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I just added this stock to my watch list. It recently had sufficient price and volume to pass my screens. In the past 3 months it has been on my stocks on the move screen on several occasions. It had several days with volume up 100%. Seeing big institutional buying got my attention. I am looking at a cup w/handle and a breakout today on 91% higher volume. 17.35 BP. 16.13-15.96 stop loss.
C=phenominal EPS growth over the past 3 quarters. Sales growth is slower than EPS growth. Light analyst coverage (5). EPS Est revision trend is mixed, Qtr est is downgraded, yr est is upgraded. Last Qtr, nice EPS suprise.
A=Weakest Area. Like many mining stocks, current year and last year was good, prior years was bad. Yr EPS was negative for negative for the past 6 yrs, except for last yr - where it made a profit of 0.09. Ann Sales picking up nicely, but lagging EPS growth. ROE is 2.2, current ratio is 3.8 - hinting to a large cash position - a look at the balance sheets confirms this, 221M in cash, 71M last qtr total sales. Profit margins are weak compared to peers. After-tax Margins are great @ 36.4%. No EPS Stability value - due to losses.
N=Great. It only lacks coverage by IBD. just a few articles in total, w/no substance. New industry conditions with weakended economy.
S=Weak - It's Avg Vol to float is 0.8%. Its market cap is just 1.3B (smaller than I prefer). No Stock repurchase plans to tighten supply.
L=Great. Sector rank is volatile was last in July, moved to 2 in today's paper. Industry A/D rating is C+, could be better. Industry rank is equally as volatile, ranked 8 on Apr-25, ranked 168 on Jun-20, ranked 1 on Aug-22. Could be ranked 197 in a few weeks.
I=Great. B Sponsorship rating. Morningstar shows new buys by 3 new funds all average. Funds % Incr is 5.4%, 2 Qtrs of rising sponsorship. Morningstar shows a much larger jump in new fund ownership. A/D is A- and U/D is 1.4. All great.
Great stock and chart to disect. The handle area is 12.4% deep on this CWH, wich is a little more that O'Neil describes on page 116 of the Green book. Additionally I tend to disregard a cup that is more than 25% deep, though I would consider the last three weeks closes to present a 3 week tight consolidation So the chart is defnitely worth further consideration. Where is the pivot point? A little tough to call, I would consider 9/1 as the launch from a 3 weeks tight pattern and call 16.6 the pivot point based on the previous high of 16.55 earlier this week. The market tells us that would have been a viable interpretation and would have confirmed buys up to $17.43 as the top of the 5% window. I would hope that it would tighten up for a day below 17.4 and I would buy pocket pivot volume coming out of that tight trade. Another set of high volume up from tight action would allow me to expand my 5% window up to 10% past the pivot point.
Hi and thanks for posting this.
I too like this chart..... but do appreciate it when the weekly is posted. If you do look at that perspective, I could make a case that it came off of an ascending base and then hit to the latest cup. What I don't care for is the most recent 6 weeks.
If you look at the last six weeks, you'll see that it may be taking on a new character. Notice how it is loosing the tightness that it used to exhibit. Almost looks like a fan in the way that it is spreading.
Anyhow, I do believe that a strong positive, is that it is Canadian. They seem to value their raw material companies and do not have the restrictions that the US has dealing with for the past few years.
From what I see, the buy point would have been $15.60 +0.10. I do believe with there will be another spot within the next four weeks where it'll come to the 10 week and bounce.
Thanks for allowing me to comment,
I just zoomed in and saw your red line at 16. Nice observation of the space between tight price areas. That space tends to indicate that the price is slipping higher and the bigger funds can't buy it fast enough. It sure gave gave a nice little 6% move on top of that over 2 days.
I keep looking at this chart as it offers so much rich soil. Friday MFN marked a high volume new high from a base with all sorts of imperfections. The chart leades me to toss out the big deep and very imperfect CWH, but it draws me in with all the recent strength. It raises so many great questions. Is the 12.4% range of the week 8/24-8/26 too wide for a 3 week tight base? Was the week beginning 8/5 a breakout and shake out from a 3 week tight base that we "must buy it back" as it launches back up off the "10 week line on even greater volume" pg 19 HTMMS? What happens to newbies that buy this as a CWH and find success? Do they spend two more years getting beaten up on 35% deep cups before learning to read the thrusts and 3 weeks tight action within the deep cup? Is the pivot point at the new high 15.65 on 8/3 the best buy point or can we use volume thresholds that allow us to buy nearer to the beginning of the launch on 8/2 thereby reducing our shakeout loss on 8/4? The big question is how much can we have invested on the long side in a very weak overall market environment? We each find our own answers to these questions, O'Neil teaches us which questions to ask.
I normally would have posted the weekly chart, but, I wanted to show the possible handle that the daily chart shows that the weekly one doesn't.
What brought it to my attention was the large volume price moves in the past 4 weeks. This during a weak Confirmed Uptrend market. It also is strong in the L in CANSLIM, as the mining sector and other defensive issues have been strong in this latest uptrend. I zeroed in on the leading industries and was looking for strong stocks. See my comments above on the I in CANSLIM.
Also look at its RS line, it was making a new high on 8/8 the day before it's breakout off the 10-wk line.
What is the reasoning for discarding cups deeper than 25%, IBD suggests 30-35% is ok? You also mention getting beat up on deep cups. I wasn't able to find much reference to this on investors.com.
I searched the investors.com site for the phrase "Volume Thresholds" - it found none. I was hoping to get a technical definition and some examples of what you are referring too. Is this an IBD tool or something you leanred from the chart school?
If you go through all the charts in HTMMS and measure the depth of the base in the 8-12 weeks prior to each buy point you'll find that almost none of the buy points come at the top of a > than 25% deep consolidation in the prior 10 weeks. It is my interpretation that the formation of the base going back more than 7 weeks is much less a factor than the most recent 3-8 weeks behavior. The fact that MFN put up a > 20% move in less than 3 weeks starting in the last week of June is the driver of my interest in MFN not the 16 week very deep cup.
IBD recommends a basic volume threshold(a term I use to describe a type of rule) of "40%-50% above normal" pg 117 HTMMS on the breakout. In order to operate more profitably between say a 40% volume breakout and a 7% loss, one might develop ones own rules of additional volume thresholds and day or week counts. Additional rules of our own may allow us to capture 3-4% gains before a stock shakes out. Ten of those in a year can really make a difference in your performance. The 7% cut lossrule keeps us watching and creating distinctions on the RS leaders in a most important phase of their move. Former O'Neil PM Dr. Kasher provides another volume threshold of a "pocket pivot" or volume greater than any down day in the previous10 days. The pocke pivot is a very powerful distinction. I can't say enough about it.
Additionally, if you look closely at the language at the top of page 117 in HTMMS "Downturns in handles that exceed this percentage(12%) during bull markets look wide and erratic and in MOST cases are improper and risky."
This sort of flexibility in CAN SLIM allows us to continue to use the CAN SLIM system and to develop our own rules. The measurement points for rules that seem most constructive are built on volume, price action and a time component. % thresholds of moves over certain numbers of days or weeks are very helpful. "6% move in 2 days-hold for 4 more days" or "follow on accumulation within 4-5 days hold 4 more days" might be additional rules that fit within CAN SLIM and allow you to capture a profit in a stock that only climbs 7-9% before shaking out.
I am aware of the high volume breakout of 40-50% and use it all the time. In addition, I use volume to look for accumulation and institutional buying. That is one thing that IBD teaches very well is that volume is very important. In the world of investing, people toss around terms and it is difficult to know if we are talking about the same thing. The term "Volume Thresholds" is just not a term that IBD uses in their book, newspaper or at investors.com. Thanks for explaining your use of this term.
CAN SLIM skill building is a lot like Skiing. IBD teaches you how to snow plow to protect yourself on the slope with the 7% cut loss rule. IBD teaches you how to get on the lift by looking for the 40%-50% volume on the breakout of RS leaders. IBD teaches you where the out of bounds area is by the sell at the at the heavy volume break of the 50 day. IBD teaches you to tuck by looking for tight trade. If we want to set personal best records in the slalom course, we have to develop our own rules for how tight we tuck and how fast and powerfully we enter each turn. And the real pros will build rules on ever subltler movements. How can a skiier use the wind resistance with of an expanded torso on the inhale as a braking component, and tuck even tighter with a shrinking torso to increase speed on the exhale. All the while the skiier needs to remember the out of bounds he learned way back at the beginning.
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