Sell Rules Keep it Simple 4/2/2016

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Marjory O’Brien’
5 years ago
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1 Sell Rules Keep it Simple 4/2/2016

2 Disclaimer I am not an agent, broker, stockbroker, broker dealer or registered financial advisors I am not employed by IBD or any of its affiliates I do not recommend stocks, any stocks I mentioned, they are only for illustrative and educational purpose I do not accept any responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in the presentations I do not guarantee any results Your success as a trader is dependent upon your experience and ability to conduct due diligence and apply correct strategies

3 Disclaimer This presentation is for educational purpose only I am not recommending any stocks for buy or sell All investing has substantial risk of losing big money CANSLIM is a registered trademark of Investor s Business Daily

4 Books on CANSLIM

5 IBD News Paper and Website Learn from the Experts

6 IBD Workshops and Home study Learn from the Experts

7 Ashish Dave Attended Level II (3 times), Chart school (2 times), Masters Program IBD Meetup organizer for Sunnyvale, California for 9 years Work full time as an Electrical Engineer 14 years with CANSLIM I only want best and I am willing to work for it Recently I am enjoying providing one on one mentorship

8 Assumptions The top quality Liquid Leaders stocks are bought at the proper pivot, once established and the breakout happened in > 100% volume Stock is bought within 1-2% from pivot Account does not use margin

9 It is OK to chase If stock breaks out with a gap or you missed the breakout It is NOT OK to chase If stock already gave you a chance to be bought within 1-2% of the pivot but you passed and now you think you made a mistake so to compensate the first mistake you are making a second mistake

10 Do not chase stocks There is always another one Take the pain of missing the stock so that in future you will not make the mistake of not buying when you were supposed to be buying

11 I missed this one GOOGL Sell Buy 16 months

12 I made up on this one KORS -> 219% in 18 months Sell Good bye pain Buy Frustration Bored from waiting for the stock to go up About to sell Hope Miserable

13 How could I hold KORS through all the pain points??? Missing GOOGL was more painful than holding KORS

14 GOOGL VS KORS Both were IPO breakouts Both formed similar looking patterns though each subsequent bases Both had accelerating earnings and sales growth, high RoE Both gave > 200% returns

17 Bottom line Don t miss the right stocks Especially when your friends are in that stock

18 SELL RULES KEEP IT SIMPLE

19 First Week The first week is the week you bought the stock even if you bought it on Friday that week is your first week

20 Week 1 Sell Rules Rule 1 (applied on daily basis) Sell the stock if stock is giving > 5.5% loss at the closing of the trading day Rule 2 (applied on Friday) Sell the stock if the stock is closing below the pivot

21 Week 2- Week 8 Sell Rules Rule 1 (applied on daily basis) Sell the stock if stock is giving > 5.5% loss at the closing of the trading day Rule 2 (applied on Friday) Sell the stock if the stock is closing below the pivot

22 Week 2- Week 8 Sell Rules Rule 3 (applied a day before earnings) Sell the stock if stock has < 5% of cushion going in to earnings

23 Week 8 th Sell Rule Rule 4 (applied on Friday before closing of the 8 th week) Sell the stock if stock is < 8% in profit

24 First 8 weeks Only 3 Sell Rules to follow Rule 2 will almost always never let Rule 1 to trigger after first week Rule 3 does not apply if there are no earnings in first 8 weeks

25 End of 8th week Only 1 Sell Rule to follow Keep it Simple

26 Rule 4 should not be applied 1.) stock has accelerating EPS and Sales 2.) stock has 5+ weeks up in a row 3.) stock is up 20% in 3 weeks 4.) stock never closed below 10 week line on Friday 5.) you are in love with this stock

27 Rule 4 MUST be applied From 9 th week onwards stock must have 8% cushion at least at the close on Friday to continue to hold going forward, every week

28 Week 9 Week 18 Rule 4 (applied on Friday before closing) Sell the stock if < 8% profit

29 Week 9 Week 18 Rule 5 (applied on Friday before closing) Sell the stock if stock is closing below 10 week line > above average volume

30 Week 9 Week 18 Only Two Rules apply Rule 4 and Rule 5 Rule 4 replaces Rules 1-3 Keep it Simple

31 Week 18 on wards Continue to use Rule 4 and Rule 5

32 Week 18 on wards Rule 6 (applied on Friday before closing) Sell the stock if stock goes up or down with highest volume in the move including breakout week volume

33 Week 18 on wards Only 3 Rules Keep it Simple

34 Rule 5 Exception Buy Back the stock if stock recovers and holds the 10 week line at the closing of the very next week

35 In Summary: Total Six Rules to remember At a time only 2-3 Rules may apply Tiptop CANSLIM stocks may retest the pivot but it should be supported by Friday Always ride the earnings if you have cushion and no other sell rules have applied

36 Rule 1 Daily Basis Sell the stock if stock is giving > 5.5% loss at the closing of the trading day

37 Rule 2 Friday Close Sell the stock if the stock is closing below the pivot

38 Rule 3 Day before Earnings Sell the stock if stock has < 5% of cushion going in to earnings

39 Rule 4 9 th week onwards Friday at close Sell the stock if stock is < 8% in profit

40 Rule 5 9 th week onwards Friday at close Sell the stock if stock is closing below 10 week line > above average volume Buyback Next week Friday if false trigger

41 Rule 6 9 th week onwards Friday at close Sell the stock if stock goes up or down with highest volume in the move including breakout week volume

42 Simulation applying Rules 1-6

43 Nasdaq: 2014 Oct Oct Shakeout and reversal below 40 week Nasdaq FTD 10/21/2014 Climax Selling is over after flood gates are closed on the index

44 Nasdaq: Pink Rally Day FTD on the 5 th day

45 10/21/2014 (FTD) Watch List from IBD news paper a week before Follow Through Day: CELG ILMN MANH ORLY EA LEG

51 ILMN: 0.2% profit Buy Rule 2: Fri closing below pivot

52 MANH: 60% profit Buy Rule 5 Rule 5: Fri closing below 10 week but low volume hold Rule 5 Exception and Buyback

53 CELG:15.4% profit Buy Rule 5: Fri closing below 10 week Rule 5 Exception and Buyback but since the same day another stock broke out and this one did not show true leadership power, did not buy back

54 ORLY:26.5% profit 28% profit lost in sell and buyback Buy Rule 5 Rule 5: Fri closing below 10 week Rule 5 Exception and Buyback

55 EA:53% profit Buy Rule 5 Rule 5: Fri closing below 10 week but low volume so hold Rule 5 Exception and Buyback

56 LEG:17.6% profit Buy Rule 5

58 SBUX:19.8% profit Buy Rule 5

59 SKX:104.6% profit Buy Rule 5

60 MANH, EA, SBUX SKX ILMN CELG LEG EA SBUX CELG, ORLY, LEG SKX MANH ILMN

61 Stats 8 total trades Only two sell rules triggered (Rule 2/5) Average loss 0%

62 Portfolio Performance Stock Buy Date Sell Date Profit Days Held ILMN 10/21/ /14/ % 24 MANH 10/22/2014 8/21/ % 303 CELG 10/23/2014 2/13/ % 113 ORLY 10/23/ /23/ % 365 LEG 10/23/2014 4/17/ % 176 EA 10/29/2014 8/21/ % 296 SBUX 1/23/2015 8/21/ % 210 SKX 2/13/2015 9/11/ % 210 NASDAQ: 16.6% Portfolio Performance: 52.2%

63 Final Words Rules are set in such a way that minimum trading or in/out is required Rules are set such that there is no judgement/art required to execute them Rules are set such that they will help you hold the right stocks through the move

64 My Philosophy I always want home runs. I am OK to let go lots of singles because I know I have a good track record to find and hold the right stocks I just do not know which one are these right stocks and therefore I have to hold them all as far as they behave

65 Thank You

66 Questions???

Daily, Friday, 3/13/15

Daily, Friday, 3/13/15 2 Watch List Monday 3/9/2015 1. NOAH IBD 50 #23, A bit sloppy but very desirable. Tip, Top No Breakout Fundamentals. 2. FB Leaderboard, C/H, New America 3/9/15 No Breakout 3. AYI