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At 11:16 AM 11/7/2000 -0800, The Torch wrote:
John,
Thanks for the information. Can you take a look at
CYTC and JKHY do they meet the CANSLIM criteria with a
C&H pattern.
JS,
Sorry for the delay in responding. Anyhow, FWIW, I thought
it would be helpful if I explained what constitutes a CANSLIM
prospect.
C = Current earnings per share. Look for companies that show
quarterly earnings up at least 25% in the most recent quarter...the
higher the percentage, the better. (This number can be seen near
the bottom of a 'Daily Graph Online (DGO)" chart, where it shows the
quarterly earnings boxes. If I use the JKHY chart as an example,
you will see its most recent quarter had a 35% increase. Note, in
June, it had a 37% (good), but prior to that, we see at least two
quarters of negative earnings growth.)
A = Annual earnings per share. Look for companies that have 3-5
years of annual earnings growth greater than 25-50%. (On the DGO
chart, this is the 'Growth Rate' number. For JKHY it is 27%, not
bad.)
N = New. Look for either NEW 52 week highs or NEW products/services
that are selling very well. JKHY is breaking out to new
highs.
S = Supply/Demand. Note, years ago, 'S' stood for shares
outstanding but that has since changed. This supply and demand can
be seen on the JKHY chart as "Accumulation/Distribution" and
reflects an "A" rating (their highest). Also, although
not displayed on the standard JKHY chart, (you have to use the
"Datablock" feature of DGO), one could incorporate the Daily
Graph "Up/Down" indicator. This is a 50-day ratio of
daily up-volume to daily down-volume. A number greater than 1.0 implies
positive demand. Personally, I like 'u/d' greater than 2.0.
JKHY is 1.9.
L = Leader or Laggard. Is this company one of the BEST acting
companies in an industry group? Most laggards may appear safer and
a better value to you , but they seldom perform like the real leaders in
the group. Thus select the best you can find, not the
cheapest. The best method for spotting the leaders is to view their
Relative Strength - RS. Look for companies with a RS greater than
80. JKHY is 95...this number can usually be found just below the
price action on the chart.
I = Institutional sponsorship. Look to see if mutual funds and
banks are buying/own the stock. Again, this number is not displayed
on a typical DGO chart, but can be found using an expanded Datablock
function. JKHY currently has a 28% institutional ownership.
M = Market. Some consider this the most important 'letter' in the
model, as it indicates the general direction of the broad market.
Going against the trend can dramatically reduce the chances of
success...Current market conditions is a judgement call.
Finally, once I have found a company that meets most of the above
criteria, I look at the price action of stock. This includes
looking for a solid uptrend, followed by a consolidation (hopefully
lasting 8 weeks or longer), rallies or breakouts on increasing volume of
100% or greater than the 30-day volume average, and finally pullbacks on
light volume. Cup and Handle formations are some of the best
patterns when searching for such companies.
I have also included a standard and 'Datablock' chart of CYTC for
your review.
I noticed you are using DailyGraphs
On-Line. How do
you sort through all the charts to find your
candidates. Your help is greatly appreciated.
JS
As for your second question, it is not easy. In addition to
Daily Graphs Online, I also have the print version mailed weekly.
Come Monday, I start manually scanning the books for interesting chart
patterns, then look at the Daily Graph rankings and company
fundamentals. If all looks good, I then put the stock on my DBC
Signal machine and set high, low and volume alerts. Once the price
begins to move, I usually pull the trigger and buy the stock.
If anyone has a better method of scanning for CANSLIM prospects, I
am all ears.
Hope this helps,
John Boggio
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