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This is definitely a CAN SLIM stock.
99 Composite rating. It's not at the 50 dma. It's not at the top of a base. It's not three weeks tight.
It sure looks a lot like a Darvas box with a previous shake out....
Sell offs have been in very low volume. Run ups have had accumulation. If your eye is very quick and your sell rules are tight as a drum, perhaps we can treat the 20 dma the way O'Neil teaches us to handle the 50 dma.
Your own study of CAN SLIM leaders of the past will be your best guide here.
Its a "Good stock but a bad market" scenario here. WWWW stock on its own till date has given no reason to sell. Sector wise it has SWI and RAX as its broken cousins. On the market front leaders like QCOR, SYNC, CRUS, ALLT, MLNX, GNC, ALXN all had bad action today. In general a big majority of the big bull market time-frame leaders from 2009-2012 run are either behaving badly or are already toast. Decision seems pretty clear.
I really like the fact that it has found support at the 21 day line. It has basically been above that since early May. Few distribution days compared to accumulation days. The 21 day line could be played with a smaller position and a tight sell if it drops below that for more than a day or so. I was watching NSM when it was a little extended at the 16-17 level and a small position there would have worked out well. In that case the 21 day and 10 day line have proven to be support levels.
sometimes the best thing to do is do nothing
I did some research on this stock over the weekend as it has been hitting several of my screens. One of the issues that concerns me is in the A in CAN SLIM. The company fundamentals have:
- a debt to equity ratio of 263%, I consider a ratio greater than 100% a red flag.
- a current ratio of 0.5 - the current ratio should be greater than 1 - the current ratio measures a company ability to pay short term obligations with short-term assets;
- its cash flow to EPS is negative; its CF vs EPS % Last Qtr was -14% and its CF vs EPS Last yr was -57%; and,
- it's profit margins are poor - operating profit margins and after tax profit margins are less than the industry medians, and have been basically flat for the past 6 quarters.
It is a red flag when a company has a high debt ratio, a low current ratio, negative cash flow vs EPS and poor profit margins. Especially since its ROE is marginally acceptable @ 18.7. All of these points to problems.
Besides the fundamentals. Its industry rank has dropped in the past 3 months from rank 1 to rank 64 today. And its sector is ranked 25.
I would be interested in how you interpreted its fundamentals and the above indicators. Do you give any of these indicators any weight? If not, are there other indicators to compensate for these faults?
I also concur that with others here that with the market under pressure, I will hold off on any buys.
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