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One of the critical characteristics of successful investing is knowing when to sell. CANSLIM oriented investors are best served when the buy based on the combination of strong fundamentals and technicals, then sell based on the technicals. The reason is because fundamentals often tend to lag a stock's technical condition and come to light later to help explain the technical chart action after the fact.
Wilshire Bancorp Inc. (WIBC +$0.01 or +0.05% to $18.49) added one penny, but it failed to repair its recent 200-day moving average (DMA) line violation. This stock was first featured on Monday, August 14, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $19.74 pivot point, which for a very short time it traded above. However, it was unable to hold onto that session's gains for a close above its pivot point, and then it spent the next couple of months trading below it. In fact, the next day after WIBC was featured it negatively reversed, erasing early gains to close with a loss on above average volume, negating the bullish action. Within a few weeks it sliced under its 50 DMA line and came within a few cents of the 7-8% sell rule (-8% below the pivot would equal $18.16, and its low on September 11, 2006 was $18.19). In late-October, a couple of months after this stock was first featured, it again attempted to trade above its pivot point. Once again the bullish action met stiff resistance and the breakout attempt promptly failed as it fell and sliced through its 50 DMA line again. Recently then 50 DMA line has acted as a resistance level, and the stock sliced under its longer-term 200 DMA line. Furthermore, its Relative Strength (RS) rating has fallen to a mediocre 39. CANSLIM.net's daily coverage on this issue will be suspended.
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Often, when a leading stock is setting up to breakout of a solid base it is highlighted in CANSLIM.net's Mid-Day Breakouts Report. The most relevant factors are noted in the report which allows prudent CANSLIM oriented investors to place the issue in their watch list. After doing any necessary backup research, the investor is prepared to act if and when the stock triggers a technical buy signal (breaks above its pivot point on more than +50% average turnover). In the event the stock fails to trigger a technical buy signal and its price declines then it will simply be removed from the watch list.
Wilshire Bancorp Inc. (WIBC +$0.28 or +1.43% to $19.30) closed higher on below average volume on Wednesday. This stock was recently featured on Monday, August 14, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) at $19.77 as it was breaking out of a multi-month base. However, the very next day, after it had triggered a technical buy signal, this stock reversed course and promptly negated its breakout. It then endured some distribution days (8/25/06 an 9/06/06) and briefly violated its 50 DMA line. The technical violation of the 50 DMA line came on lighter than average volume, but the fact is that the stock triggered a few technical sell signals, first that it had fallen back into its prior base, then when it endured two distribution days, then when it breached that important short-term 50 DMA line, and add to that the fact it also fell more than -7% below the pivot point published.
On a more positive note, the stock stayed well above its 200 DMA line and found support near its July chart highs, and the abovementioned violations were quickly repaired. WIBC is now lingering within 3.4% of its all-time highs, with only limited resistance remaining. Despite its slightly sub-par 77 Relative Strength rank, WIBC otherwise sports healthy rankings. It is also among the Banks - West/Southwest industry group which is presently ranked 13th on the 197 Industry Groups list, which helps it meet the "L" criteria of the CAN SLIM(R) investment system. A close above its best-ever close of $19.71 on August 14th, with gains on above average volume at least +50% above average, would be a bullish sign. Stocks do not close in new high territory by accident or random chance. In due time, this candidate may trigger another proper buy signal. Patience is very important, as your odds are always best when you see proof of institutional buying demand, in the form of high volume gains, to satisfy the "I" criteria.
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