BY: Den Somera
Let's get back to William O'Neil as promised and finish the review of his winning model, CANSLIM, which may give us a fresh insight on what could be a very difficult market to track this week.
The Dow Jones industrial average plunged by more than 366 points on Friday due to worsening fears of recession, as the price of oil went past $90 per barrel during early trading. Coincidentally, the US market ended down in the same manner as the so-called Black Friday market crash exactly 20 years ago.
By the way, the drilling of the programmed vertical pilot hole at the Galoc oil field should have been started at the weekend. This is done to provide core samples needed by the drillers to refine their plans to produce the oil field.
The drilling is set to intersect the top of the oil core all the way down until it hits water, which should be the bottom of the oil reservoir. The drilling is estimated to take about nine days, and based on the actual calendar of drilling activities, the vertical pilot hole should be completed by Oct. 28 or thereabouts.
After that, the operator will proceed with drilling of the horizontal holes that will take about 20 days each to finish. This will bring the drilling time zone at the end of the first week of December. The vertical pilot hole will provide exciting findings critical to the commercial operation of the oil field. The findings, therefore, may affect production strategies and, most importantly, to investors like us, it may affect the behavior or direction of stock prices. This week is crucial and exciting. Stay tuned.
William O'Neil with his CANSLIM has a piece of advice for those who believe in predicting market prices: Don't waste time trying. It's impossible to exactly predict market prices. Like the other greats in our golden gallery of winning investors, he believes that "Making money in stock trading does not mean knowing the secrets of forecasting future prices."
Instead, O'Neil advocates the use of an automated trading system. This will prevent you from falling prey to your emotions. Good decisions and timely actions are often hindered by emotions. Use some mechanical decision triggers: Stop losses at 8%; add more money to winners up to 5% above the buy price; make gradual moves into and out of a stock; don't buy or sell at one time; and buy or sell in parcels.
O'Neil also insists that in choosing stocks, one should ignore valuation. Low price earnings (P/E) ratios oftentimes indicate that the stock is cheap for a reason. It can become even cheaper. Instead, he insists on looking for growth features in the financial variables of a company. This is where he radically departs from the advice of the other trading greats. CANSLIM is all about looking for growth in the financial performance of companies.
The C pertains to current quarterly earnings per share. The earnings performance of the company should be accelerating. The A is for annual earnings per share. It should be accelerating, too. The N deals with something new in the company. In other words, there should be something driving the stocks to new highs.
The S stands for shares in limited supply while demand should be high. In other words, the share float of a company must be actively sought by the investing public. The L refers to directing your focus on the stocks of companies that are leaders in an industry, while the I stands for institutional sponsorship or ownership being moderate.
Demand needs to be high to drive stock prices higher. Institutional buying is the best source of demand in the stock market. They drive prices up when buying. But too much of them in a stock can translate to being overowned, and the stock might get dumped and its price will drop. The M is for market direction. The stock price should be upward because of strong fundamentals present in the company. Even if the market on the whole is down, it may stand strong and buck the market trend. Most importantly, like what the other trading greats are saying, O'Neil insists on being well informed. If you are not well informed in your task, you might miss a great opportunity.
(The article has been prepared for general circulation to the reading public and must not be construed as an offer to buy or sell any securities or financial instruments referred here. The writer may have a conflict of interest that can affect the objectivity of his reported investment activity. You may reach the Market Reader at densomera@yahoo.com)
The Dow Jones industrial average plunged by more than 366 points on Friday due to worsening fears of recession, as the price of oil went past $90 per barrel during early trading. Coincidentally, the US market ended down in the same manner as the so-called Black Friday market crash exactly 20 years ago.
By the way, the drilling of the programmed vertical pilot hole at the Galoc oil field should have been started at the weekend. This is done to provide core samples needed by the drillers to refine their plans to produce the oil field.
The drilling is set to intersect the top of the oil core all the way down until it hits water, which should be the bottom of the oil reservoir. The drilling is estimated to take about nine days, and based on the actual calendar of drilling activities, the vertical pilot hole should be completed by Oct. 28 or thereabouts.
After that, the operator will proceed with drilling of the horizontal holes that will take about 20 days each to finish. This will bring the drilling time zone at the end of the first week of December. The vertical pilot hole will provide exciting findings critical to the commercial operation of the oil field. The findings, therefore, may affect production strategies and, most importantly, to investors like us, it may affect the behavior or direction of stock prices. This week is crucial and exciting. Stay tuned.
William O'Neil with his CANSLIM has a piece of advice for those who believe in predicting market prices: Don't waste time trying. It's impossible to exactly predict market prices. Like the other greats in our golden gallery of winning investors, he believes that "Making money in stock trading does not mean knowing the secrets of forecasting future prices."
Instead, O'Neil advocates the use of an automated trading system. This will prevent you from falling prey to your emotions. Good decisions and timely actions are often hindered by emotions. Use some mechanical decision triggers: Stop losses at 8%; add more money to winners up to 5% above the buy price; make gradual moves into and out of a stock; don't buy or sell at one time; and buy or sell in parcels.
O'Neil also insists that in choosing stocks, one should ignore valuation. Low price earnings (P/E) ratios oftentimes indicate that the stock is cheap for a reason. It can become even cheaper. Instead, he insists on looking for growth features in the financial variables of a company. This is where he radically departs from the advice of the other trading greats. CANSLIM is all about looking for growth in the financial performance of companies.
The C pertains to current quarterly earnings per share. The earnings performance of the company should be accelerating. The A is for annual earnings per share. It should be accelerating, too. The N deals with something new in the company. In other words, there should be something driving the stocks to new highs.
The S stands for shares in limited supply while demand should be high. In other words, the share float of a company must be actively sought by the investing public. The L refers to directing your focus on the stocks of companies that are leaders in an industry, while the I stands for institutional sponsorship or ownership being moderate.
Demand needs to be high to drive stock prices higher. Institutional buying is the best source of demand in the stock market. They drive prices up when buying. But too much of them in a stock can translate to being overowned, and the stock might get dumped and its price will drop. The M is for market direction. The stock price should be upward because of strong fundamentals present in the company. Even if the market on the whole is down, it may stand strong and buck the market trend. Most importantly, like what the other trading greats are saying, O'Neil insists on being well informed. If you are not well informed in your task, you might miss a great opportunity.
(The article has been prepared for general circulation to the reading public and must not be construed as an offer to buy or sell any securities or financial instruments referred here. The writer may have a conflict of interest that can affect the objectivity of his reported investment activity. You may reach the Market Reader at densomera@yahoo.com)
1 comment:
If you're investigating CANSLIM as an investment strategy, there's a pretty amazing list of sites on this topic that was put together by researchers at Google Answers:
CANSLIM (or CAN-SLIM) Wesbsites
It's well worth a look, if I may say so.
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