A classic example of the success enjoyed by many CANSLIM.net readers usually starts when an investor reads a CANSLIM.net report and buys a featured stock before it has risen above the pivot point by greater than 5%.  After a stock breaks out above its pivot point, there is only a +5% window that investors have to purchase the stock under the proper guidelines. Once a stock rises above the "maximum buy price" the risk of a shake out balloons, meaning that even a normal retracement in the stock might force you to employ the 7-8% loss cutting rule.  Much can be told by the stock's daily action in the weeks and months that follow a breakout. Typically, a light volume and orderly pullback suggests that the bulls remain in control.  However, high volume pullbacks that violate support paint a totally different picture.

Ametek Inc. (AME  +$0.40 or +0.80% to $50.63) enjoyed a fresh new high close today with a gain on average volume as this high-ranked leader continues to show healthy action. The stock recently broke out and has spent the past few weeks trading in a tight trading range above its prior chart highs. Concerns would be raised by deterioration under prior chart highs in the $48-49 area which would have the effect of technically negating its latest breakout. AME sports strong ranks; an Earnings Per Share (EPS) rating of 92, and a Relative Strength (RS) rating of 90.  Its Return on Equity stands at a firm 21%, which is well above the +17% guideline. There is reassuring leadership (the L criteria) from other strong stocks in the Electrical-Equipment industry group including Jinpan Int'l Ltd (JST) and EnerSys (ENS), both of which are also presently included among CANSLIM.net's current list of Featured Stocks.  This stock was first featured on Monday, April 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $48.55 pivot point and a $50.98 maximum buy price and the following note as it was triggering a technical buy signal: "Y - Today's breakaway gap up to new all-time highs came after it reported better than expected earnings news and raised guidance. Decent annual earnings history (the A criteria) and quarterly earnings increases were above the +25% guideline for 3 of the past 4 financial reports (good C)." Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that from your purchase price. 

C A N S L I M | StockTalk | News | Chart | SEC | Zacks Reports |  

View all notes | Alert me of new notes | CANSLIM.net Company Profile