Short term you could be correct. A move down to $85-90 level you suggest would be a convincing triple bottom and an enormous buying opportunity long term. I'm not so sure. From a TA perspective, the slight gap breakout above the 50 DMA was a shot across the bow IMO regarding a major change in the trends. AOL made a strong double bottom with a "W" formation moving above its 50 DMA without a severe sudden reversal that you normally have seen over the last several months. Technically, the price should or could go back and test that breakout area of $97-99 or maybe trade slightly below it, but if the stock is healthy, that should be the low end of the trading range. If you are correct, then a triple bottom could set up a once in a lifetime buying opportunity for AOL. Obviously, a break below the recently now-formed double bottom would NOT bode well for AOL shareholders. There is strong resistance between $120-130 and if AOL gets to that resistance area, there is going to be one helluva battle between the longs and new shorts that would enter. I believe long-term, say 6-9 months, the battle will be won by the longs, and then we are off to the races to test the old highs (12-18 months out IMO).
A couple of scenerios:
1)Market crash - AOL goes back to the low 80's, creating a triple bottom. A break below the double bottom and oh well, shareholders could get stung badly again.
2)No Market crash - AOL could advance to the 120 area and be in for a resistance battle between longs and shorts.
3)No ATHM deal - AOL tests its breakout area of 97-99, maybe slightly below, we wait for earnings which should be good (I don't hear or smell any warnings on that front), and then we head on back to the 110 area waiting for confirmation of a very robust Xmas season, pushing AOL again into the 120-130 area. Eventual breakout of this area in year 2000 and upwards and onwards from there, slowly, because AOL is a LARGE cap, and we could very well see $200 by 2001.
4)ATHM deal - will be at the 120-130 resistance area real quick. If excellent earnings and excellent Xmas season happen, we could explode sooner than anyone thinks.
Happy Hunting and Good Trading Everyone. I think I'll stay on the gorilla train for awhile and see if this lumbering and sleeping giant can reawaken and make the pundits believers once again. Interesting times. Good luck to you. You're doing great.
jmanvegas |
