One more thing Pete that I just thought of. When you say that you can’t compare IBD to the S&P, that isn’t true at all. IBD sells a product that they call Swing trader. It has much different rules than IBD was originally marketed with. One of them is that instead of holding for a drop of 7 to 8 percent, you only hold to a max drop of 3 percent. One thing about rules is they can always be adjusted to your style.
Andy
Andy, Swing Trader is a product that they sell, but it is not a product you can use to judge CANSLIM. They won’t swing trade junk stocks, but they are not following the CANSLIM rule and the way Bill would do things. Don’t get me wrong, I am not evangelizing CANSLIM and don’t want anyone to think it is the best way. I am trying to make a fairly serious attempt at it, but it does take a lot more work than SimonSez, and when I prove I can do SimonSez better with less time, I am willing to go there.
I think marrying the too is how I will try to do it for individual stocks. Buying stocks with great growth fundamentals might result in longer runs with SS.
Anecdote: 4 or 5 years ago MF had a stock picking contest, I think it was using the Rule Breaker universe. I think you could pick 5 stocks a week and allocate some points to each one. Maybe out of 10 points you put 5 on NVDA, 1 on ELF, etc. I ran a spreadsheet where I tracked the IBD rankings for each one each week. When it was time to pick, I would sort the columns and try to pick the best 5 stocks at the time. With this simple mechanical method, I came in somewhere around 15th. So maybe using IBD to help pick for SS will be a good approach.
I agree Pete, that is what I did with Cava. We can see how it will work. I am not advocating just running away from stocks like Cava, I think it is a strong stock even though I sold it. I will buy it back when the time is ripe. Look at Duol using IBD, the fundamentals not the technical’s. I think it looks really good.
Then look at the Technical’s on the daily.
You see that big drop? It wasn’t because of their earnings but because chatgpt was showing people how they could translate from different languages. Seems like a bunch of bunk to me, I think it’s going to come roaring back, but under the IBD method that won’t be touched. Not yet until it come back and forms a cup and comes roaring back. But look at simon sez.
It looks like it is just about ready to turn. We will see.
Pete I want to thank you for showing me Marketsurge and I have been reading and watching alot of books and video’s. The book that Bill wrote how to make money in stocks and the 2013 version I am working through right now where they explain it in more detail. Then watching a ton of video’s on IBD. It is all very interesting and I have learned a lot from many people with different ideas. I don’t pretend to be an expert on any of this and I don’t think it matters how you do any of this. The most important thing is this What ever system you decide to choose, just make the rules fit your way of doing things. I have found that your way is very smart. Picking a system and sticking to it. But I think its also important to be flexible when you find a system that doesn’t work correctly for your way of investing. I am going to stick with IBD Marketsurge because like you said it is a great system for finding great stocks. It makes it so easy to see the fundamentals and I need the hand holding to find when the market is turning. I like the way their system works. It was something I was looking for. But I am going to tweak it with Simon Says. I know you bought Cava along with me. So let’s see how many times I can get in and out of it before IBD tells you to sell. We can see how the two systems work. I may have to change my mind again because I am wrong.
Andy
P.S Pete I am not trying to change your mind just clarifying my thoughts and actions on this. I enjoy your advice.
Andy, I wonder how it impacts the buy sells if you go to 2 or 3 bars a day. Could you get a sell mid day? Charlie was a great source of info because he would back test these things…doc
Hi Doc, Yes you could. Here is a look at something that looks like what you are asking.
It is set for 1 month intraday. Here is a chart set for 1 day 5 min on the same company.
You could use that to day trade it.
That is the whole thing Doc. None of this is wrong. Pete isn’t wrong doing it whatever way he wants to do it, I am not wrong doing it the way I want to do it, You are not wrong the way you want to do it. Pete is following classic IBD methods and it is just a slower way of doing it, yet I am putting some of IBD methods with Simon Sez which seems a little faster. But if I went to day trading I would be in front of my computer all day and it would be very fast.
I am starting to think that whatever your method is, know your rules and stick to them. Pete is probably doing it the correct way because he is sticking to strict IBD rules while I am being a little more flexible, but it could get me into trouble. But where I found I have had the most problems is holding to long and not willing to cut my losses. That is why sticking to your rules is so important.
Andy
Andy, one consistent thing I have heard about the “great traders” is that they knew when to cut losses and preserve capital to fight another day. So definitely make that you best skill! SimonSez makes this a simple, automatic decision. IBD has a set of rules to watch, some of which are very simple decisions, some of which are offensive to sell before you start to lose money.
I like Quill’s simon sez chart. I have been using it for entry positions into various stocks. The thing I was wondering is if you got 2 or 3 bars a day, would that get you out on a bad crash day vs waiting from ten AM to 2:30 in the afternoon. Charlie was very good for back testing ideas like this. BTW, I hadn’t even thought about using it for day trading. I have been using support resistance, along with TTM squeeze and full Stochastics for my day trading (set tight stop loss) and that has been working quite well. Love this conversation and thanks you two for working through it…doc
edit: one thing i haven’t been able to do is get the PAR/TP on stock charts. They only have parabolic SAR 
Doc, one thing I try to keep telling myself is that we have been in a very strong bull market and any system that is working well now, may not work well in a choppy or bear market. Right now I am feeling very smart, and that is usually a good sign of the top. I have not yet taken anything off the table before NVDA earnings (because I am so smart!). That makes me think NVDA will disappoint the very high expectations. We will see soon.
Me too Pete. NVDA is my largest position with SMCI not far behind. So I have been really thinking about that.
Andy
That was my problem Doc. I couldn’t figure out where I was in the market. I mean I knew when the market was doing good and I could see it roll over when the nasdaq or S&P did but I haven’t figured out how to tell as fast as you want it to. It seems to be pretty good on individual stocks but even then it gets clobbered sometimes when a stock just drops on bad news. (Look what happened to Duol, Had great earnings but the next day a blurb comes out that chatgpt will be able to translate for you and the stock dives and is still going down)
But that is where IBD comes in. They have this thing going with distribution days and they tell you how much of your portfolio should be in the market. Right now they say 80 to 100 percent invested. But when I started about a month ago it was 20 to 40 percent invest. So I think that is a pretty good indicator of how I am going to do it. Just follow their advice.
Andy
Thanks for the great discussions and knowledge transfer Puddin and Buy, really appreciate your guidance and analysis. What are your thoughts on ELF as a candidate for swing trade prior to earnings on Wednesday? Seems like the stock has taken a breather in the recent months but growth trends have been great over the last few quarters? Thanks in advance.
Simon sez when the TSI crosses above then its a buy. We already have the smiley face and the TSI is the confirming indicator…doc
Growth and Doc this is how I see Elf.
Looking at that chart I wouldn’t be excited about swing trading it because it is to choppy. But I have been a long term holder of it and If I was using simon and swing trading it I would have been out on 3/25. But it is possible that it might get better after earnings but the way it is acting I wouldn’t want to own it before earnings(although I do).
Doc even though it has the smile we have to wait one day for the green bar before buying. Tomorrow could bring another red bar with another smiley face. If you look at the TSI lines (Blue and Yellow) The yellow line is still above the blue. I wouldn’t buy the stock until the blue line crosses the yellow line. I want the smiley face than a green bar with the blue starting going over the yellow line.
Andy
If you are going to swing trade stocks (long only), why not wait until more odd are in your favor. At least wait until it is above the 50dma. Maybe even wait until the 21dma is above the 50 and the price is above the 21dma. Look for stocks with a strong RS.
Here is a list from another thread. Some of these might pique your interest.
Some IBD stocks near or in buy zones: AROC, HOOD, AVGO, MPWR, CELH, NVO, ISRG, TOL, PHM, , BROS, PDD (they own TEMU), NFLX
○ CRWD is down a bit due to Palo Altos earnings report tonight, but it is building a nice base that should be watched. (Mike Webster says it really broke out a few days ago). CrowdStrike (CRWD) has teamed up with Google Cloud, aiming to transform AI-native cybersecurity. CRWD stock is poised to unleash a new breakout as it edges out PANW stock for top billing among cybersecurity stocks. On May 9, CrowdStrike and Alphabet (GOOGL)-owned Google Cloud announced the expansion of their existing strategic partnership. The enhanced collaboration leverages the CrowdStrike Falcon platform with the Google Cloud Security Operations platform.
○ ATEN: look at chart to see move after gap up (too late to buy) Look how the day after the gap up had a nice little reversal. Was that hinting at the strength to come? NEM, another gap up with a dip and then a take off. Also see SG gap, dip and pop.
○ VST: has seen a ton of accumulate (see the ants on MarkgeSurge). Today was a little messy. I am keeping it on my watch list to see if it will build a tight flat base, then with all the recent accumulation, the breakout could be very strong.|
Is that appropriate on the Simon Sez thread Pete? I thought we were trying to keep the styles separate? This is going to get very confusing.
Andy
Andy,
What matters with the Simon Sez system(s) isn’t any of the specific rules Quill tries to explain and exemplify, but having a set of (simple) rules and then actually following them.
Time-price series are complex enough, and chaotic enough, that nearly anything works some of the time. Hence, no matter what the set of rules might be, a profit can generally be made if proper position-sizing rules are followed and if proper risk-management is observed.
However, the choice of one’s entry and exit rule set does have consequences. Or as the Buddhist proverb goes, "A way of seeing is also a way of not seeing." Hence, the more constrained one’s rule set is, the fewer opportunities one will see. That probably will increase one’s right/wrong ratio but at the cost of having to suffer larger adverse moves while waiting for an exit signal.
Chande lays it out this way, saying there are four possibilities:
Fast in/ Fast out.
Fast in/Slow out.
Slow in /Slow out.
Slow in /Fast out.
Decide which game best suits your personality and stick with it.
That is what I am starting to realize Charlie. Each method or rule has advantageous and disadvantageous. So each trader, unless he follows a specific method like IBD or some other Trading strategy is going to have rules that they specifically set. What I am thinking is that I do not have the understanding to be setting my own rules, so I need to either find a method that suits my investing style and then stick with it until I have a better understanding of what I am doing.
Andy
I have rethought that Pete. I think it’s important to contrast each style. How about if we state what methods we are using when posting so we can learn more? It’s like the Cava trade where you are doing the IBD method and I am doing the Simon Sez. Which seems to be going against me so far.
Andy
"What I am thinking is that I do not have the understanding to be setting my own rules, so I need to either find a method that suits my investing style and then stick with it until I have a better understanding of what I am doing."
Andy,
If --on average-- you’re netting more money than you’re losing, then you’re doing a lot of things right, maybe even enough right that no changes need to be made.
Also, as someone mentioned, right now we’re in a period of rising prices, so much so, that nearly any method or any set of indicators will produce positive results. The reason why is obvious. It’s an election year, and the current government --and those who want to see them continue in power-- is doing everything it can to keep stock prices rising.
But the reality is this. BRICS Plus is now larger than the G7. The world’s Global Majority is de-dollarizing as fast as they can. Etc. The macro-economics all say a downturn is ahead of us. That scenario might require a different approach to making bets on the direction of asset prices than what is currently working.
Charlie
All Reason’s I like the IBD product. They help you realize the direction of the market with tracking the sectors for you.
Andy
