* C = Current quarterly earnings

* A = Annual earnings
* N = New products, management, or conditions
* S = Supply and demand
* L = Leaders over laggards
* I = Institutional Sponsorship
* M = Market Direction
Overview of CAN SLIM Trading
The high growth strategist is essentially looking for a high quality company tha
t is aggressively growing. The earnings should be growing by at least 25% and ac
celerating. The relative strength of the price should be high which means the st
ock outperforms the market. Institutions should have a decent amount of ownershi
p, but more importantly they should be increasing their position. One should alw
ays trade with the market trend.
Cup and Handle Analysis
William O Neil s CAN SLIM method will indicate which stocks to buy, but does not pro
vide specific entry and exit values except to time trades with bull and bear mar
kets. That is why he includes in the overall strategy the use of the 'cup and ha
ndle' to provide timing.
The cup and handle formation represents a drop in price followed by accumulation
of stock. This is the cup. The handle is a small pullback to shake out weak inv
estors before the price rockets up. It should be noted that this is not the only
formation used, but perhaps the most famous one.
CAN SLIM Strengths and Weaknesses
The high growth strategy outlined by William O Neil provides a very strong mix bet
ween the two styles of trading: fundamental and technical. The American Associat
ion of Individual Investors' independent study claimed that IBD's CAN SLIM inves
ting achieved a 1521.7% gain vs. 54.92% for the S&P 500 from 1998 through 2007.
The criticisms against this method would be that neglecting one step could be de
vastating. For instance, the CAN SLIM method requires liquidating in bear market
s, and having a stop loss of 7 or 8% below the purchase price of the stock. Sinc
e high growth stocks are also the quickest droppers in bear markets, it is absol
utely essential to exit when the market is giving distribution clues.
As well, the strategy for bear markets is much more weak than the one for bull m
arkets. Some investors also dislike that lower priced stocks, ones under 20 or e
ven 10 dollars, are rarely promoted.
Who is CAN SLIM Trading For?
This is a great strategy for investors who are willing to put forth the due dili
gence for stock selection. Active investors who enjoy tracking the market sentim
ent will find this method useful. People who have an eye for chart pattern recog
nition will enjoy this trading style. Whatever the case, many investors for a lo
ng time to come will likely follow William O Neil s high growth CAN SLIM trading str
ategies and methods.