Sunday, September 30, 2007


CANSLIM is a growth stock investment strategy based on a study of 500 of the stock market winners dating back to 1953 in the book How to Make Money in Stocks: A Winning System In Good Times or Bad, 3rd Edition (May 23, 2002) ISBN 0071373616. by William J. O'Neil . This strategy uses both technical analysis and fundamental analysis.

The goal of the strategy is to discover leading stocks before they make major price advances. These pre-advance periods are "buy points" that are emerging from price consolidation areas (or "bases") of at least 7 weeks on weekly price charts.

[edit] Components of CANSLIM

Each letter in CANSLIM stands for common characteristics which are claimed found in the greatest stock market leaders over the past 50 years:

  • I = Institutional sponsorship. Make sure large mutual fund companies (and other institutions) are investing in your stock - you can ride on their capital. Also, focus on the better performing institutions buying your stock. [51] [52] [53] [54] [55] [56] [57] [58] [59] [60]
  • M = Market trends and market indices. Recognize the cup and handle pattern, as well as other market correction footprints. Know when a stock has peaked out. Also, buy stocks only when the Dow, S&P 500, and Nasdaq are going up. [61] [62] [63] [64] [65] [66] [67] [68] [69] [70]

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