The Test Bench › scanner
Does CANSLIM + Sector Overlay actually work?
DEADNo edge left once tested on a fair footing.
The claim
Restricting CANSLIM picks to the strongest sectors should improve it — O'Neil ('leaders in leading groups')
What we did
Tested against Equal-weight survivorship-free peer universe + SPY, net of cost, 2003–2026, OOS ≥ 2021.
The result
Result: 0.7 net-αSPY %/yr (beats index net of cost)
vPEERS +3.6 vs base +5.0; net-αSPY +0.7 vs +6.1%/yr; leading ≈ lagging
Verdict
A sensible-sounding overlay that HURTS. Filtering CANSLIM to leading sectors cut the edge (+3.6 vs +5.0 over peers) and gutted the net return — and the control is the clincher: picks in LEADING sectors (+3.6) ≈ picks in LAGGING sectors (+3.8), so the sector signal adds nothing. The sector strength is already inside each stock's relative strength; the overlay is redundant.
What the test did and did not do
- survivorship-free universe
- net of real costs
- tested out of sample
- point-in-time data
- checked for look-ahead
Almost nobody publishing a backtest says which of these they did. We list the ones we failed as well as the ones we passed.
Tested 2026-06-23. The same treatment, applied to every other system, is on the test bench.
Written with AI assistance from our own test database. The numbers are computed, not composed.
General market commentary for education, not personalised investment advice. Backtested results are hypothetical. Trading carries a real risk of loss.