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It sure is nice to see some big names like TYC and AMZN showing positive action. That should generate some enthusiasm amongst the bigger players.
Trying to find CAN SLIM investments for a billion dollar portfolio must always be challenging. Imagine that 10% of the average daily volume in WalMart is only a $60 million dollar investment. Where was a CAN SLIMer to put the other $940 milion?
$2 million into NSM leaves you with $938 million left to place. Pick up 10% of average daily volume in Home Depot and that's only $55 million. Now you've got $883 million left to go. If you are Bill O'Neil, you probably took your profit in WMT at 20% up, so add back that $60 million investment to your cash position and now you are back over $900 million left to place.
In a market like this, If you want 7 or 9 names it's going to take you quite a while to get to 100% invested.
Let's say you bought the TYC breakout because you are a big fund and you couldn't find anything else of good size to start diversifying into. Let's say your entry was at 57.73. O'Neil says that you should sell if your loss gets to 7-8% Pg 242 HTMMIS. He also says "Don't take profits during the first eight weeks" pg 272. I would not violate these rules.
However today, the TYC entry at 57.73 is sitting with a 1.3% loss after four days and a distribution day has shown up in the stock as well. We know that Bill has said that "All stocks are bad, unless they go up" TYC certainly isn't acting like a powerhouse at this point and the overall environment has been pretty choppy in the past several weeks.
My experience tells me that TYC is not acting well and therefore there is no reason to own it. If overwhelming volume were to push it higher in price, above the August tight trade, you can always buy it back.
This way if you can keep your loss to less than 2% and the powerful ones like WMT carry you up 20%, then you can really make some money.
Note that WMT accumulated again right away after its May breakout and never headed lower. That is ideal action. Home Depot is currently showing several accumulation days higher in price and very light selling in the past seven days. These two act like leaders. TYC is currently coming up short.
Abe...nice analysis. I too am sittin on a small position on KORS bought at breakout (cause I missed the pocket pivot while on vacation) not making another decision until this one is proven right. If KORS does not get some accum today, probably dump it.
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