(I read the delayed version of his posts) I found this to be too "what you could have/should have" done to be actionable. I agree that it can be used to learn to find your own picks, but I wanted to see what his "real time" thinking is, since he has been doing this a lot longer than I have. Delayed posts also give the opportunity to screen out picks that didnt work.
Go through the yahoo group on Gary Smith and you will find interesting discussion and also effectiveness of his picks. http://groups.yahoo.com/group/GBS_Trading/
O'Neill is not strictly fundamental by a long shot, although the CANSLIM method has fundamental aspects. He bases his entry rules around the cup and handle pattern and specifically a high volume breakout above the handle. This is identical to Smith's typical entry pattern. While O'Neill hardly has exclusive rights to this technique, others who use it, such as many of the writers on Trading Markets, seem to feel it is appropriate to identify it as O'Neill's approach rather than imply it is their own invention.
smith is with realmoney.com not to be argumentative, but canslim does use earnings growth, a fundamental consideration, Smith does not use fundamentals at all, so I feel that makes the two methods different enough to not warrent giving credit.
Smith is a straight technician. His method is as simple as they come. He buys or sells, breakouts or breakdown, moves through moving averages, channels, etc... There's is absolutely no complexity to what he does. What you need to learn is how to exit with a profit, and how to pick the buy or sell in points. Once you master that, you can just buy or sell at the breakout/down point, get out at the end of the day if it closes below that point, or let the stock ride if stays above. Key is, watch the price/volume action, if the stock keeps going up on lighter trade, you might want to take a profit, if it is up big and reverses, another profit taking point. Read O'neils "How To Make Money in Stocks" for more sell rules. This will help you be a little more patient on your winners, but never be patient on taking a quick loss. Just pull the trigger. Even if you take several losses in a row, just one good winner should compensate for the losses, and two could turn you green.
Thanks for the link. I did some research, and it does seem that many(most) in that forum use his style, rather than his picks (particularly his paid service). I looked into this because it seems that many there were not doing as well as Smith's claimed performance, and this bothered me. So far, I'm 3 for 3, but have closed all because I dont tollerate reversals (true for 2) and I dont like holding overnight (the remaining one) @ $500 on 26k capital average in 2 days, no losers. I dont have any problem re-entering a profitable trade, if the technicals warrent. It seems to me one key to this style is to set stops not far below the close of the breakout day, because I think this style would tend to work soon, or not. Keep losses small on those that dont pan out, and just move on to the next pick. (so far I have used tighter arbitrary auto stops like 0.12 offset) Trail those that succeed with stops no larger than the previous day's close.
Most writers that recommend stocks, after they've gotten popular underperform the market. The reason for this is too many people buying or selling at the same time. When Smith first started he had a limited following and a very limited amount of shares chasing the same stock. Now that he's gotten popular, there are probably 100's of thousand of sahres trying to buy at the same point. That creates a gap up or a fast move up or down as everyone tries to get in and the market makers and specialist take the stock up to their comfort point. Once the buyers want to take profit, there are no buyers left and the stock drops to the point where it should've traded. The move up or down is artificial. That's why you have to learn his methodology and find your own stocks. When he quotes his return, he's most likely quoting his personal trading. This includes stocks he doesn't post on the site.
Some of Gary Smith's old article which explain his technique. Gary on profit taking http://www.thestreet.com/p/comment/cfeatures/7254.html Gary and William Oneil http://www.thestreet.com/p/comment/cfeatures/7456.html Gary Revisits His Long Strategy http://www.thestreet.com/p/comment/techtake/13561.html Short Strategies: Part 1 http://www.thestreet.com/p/comment/techtake/15185.html Short Strategies: Part 2 http://www.thestreet.com/p/comment/techtake/15389.html