Yep, Old Habits Die hard.....that was what taught to us once upon a time.....making us remember this as a Habit or Rather "Have - It"...but now i guess we are moving to a New Age Funda.......
It takes a leap of faith to buy a stock as it's hitting new highs. Everyone who had already bought it up until that point is in at a better price than you. If it doesn't keep rising, you'll have the dubious distinction of owning those shares at the all-time high.
But everything is relative. The whole reason to buy a stock in or near new-high ground is that there is no more overhead resistance. The stock has run out of sellers in that neighborhood.
But few stocks enjoy such momentum. That's why you already will have scoured the marketplace for only the best stocks money can buy: those with great sales and earnings growth, a leader in a strong group, new products or management.
When a stodgy old rust-bucket firm barely growing its bottom line makes a new high, that can be a gift from above, and a great chance to unload. Big run-ups are less likely.
Such is not the case with CAN SLIM candidates. A proper breakout with strong volume from an appropriate formation often is the recipe for success.
Look at big-box pacesetter Costco (NASDAQ:COST - News). Today it's a market-cap behemoth -- still growing but with very little chance to quadruple its value again in the near future.
But in the late 1980s, it was a classic "N" in CAN SLIM -- a young company with a new idea on how to sell to Americans. And, as it turned out, to Canadians, Brits and Asians.
Look at Costco after the stock had recovered from the crash of '87, when it sank to 5.63 (point 1). In mid- to late 1988, it had formed a base between 13.13 and 16.00 (point 2).
On Dec. 1, after months of meandering, Costco leapt back to 16.00 (point 3). That matched its peak for the year. Volume swelled to five times its average.
The short-term trader may have bought Costco near the bottom of that range, hoping for something close to the 16.00 level. He got it.
But if he sold there, he missed a breakout from a flat, tight pattern. The stock paused for four weeks, consolidating its recent gains -- and hugging its 10-week line. Costco didn't even have to make a new 52-week high to declare itself a winner.
The next week, the first of 1989, saw the stock jump to 17.50 -- again in heavy turnover (point 4). By the time it peaked in early 1992, it had soared almost 700% from its buy point.
As with other leading stocks, a new high meant a chance for a new winner.
'Buy Low, Sell High' Is Short-Sighted Plan
It takes a leap of faith to buy a stock as it's hitting new highs. Everyone who had already bought it up until that point is in at a better price than you. If it doesn't keep rising, you'll have the dubious distinction of owning those shares at the all-time high.
But everything is relative. The whole reason to buy a stock in or near new-high ground is that there is no more overhead resistance. The stock has run out of sellers in that neighborhood.
But few stocks enjoy such momentum. That's why you already will have scoured the marketplace for only the best stocks money can buy: those with great sales and earnings growth, a leader in a strong group, new products or management.
When a stodgy old rust-bucket firm barely growing its bottom line makes a new high, that can be a gift from above, and a great chance to unload. Big run-ups are less likely.
Such is not the case with CAN SLIM candidates. A proper breakout with strong volume from an appropriate formation often is the recipe for success.
Look at big-box pacesetter Costco (NASDAQ:COST - News). Today it's a market-cap behemoth -- still growing but with very little chance to quadruple its value again in the near future.
But in the late 1980s, it was a classic "N" in CAN SLIM -- a young company with a new idea on how to sell to Americans. And, as it turned out, to Canadians, Brits and Asians.
Look at Costco after the stock had recovered from the crash of '87, when it sank to 5.63 (point 1). In mid- to late 1988, it had formed a base between 13.13 and 16.00 (point 2).
On Dec. 1, after months of meandering, Costco leapt back to 16.00 (point 3). That matched its peak for the year. Volume swelled to five times its average.
The short-term trader may have bought Costco near the bottom of that range, hoping for something close to the 16.00 level. He got it.
But if he sold there, he missed a breakout from a flat, tight pattern. The stock paused for four weeks, consolidating its recent gains -- and hugging its 10-week line. Costco didn't even have to make a new 52-week high to declare itself a winner.
The next week, the first of 1989, saw the stock jump to 17.50 -- again in heavy turnover (point 4). By the time it peaked in early 1992, it had soared almost 700% from its buy point.
As with other leading stocks, a new high meant a chance for a new winner.