Well said Def... i employed the Canslim method for many years but it would get shit on in this market... although I wodner if anybody just flipped the strat for short set-ups?? Low rel strength decreasing earnings etc etc... PEACE Commisso
The Pitbull Investor uses a long method based on CANSLIM that uses IBD's stock ratings. He also sells a method of shorting. He says that just reversing his long method would not yield very good results, so I imagine that just reversing CANSLIM would not work very well either. Pitbull shorts high performance stocks based on the IBD rating. I found that Pitbull's shorting method involved too much record keeping for my taste, so I didn't pursue it. I notice that the Pitbull Investor isn't advertizing in IBD like it used to during the late great bull market. A new market indicator?
In fact some of the IBD top rated stock make some of the best shorts. 61 stocks were rated 98 to 99 EPS in January according to IBD. As of today 51 of them are negative. 31 are down more than 20 percent and 14 are down more than 50 percent. Less than 10% of IBD top rated 98 to 99 EPS plus stock actually end up plosive rest when they start dropping can be brutal. look at MTON which was last years IBD favorite stock. Because IBD methodology is basically momentum based it works both ways. When IBD high rated stock fail they go down majorly.
The Monday July 22 2002 IBD has a front page article about short selling pros. It mentions one trader who does indeed make money by reversing the CANSLIM methodology. But, this being the second IBD article about shorting to come out, might just be among the signals to get long again.
Wasn't Mr. O'Neil recently heard to talk of 'cutting losses at 7%?' If his disciples obey, there's gonna be a whole lotta sellin' goin' on.
I've been to one of there advanced workshops and met O'Neil and his in-house fund managers. When I went to the workshop it was all about reading charts and analyzing his technical indicators in his book which was too basic. I guess most of them had trouble understanding the chart. O'Niel tries to explain the material but he seemed to have trouble because he uses intuition or experience. O'Neil doesn't recommend that you short stocks but I know traders that make money using his CANSLIM criteria's using a different technical approach. The only thing interesting in the seminar was a guy who was eating next to me who used to work for Jim Rogers.