CANSLIM.COM

FIGURE 1: THE HOMEPAGE OF CANSLIM.net

When veteran traders and stockpickers are asked, "How do I get started in the stock market?" many point to one book: William O'Neil's classic, How To Make Money In Stocks. This book, which was first published in 1988, is infused with both an optimism that is exceptional for its directness and simplicity ("Success in a free country is simple. Get a job, get an education, and learn to save and invest wisely. Anyone can do it. You can do it"), as well as a hard-as-nails attitude toward investing in stocks (O'Neil is credited for the slogan: "There are no good stocks. They are all bad- unless they go up").

One of O'Neil's biggest contributions, however, was his combination of fundamental and technical analysis into a methodology generally referred to by its acronym, Canslim. Canslim stands for the seven characteristics O'Neil believes stock investors need to consider when selecting stocks. These specific characteristics are:

C: Current quarterly earnings per share
A: Annual earnings increases
N: New products, new management, new highs
S: Supply and demand
L: Leader or laggard?
I: Institutional sponsorship
M: Market direction
Unfortunately, while there have been updates to O'Neil's classic (How To Make Money In Stocks is in its third edition), many of those who have been intrigued by O'Neil's methodology have had few places they could go to see it at work in real time. Certainly O'Neil's website, Investors.com -- an extension of his daily national newspaper, Investor's Business Daily -- is one place. But for those primarily concerned with the opportunities presented by the Canslim method itself, there really hasn't been a perfect, one-stop shop.

At least, not until now.

If you are a Canslim fan, then Canslim.net is a must-visit website. Its developers have provided what must seem to the uninitiated like a veritable waterfall of Canslim-related stock service. With free (premium) and paid subscriber options, daily commentaries and free email reports, Canslim.net picks up where How To Make Money In Stocks leaves off, providing those interested in this methodology a continuing education that can be the foundation of a successful investing and stock-trading practice.

THE SKINNY ON CANSLIM.NET

At first blush, Canslim.net is dizzying to browse. The homepage is packed with charts and commentary. The left-hand side of the website lists the various departments, grouped into categories like "Featured Stocks," "Articles and News," and "Corporate." This latter category includes an FAQ section, an "About Us" page, and advertising and partnership information. But most premium members and subscribers will likely spend their time in the first two sections.

"Featured Stocks" is further divided into four sections: "Breakouts," "Portfolios," "Message Board," and "The Leaders List." The Breakouts page consists of stocks from the Leaders List that have reached or exceeded 52-week highs. These stocks are displayed in tabular form with symbol, company name, price, change, daily high, 52-week high, volume, 50-day average volume, and a set of links to look at the company's financials, news, and price chart, as well as relevant Sec filings and an earnings analysis/report from Zacks. Investors and traders interested in different breakout criteria can use Canslim.net's Leaders List screening tool to limit the number of selections from the Leaders List that will appear in the Breakouts page. Investors and traders can control for exchange, industry group, share price, volume, and relationship to the 52-week high (for example, above or below by a certain percentage).

Just what is the Leaders List? It is a collection of stocks, updated daily, that meet all or most of the Canslim criteria mentioned. The list looks much like the Breakouts page in terms of its tabular format and the data categories provided. Depending on market conditions, this list can get quite voluminous (on the day this review was written, there were approximately 272 stocks in the list)- hence, the Leaders List screening tool.

The two other sections in the Featured Stocks area are Portfolio and Message Board. The Portfolio section consists of downloadable (Excel or text file) sample portfolios of Canslim.net's top-rated stocks. These portfolios can be imported into a trader's or investor's own quote and trading software for further analysis and charting in real time. The Message Board is, well, a message board. Moderated to keep the discussion away from spam and penny-stock hype, the Canslim.net Message Board has a clean and largely intuitive interface and appears to be relatively active without being simply a cacophonous roar of half-formed opinion and attitude.

CANSLIM.NET CATCHES ON

The second major section of Canslim.net ("Articles and News") includes a variety of subsections that provide links to more information about the Canslim methodology, other advisory services (some of which rely on the Canslim method), and other sources of information about trading stocks and managing risk. A "What's New" section includes notes on recent additions, enhancements, and site improvements. These improvements and additions include such things as the announcement of the new "Mid-day Breakouts Report," as well as the monthly release dates of Canslim.net News (more about this in a moment). "What's New" also provides technical information about accessing the website (connectivity issues, AOL-compatibility updates, and so on).

The rest of Articles and News covers Canslim-related educational information such as the "Strategies" section, which is devoted to risk and money management strategies largely derived from How To Make Money In Stocks. "What is Canslim?" is a section that consists of a detailed explanation and breakdown of the Canslim methodology, combining O'Neil's original thinking with clarifications and examples provided by Canslim.net's writers and editors.

A final section in this group is the Canslim.net "Knowledge Base." The Knowledge Base is a sort of Canslim "continuing education" classroom containing links to the Canslim.net chat area, and a set of popular articles and archives from market newsletters (newsletters that have now been incorporated into Canslim.net News). These newsletters range from Canslim-styled analysis ("Investing for the New Millennium") to more conventional analysis and stock-picking ("Market Sense").

One other section of Canslim.net is worthy of note. Under screening tools, Canslim.net not only provides the Leaders List screening tool mentioned, but also a link to "CupWatch," a stock screening service available as a separate subscription. This service screens specifically for stocks with O'Neil-styled cup-with-handle chart patterns. Recall that William O'Neil wrote about the cup-with-handle pattern in How To Make Money In Stocks, calling it "one of the most fundamental chart-base price patterns." It is little surprise that a website devoted to O'Neil's Canslim methodology (but not officially connected with his Investors Business Daily publication or corporation) would provide an opportunity like CupWatch to help traders and investors take advantage of price action and price patterns that O'Neil believed were among the most important.

COMING SOON TO CANSLIM.NET ... YOU!

As even a cursory visit to Canslim.net will prove, the website is in semi-perpetual motion, with improvements and modifications occurring often. Thus, readers who visit Canslim.net should not be surprised to discover upgrades to the website that are not covered here -- although there are no immediate plans for major new programs, features, or additions to Canslim.net. That said, those looking for regular and consistent information that will help them find, invest, and/or trade stocks based on simple, straightforward criteria that has stood the test of time could search for quite a while before coming across a website as worthwhile as Canslim.net.

-- David Penn, Technical Writer

Originally published in the April 2004 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2002, Technical Analysis, Inc.
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