Retta,
Thanks for your inquiry. The previous high point for Echelon stock was almost exactly a year ago when John Chambers of Cisco spoke warmly of ELON, at the Las Vegas CES show and that mention drove the stock through the roof. The roof worked out to be just under 20. People bought and sold all the way up to 19 something and people like me bought at 16 on the way back incorrectly believing that it was a dip suitable for buying. Well all the people who bought and held on the way down often convince themselves that if the stock ever gets back to that buy level they'll sell, because they feel they've been burned. Can't acknowledge a mistake, simply wait so they can sell and convince themselves that "at least I didn't lose any money" and be vindicated. By the time it finally regains its footing and begins working its way back up, there is presumed to be selling all along the way. New happy buyers, take this stock that is offered by the unhappy former owners. As the price approaches the old high, you'll observe more shares coming in for sale, much from the new round of owners taking profits. Well, once all these shortsighted longs, or aggressive short term traders, get out of the way, we say there is less resistance because each new owner is profitable and won't sell. he may even buy more, and he encourages his family, friends, and cyberacquaintances to join in the fun. Each helping the others profit by moving the stock up either by their simple refusal to sell, thus limiting supply or by aggressively adding even more shares to their portfolios. So we say e have "no overhead supply" of shares to dampen our stock's progress. Thus you'll read about explosive upside breakouts, of which Echelon is still I think in the process of giving us a classic textbook example. The crowd goes wild, and we longs should do everything ethical within our means to encourage it. Simply in our economic self interest.
Short sellers enter the market trying to prove their manhood and get swept aside, forced to buy back in at higher prices. Unfortunately, we could not seem to bait enough shorts into this one (ggg) I read that the percent of shorts was quite low, indicating that the overall sentiment on this company at this point in time was very positive.
The trick now, is to prevent a price collapse a la last January but rather to taper off that hockey stick shaped curve on the stock chart and roll it over on its side with what is called consolidation. When people trade the stock back and forth for a few weeks, catch their collective breaths and get ready for another upleg, often spurred by another incredible news announcement or blowout earnings or something similarly encouraging. Again the only "resistance" will be from people determined to take short term profits, rather than hold for what may become a stock miracle on the order of an AOL, or a Qualcomm, etc.
When one is lucky enough to see one of these trains coming, it is important to have a strategy and stick to it. That was what ole 49'r was cautioning me about. In the prior post. Do not get rattled. For many of us we have never seen so much wealth piling up so fast in our lives, and it is easy to make mistakes. My Mother let her broker persuade her to sell 1/3 of her Echelon shares yesterday morning at 40. I was heartbroken. We had purchased them at just over 4.
I am convinced that this time it is different. Echelon will connect the world. And stepping off for pennies is dumb.
This stock should go into a dynasty trust to educate your great grandchildren!
Bill |
