (May) only
to have that method fail, as the NASDAQ topped and most
of my breakout purchases got stopped out at a 10% loss (my
stop rule).
4. By October, I finally started to make money, but from
a 35-40% hole.   I ended up down 20% for the year, by
tossing aside emotion and going back to basics.


I'm still annoyed that the tax structure forced me to
pay a large amount in '95 due to my 100% gain(moving meup
into a higher bracket because manygains were Short-Term)
but they won't let me write off the whole loss this year
and start with a clean slate.  That's my only remaining
psychological baggage which I am struggling to overcome.

Bottom line: stocks CAN gap downward;live with it an
move on!

Thanks for letting my bare my soul.  Ihope you learn from
it -- or better yet, can add your own comments or discussion.


With sincerity,

Dave Cameron
[e-mail]

------------------------------

End of canslim Digest V1 #33
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