Can CANSLIM be Programmed?

What exactly is CANSLIM? And can it be mechanically programmed?

Here is the brief definition from their website:

C= Current earnings per share should be up 25% or more and in many cases accelerating in recent quarters. Quarterly sales should also be up 25% or more or accelerating over prior quarters.

A= Annual earnings should be up 25% or more in each of the last three years. Annual return on equity should be 17% or more.

N= A company should have a new product or service that's fueling earnings growth. The stock should be emerging from a proper chart pattern and about to make a new high in price.

S= Supply and demand. Shares outstanding can be large or small, but trading volume should be big as the stock price increases.

L= Leader or laggard? Buy the leading stock in a leading industry. A stock's Relative Price Strength Rating should be 80 or higher.

I= Institutional sponsorship should be increasing. Invest in stocks showing increasing ownership by mutual funds in recent quarters. IBD's Accumulation/Distribution Rating gauges mutual fund activity in a stock.

M= The market indexes, the Dow, S&P 500 and Nasdaq, should be in a confirmed up trend since three out of four stocks follow the market's overall trend.




So, can this be programmed? Sure it can but I would urge some changes to fit exactly what you are looking for! Here is how I would simply break CANSLIM down to enter it into a mechanical system:

C= quarterly earnings 25%+ versus last quarter, sales should also be up 25%+ versus last quarter
A= Annual earnings 25%+ for three consecutive years, ROE must be 17%+
N= within 15% of new high
S= minimum daily trading volume is set to 40,000 shares*
L= RS rating of 80+
I= Increased institutional support along with net positive shares**
M= NH-NL ratio must be positive for longs (my criteria)

This can be programmed (of course itis still simplified)!

*Volume should exceed 150% average volume on breakout days and strong accumulation days (up-days)

**Just because more institutions own the stock doesn't mean that the net number of shares bought versus sold was positive! Criteria can be set for this level (maybe you want an increase by 5% or 10%)

Piranha