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.

Cavco Industries Inc. (CVCO +0.68 or 1.38% to $48.59) rallied to a fresh new high close on above average volume on Friday. This stock was featured on Wednesday, February 8th, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) at $42.94. A few days later it blasted out of a solid base, then it quickly pulled back and found support slightly above its 50-day moving average (DMA) line. This was a very severe shakeout that probably prompted many weaker hands to sell, but it did not fall back and close in violation of an 8% sell stop.  After that brief shake out, CVCO went on to build a new base-on-base pattern. Then, on Wednesday, March 29th, 2006, it broke out of this new, shorter base with a gain on more than twice its average daily trading volume.  It followed through with more gains on above average volume to end the week at a fresh new high close.