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Technology Stocks : America On-Line: will it survive ...?
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To: kajtek who wrote (5692)11/8/1997 2:44:00 AM
From: Investor-ex!   of 13594
 
Hi AK,

IMO, your composite chart demonstrates that AOL is forcibly being sustained for distribution purposes. What I find even more interesting is AOL's volume chart, which shows a steady decrease as the stock rose from its last major low.

chart1.bigcharts.com:80/report?r=cobrand&site=dailystocks&onbad=cobrandsymb&symb=AOL&time=9&uf=7168&draw.x=31&draw.y=17&sid=8630&sec=c&xyz=130884688&s=7960

The declining volume is a symptom of AOL's 80% institutional ownership. They've overdone it to the upside, pushing this stock to a level where the tiny number of greater fools remaining has left them in a position in which they can no longer effectively achieve distribution. At this point, save for the momentum crowd, anyone looking at AOL's fundamentals breaks out laughing. Individual longs who bought in at a lower price may feel justifiably comfortable, but what prudent investor would establish a position at this level?

AOL is at a Mexican standoff. The institutions would like to sell and lock in a gain but there are not enough willing buyers. If they take it down to a level where distribution might be more feasible, they start an avalanche out of a broken momentum stock. If they expend capital holding the price up, trying to unwind into whatever demand is available, they won't have enough time before the very likely upcoming recession begins. It will be interesting.
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