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Disciplined Investors Avoid Chasing Extended Stocks Above Max Buy Level - Wednesday, April 02, 2008
Once again, the "L" criteria tells investors to choose leading companies in leading industry groups, and when we have identified a high-ranked leader with the proper characteristics we should wait and watch for gains on at least +50% above average volume as a confirmation that a breakout is attracting meaningful institutional sponsorship. 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 triggers a technical buy signal and is purchased, it is always important to employ the 7-8% loss cutting rule in the event of a downturn.
Exponent, Inc. (EXPO +$1.25 or +3.79% to $34.25) rallied on above average volume and enjoyed its second best close. This stock was first featured at $30.86 Thursday, January 31, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $30.91 pivot point and a $32.46 maximum buy price. The stock is currently trading above its maximum buy price which makes it too extended to be considered buyable under the proper guidelines. EXPO sports a strong Earnings Per Share (EPS) rating of 91 after posting healthy increases in the earnings department in recent quarters. All four of its most recent quarterly comparisons showed earnings increases of greater than the +25% guideline. Its Relative Strength rating is a very robust 97.
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Many Weeks Trading in Tight Range Near Highs - Friday, March 07, 2008
Another important factor is the relationship between an uptrend and a stock's pivot point. Typically, stocks begin forming an uptrend after rising above their pivot point. In the event the upward trend is violated, the stock will generally be expected to continue falling until it can retest support. Initial support is often the 50 DMA, or its pivot point, whichever is higher.
Exponent Inc. (EXPO -$0.32 or -1.06% to $30.53) closed lower on below average volume as this high-ranked leader continued consolidating in a tight range, perched near its highs for several weeks while staying above its 50-day moving average (DMA) line. EXPO sports a strong Earnings Per Share (EPS) rating of 90 after posting healthy increases in the earnings department in recent quarters. All four of its most recent quarterly comparisons showed earnings increases of greater than the +25% guideline. This stock was first featured at $30.86 Thursday, January 31, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $30.91 pivot point and a $32.46 maximum buy price. The stock triggered a technical buy signal but immediately ran into resistance, yet it held up well as the market plunged in recent weeks. The stock remains a strong candidate as long as it continues trading above its 50 DMA line ($28.96). If that line is breached then lower prices will likely follow.
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