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.
NASDAQ Stock Market, Inc. (NDAQ +$0.65 or +1.49% to $44.32) has continued to climb with gains on above average volume since it was first featured in yellow on Wednesday, October 24, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $43.39 pivot point and a $45.56 maximum buy price. Nasdaq Stock Market sports a very healthy Earnings Per Share (EPS) rating of 95 and a Relative Strength (RS) rating of 88. It resides in the Financial Services- Misc group which is currently ranked 50th of out the 197 industry groups listed in the paper, helping it satisfy the L criteria. Prior chart resistance in the $45-$46 area (its 2005-2006 highs) are the one reason it still may face some resistance, but there is very little overhead supply to be concerned with now. The stock is currently trading below its $45.56 maximum buy price, which still makes this high-ranked leader buyable under the guidelines. Disciplined investors know to avoid buying stocks extended above the maximum buy point, because doing so is considered "chasing" and typically hinders performance. As long as the most recent breakout is not negated with a damaging loss and close back under its prior high closes, odds favor even further gains.
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