Disciplined Investors Avoided This Trip To The House Of Pain

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Disciplined Investors Avoided This Trip To The House Of Pain
Monday, December 29, 2008 CANSLIM.net

In recent weeks we have taken the opportunity to use this section to revisit some of the previously featured stocks that were dropped some time ago based on technical weakness, and later developed fundamental concerns. Studying what happened afterwards should hopefully allow investors to get a better understanding of the importance of having a sell discipline. Limiting losses while they are small is critically important to your success, and this investment system's rule is to always sell a losing stock after it falls more than 7-8% from your buy price. These well-known, high-profile companies serve now as perfect examples that will hopefully allow investors in the future to recognize the warning signs and technical sell signals so they will know when it is time to lock in profits or minimize losses per the investment system's sell rules.

Ctrip.com International (CTRP +$0.52 or +2.48% to $21.51) now faces a tremendous amount of resistance due to overhead supply, making it unlikely to be a market leader in the near term. Investors who ignored earlier technical sell signals now have more serious concerns. Why? Because its fundamentals are weakening! Sequentially, its quarterly comparisons against the year ago period show a pattern of ongoing deceleration in its sales revenues and earnings growth. Now, the latest quarter ended September 30, 2008 comparison showed only a +12% earnings increase, under the investment system's +25% minimum guideline for the first time in years.

Following its last appearance in CANSLIM.net's 5/07/08 After Market Update under the headline "Chinese Online Travel Stock Retests Prior Highs" (read here), concerns soon started to mount. First it fell into its prior base, then it violated its 50 & 200-day moving average (DMA) lines while encountering persistent distributional pressure. Very weak technical action was noted repeatedly, and it was dropped from the Featured Stocks list on 6/10/08. It has since traded as much as -67.07% lower, making it worthy of one of Mr. Cramer's "house of pain" references. CTRP was first featured on Monday, October 29, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here).

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About : Kenneth J. Gruneisen - Passed the CAN SLIM® Master's Exam
Kenneth J. Gruneisen started out as a licensed stockbroker in August 1987, a couple of months prior to the historic stock market crash that took the Dow Jones Industrial Average down -22.6% in a single day. He has published daily fact-based fundamental and technical analysis on high-ranked stocks online for two decades. Through FACTBASEDINVESTING.COM, Kenneth provides educational articles, news, market commentary, and other information regarding proven investment systems that work in good times and bad.

Comments contained in the body of this report are technical opinions only and are not necessarily those of Gruneisen Growth Corp. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.
You can contact Kenneth J. Gruneisen - Passed the CAN SLIM® Master's Exam at kengruneisen@gmail.com

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Kenneth J. Gruneisen founded Gruneisen Growth Corp. (2003), which prior to May 11, 2015, operated CANSLIM.net and CANSLIM.com both under license from Data Analysis Inc. / Investor's Business Daily. Kenneth has passed the CAN SLIM^® Master's Exam. Gruneisen Growth Corp. now continues over two decades of fact based market analysis via FactBasedInvesting.com.