CAN SLIM — the system that survives both bull and bear markets.
C = Current Earnings
Last quarter's profit needs +25% YoY minimum. But here's the real alpha: acceleration matters 100x more than the number itself. You want earnings growth speeding up, not slowing down.
A = Annual Earnings
3-year CAGR above 25%. ROE ideally 17%+. One-hit wonders don't cut it.
N = New
New product, new management, new narrative, or straight-up new ATH. Most fear new highs — that's exactly when you should buy. No overhead resistance = no bagholders waiting to dump on you.
S = Supply & Demand
Avoid bloated float. Breakout day volume must spike 40-50% above average. No volume = fake breakout.
L = Leader
Only top 1-2 names in the sector. Relative strength score 80+, meaning it's outperforming 80% of the market. Don't bargain hunt laggards. Weak stays weak.
I = Institutional Sponsorship
Fresh smart money entering is bullish. But if 200+ funds already own it? That's a red flag. Crowded trades have no incremental buyers. One miss = stampede.
M = Market Direction
This is the master switch. If the overall market is in a confirmed downtrend, don't touch anything. Cash is a position.
You don't need all 7. Hitting 2-3 solidly is already top tier.
Once you're in:
- Hard stop at -7% to -8%. No excuses.
- Take partial profits at +20% to +25%.
- But if it rips +20% in under 3 weeks, hold tight. Strong stocks often run 8-10 weeks in their main move. Don't get shaken out early.
C = Current Earnings
Last quarter's profit needs +25% YoY minimum. But here's the real alpha: acceleration matters 100x more than the number itself. You want earnings growth speeding up, not slowing down.
A = Annual Earnings
3-year CAGR above 25%. ROE ideally 17%+. One-hit wonders don't cut it.
N = New
New product, new management, new narrative, or straight-up new ATH. Most fear new highs — that's exactly when you should buy. No overhead resistance = no bagholders waiting to dump on you.
S = Supply & Demand
Avoid bloated float. Breakout day volume must spike 40-50% above average. No volume = fake breakout.
L = Leader
Only top 1-2 names in the sector. Relative strength score 80+, meaning it's outperforming 80% of the market. Don't bargain hunt laggards. Weak stays weak.
I = Institutional Sponsorship
Fresh smart money entering is bullish. But if 200+ funds already own it? That's a red flag. Crowded trades have no incremental buyers. One miss = stampede.
M = Market Direction
This is the master switch. If the overall market is in a confirmed downtrend, don't touch anything. Cash is a position.
You don't need all 7. Hitting 2-3 solidly is already top tier.
Once you're in:
- Hard stop at -7% to -8%. No excuses.
- Take partial profits at +20% to +25%.
- But if it rips +20% in under 3 weeks, hold tight. Strong stocks often run 8-10 weeks in their main move. Don't get shaken out early.