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Technology Stocks : PairGain Technologies
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To: margin_man who wrote (20034)2/3/1998 11:40:00 PM
From: Rick Slemmer  Read Replies (2) of 36349
 
Is there room on this thread for a PAIR bear?

A look at the chart reveals a few things about PAIR you should consider before buying options.

1. Yesterday and today were two attempts (both on strong NASDAQ and DJIA days) to break through PAIR's 50-day moving average. Both rallies failed.

2. From late December through late January we see a series of three peaks, each one lower than the last.

3. The stock's Relative Strength and On-Balance Volume are declining.

4. CCI is indicating "overbought" at +100 (on a -200 to +200 scale)

5. Volume has just about dried up in relation to the May-August period. A split-volume chart and resulting 21-day moving average shows more down volume vs. up volume.

I like Pairgain; it's a good company, and someday it'll be at 42 or higher again. But short-term, for whatever reason, Wall Street doesn't want to buy the stock. The indicators above tell me that someone with a lot of shares is selling into rallies and is trying to dump the stock as quickly as possible.

A word of advice: Please don't buy call options at overhead resistance levels. PAIR has to cross over its 50-day MA (and in most cases the 200-day MA as well) before any institution or fund manager will look at it. After failing the 50-day MA test yesterday and today, PAIR will probably try to confirm support at 17 1/4, and if that fails, at 15. Sell covered calls or buy puts at overhead resistance; sell puts or buy calls at support.

I trade PAIR most days, and it certainly reacts more to down market moves than it does to up market moves.

Good luck!

RS
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