Tuesday, February 20, 2007

My CanSlim screen

I'm going to start posting the results of my own version of Bill O'Neil's CanSlim stock selection screen. This has been a great way to spot stocks before they show up on the IBD 100. Some of these companies are thinly traded and should be treated very carefully. Always cut loses short and don't mess with cheap stocks or those that trade on the pink sheets. Click here for the screen.

I'll start with an example that has frustrated me ever since it exploded. Almost Family (AFAM) has showed up on my screen for months. This company interested me mainly because I liked the story. It provides in-home nursing care for the elderly. Most of the old folks that I know hate the thought of a nursing home and considering the ageing baby-boomers, AFAM seemed like a great stock to keep an eye on. I watched AFAM flatline for the months of August and September and began to wonder if it would ever break.

Well break it did, but to the downside in early October. I found no news on the company and eventually stopped watching, figuring that something was not right. As it turns out, nothing was wrong, it was just experiencing a classic shakeout. In early November, AFAM exploded to the upside on huge volume. If I was still watching, I would have been tempted to jump in. I'm not sure if I would have bought, but since I wasn't even watching the chart, I will never know.

"It's like lotto, you've got to be in it to win."

The message is simple. If you find a good story and a good chart, keep it on that watchlist. Don't get lazy.

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