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So it may seem contrary to CAN SLIM analysis that I sold my CERN this morning since it is making a new high on high volume. However I use CAN SLIM rules to take my profit here.
1. Heavy volume support at the 50 day on 6/7 quickly got higher in price. I regard this a valid CAN SLIM entry at the 50 day. After 10 weeks of correction in the indices, this was enough to draw me in.
2. Follow on accumulation showed up 6/12 and again on 6/15 with the follow through day.
3. Today's action is the widest range bar of the burst from the 50 day so I read that as short term climactic action. See sell rule 1 on page 263 of HTMMIS.
4. Now it has been my experience that the really big movers have had 50% run ups in the prior six months or at least a 20% move in three weeks somewhere in the prior six months. CERN does not have this, so I am comofortable taking my profits shorter term in CERN and moving to those that have had 20% run ups in less than three weeks during the past six months.
CERN is just breaking out of a flat base, and it looks like a stealth rally may be underway. Several leading stocks are breaking out today. Although we haven't had a follow through day yet - we have had a cross over of the 8 day moving average and the 21 day moving average on the Nasdaq... a promising sign
If this FTD ends up working I don't understand selling a stock breaking out of what looks like a first stage base on great volume. The numbers aren't perfect but it looks like one of the strongest stocks out there. I just don't get it.
I ended up going back to the Bible and I think you got confused with rule number 1. I think they are referring to a stock that already broke out and is way extended from it's pivot like SINA was on 04/18/11. If every stock broke out with this kind of volume, life would be great.
The "M" in CAN SLIM would have kept most people from being drawn into this (or any) position on 6/7 and, therefore, I disagree in your analysis of "...a valid CAN SLIM entry at the 50 day." The market was not in a confirmed uptrend on 6/7...a basic requirement for a "valid CAN SLIM entry".
CERN is a strong stock for the given market conditions. Although its not a 50% mover in past 6 months but still its a strong stock. I would have found it hard to sell given the confirmed uptrend and selling it without the stock or the market showing any clear signs of reversal especially given the good entry point you had.
:-) No confusion here. The book also says "Don't argue with the market". After hundreds of hours of Chart Arcade, you start to see certain things that work better than others.
I feel fairly certain that CERN will continue to add to its gains over the next few weeks, however now that the market has continued to build on a new up trend, I would rather consolidate into faster movers.
It is true that the book says wait until a follow through day, however if you look at Page 94 of HTMMIS, TARO is marked as a buy on 10/20/2000. The market was in correction at that point. If the stock is acting very well in a strong group, this gives me precedent on an early entry in the aptly described trader's "Bible" HTMMIS.
Well, a FT day needs to be > 1.4%, yet the paper (and scott) are saying it occurred on Friday with 1.3%. Just goes to show how subjective the M in the canslim piece is.
from a technical perspective, 6/6 was when the s&p broke the 1292 resistance level with some conviction, so one argument to consider testing some positions in the market...
Cern breakout is dead in the water for now. Stock pulled back yesterday with a price drop that has not been seen in over 6 months. Not a good sign.
I sold cern today on the 7% 8% rule. Market turned nasty today could be death noll for uptrened. Was in cern 2 days. Bad sign. It was one of the few breakouts with volume on the FTD
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