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Patience and Proper Discipline Are Important - Thursday, October 13, 2005
BP Prudhoe Bay Royalty Trust (BPT -$2.30 or -3.23% to $69.00) pulled back on above average volume and, after briefly violating its 200 DMA, it rebounded to close Thursday's session in the middle of its intra-day trading range. This stock was first featured on 9/29/2005 in the CANSLIM.net Mid Day Breakouts Report as it was setting up to potentially break out. It was highlighted in yellow before its pivot point was exceeded, and it was noted in subsequent reports that it had not yet triggered a technical buy signal - and that patience was of the utmost importance!
Some stocks are highlighted in yellow while they are still slightly below their pivot point, specifically to alert CANSLIM.net members to be prepared if the stock rises above the pivot point with sufficient volume to meet the +50% minimum guideline for a proper buy. Featured stocks are typically researched further and placed in members' watch lists to be closely monitored. Members who find the idea suitable then stand ready to take action if and when the stock meets their respective criteria.
In this particular case, CANSLIM.net provided additional detailed analysis on the stock in the October '05 issue of our monthly newsletter, CANSLIM.net News (read here). It may be helpful for members to carefully review the "What to Look For and What to Look Out For" portion of that report. It includes the comment that a "break below the 50 DMA would cause concern, and a violation of prior chart lows ($73.56) with high volume would be a bad technical failure and sell signal." That bad technical failure occurred on October 6th. Anyone who suffered a loss in this issue was undisciplined, whether they bought too early (before a powerful breakout), or if they ignored earlier warning signs before today's considerable loss.
BPT did not trigger a technical buy signal, and instead, it has fallen deep into its prior trading range. It now faces months worth of overhead supply in the $70-80 range. Daily CANSLIM.net coverage will be suspended.
