Do you routinely go long stocks like PCLN when Dr. K's model suggests the market is in a downtrend?
Q: Do you routinely go long stocks like PCLN when Dr. K's model suggests the market is in a downtrend? This breaks the CANSLIM model of only going long if the market is in an uptrend.
A: Stock selection can occur at any time. Our stock filters which are rigorous become even more rigorous when the model is on a sell signal. If we see something that passes all our filters, we will email out a report on it as we have done for PCLN. Also, the risk in entering PCLN at this level is very low, especially if using the Livermore rule of 300 in this case, since PCLN crossed a price of 300 just recently.
We use some of the principles behind CANSLIM but in the 1990s, we started using our own unique methods which we continue to polish and refine to this day. CANSLIM, remember, is a retail product, and even O'Neil uses some of his own unique methods which are not CANSLIM. He does not discuss these methods with the retail public because he either feels they are proprietary, but more likely, it would just add complication which could end up doing more harm than good to the retail investor.