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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. 

GameStop Corp.  (GME -$0.19) or -0.31% to $62.11) closed lower on below average volume, ending the year perched just -2.6% off its all-time high. This high-ranked leader was first featured on Thursday, August 23, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $44.86 pivot point and a $47.10 maximum buy price. Since then the stock has rallied a very healthy +42% and has built a new base in the process. GameStop Corp sports very healthy Earnings Per Share (EPS) and Relative Strength (RS) ratings, both of which put it in the top 5% of all public companies.  GME has managed to increase its earnings by above the +25% guideline in each of the past four quarterly comparisons versus the year earlier, satisfying the "C" criteria. GME resides in the Retail-Consumer Electronic group which is currently ranked 36th of out the 197 Industry Groups covered in the paper, placing it inside the much preferred top quartile needed to satisfy the "L" criteria.  The stock rallied to new highs in December, and it has formed a cup-with-high-handle type chart pattern with a new pivot point of $63.87 and new maximum buy price of $67.06. It is important to wait for considerable volume at least +50% above average to show up as this stock trades above the pivot point. Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price.  

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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.

GameStop Corp. (GME +$4.03 or +7.83% to $47.45) surged into new high territory on more than 4 times normal volume, a very reassuring sign of institutional buying demand (the "I" criteria). This stock was first featured in today's CANSLIM.net Mid Day Breakouts Report (read here) with the following note: "Recently found support near its 50 DMA line. Gapped up to new all-time highs today after reporting earnings up +367% over the year earlier period. Number of top-rated funds owning it rose from 185 in Sept '06 to 252 in June '07, a clear sign of strong ''I'' criteria. "  The report highlighted the stock's pivot point of $44.86 and a $47.10 maximum buy price. GameStop Corp sports a very healthy Earnings Per Share (EPS) rating of 95. It is also encouraging to see the company earn a very healthy Relative Strength (RS) rating of 96.  The company has managed to increase its earnings by above the +25% guideline in each of the past four quarterly comparisons versus the year earlier, satisfying the "C" criteria. GME resides in the Retail-Consumer Electronic group which is currently ranked 52nd of out the 197 Industry Groups covered in the paper, placing it just outside the much preferred top quartile. On Thursday, GME experienced a "break-away" gap when it jumped above its pivot point with gains and the necessary volume to trigger a proper technical buy signal.  It would be very encouraging to see GME follow through in the days and weeks ahead with more gains on higher volume. It is important to note, that this stock has quickly jumped above its maximum buy price of $47.10 and is now too extended to be considered buyable under the proper guidelines. Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price. Also, keep in mind that satisfying the "M" criteria calls for being sure the major averages first produce a proper follow-through day before initiating any new positions. Market conditions need to show technical improvement and leadership (new highs) must expand, otherwise odds are stacked against investors for now.

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