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Technology Stocks : Creative Labs (CREAF)

CREAF 0.470

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Jan 2 9:30 AM EST

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To: set who wrote (6493)	12/4/1997 9:58:00 PM
From: Jon Tara	of 13925

Shahar, I think we saw the same thing. I've previously pointed-out the two technical indicators that I found a bit troubling: firstly, an expanding triangle. Triangles are supposed to get smaller as they play out, not bigger. :) These are generally not a good thing, as they indicate a market out of control. Secondly, the MACD divergence which others have also pointed-out here. I did cut back on my position significantly when I observed the expanding triangle. I cut back further at the beginning of this drop, though I did not sell out entirely. I did not feel that it was going to be this bad. I felt that what I was seeing was also visible in the market averages, and that CREAF had managed to skate-by without suffering the same fate as the market (the second time, that is). I also felt that we'd already seen the brunt of the fallout from the MACD divergence in the mid-20's. While I did find these indicators to suggest caution, I didn't feel, and still don't - that a short position was prudent, as the risk/reward was too low. Better to short something with a P/E of 100 and shakey technical indicators.

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