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.

Miller Industries Inc. (MLR +1.91 or +6.25% to $28.65) surged to a new 52-week high close on more than twice its daily average volume. This stock was featured two days ago (Monday, April 3rd, 2006) in the CANSLIM.net Mid-Day Breakouts Report (read here) with a $26.09 pivot point. MLR has managed to steadily increase its quarterly results at a very healthy rate, and the action shows its shares being rewarded properly for that feat. This issue is an excellent example of healthy post-breakout action. Only a reversal back into the prior base and close back under the February 28th, 2006 high close of $25.50 would prompt concern, as such deterioration would negate the latest breakout and have the stock falling back into its prior base. Discipline always dictates limiting losses at 7-8% from your cost to prevent more severe losses. Caution about chasing the stock and buying more than +5% above the pivot point is warranted, because the big gain today took it beyond the "max buy" level. Otherwise, this issue appears poised to continue advancing and the bulls remain in control.