Group action plays a very important role, and experienced investors learn that they can increase their odds of picking a great winner by always focusing their buying efforts in the market's leading groups.  The "L" criteria in CAN SLIM(TM) tells us to choose leading companies in leading industry groups, thus it is suggested that investors choose from the top quartile of the 197 Industry Groups (listed in the paper most days on page B4). 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.

Infosys Technologies Ltd. (INFY 1.84 or 3.07% to $58.06) jumped out of a two month base with gains today driven by nearly twice its average daily volume. This stock enjoyed a very healthy run since it made its first appearance in the Wednesday, September 1, 2004 CANSLIM.net Mid day Breakouts Report. After building a fresh 2-month flat base, this issue appeared in this afternoon's edition of the CANSLIM.net Mid Day Breakouts Report (read here) with a $56.99 pivot point. This stock sports a healthy Earnings Per Share (EPS) rating of 97 which means that its earnings history is better than 97% of all other publicly traded companies.  The stock resides in the Computer-tech Services group which is currently ranked 32nd out of 197 Industry Groups covered in the paper, placing it in the much coveted top quartile - satisfying the "I" criteria.

Whenever a stock clears resistance with gains backed by heavy volume, the odds are greatly skewed in favor of even further gains. However, if this issue rolls over and falls back into its prior base, any close back under its best prior high closes prompts concern. In this case, there is its $56.50 high close of November 15th, 2006 to consider first, while a close back under its January 3rd, 2007 close of $55.82 would fully negate the past two days' bullish action, which would technically be a sign that even further consolidation may be in order.  As always, selling whenever a stock falls more than 7-8% from your purchase price is the smartest defense.