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Technology Stocks : Gemstar Intl (GMST)
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To: Magic212 who wrote (2050)2/21/2000 10:06:00 AM
From: Raymond Clutts  Read Replies (1) of 6516
 
Leslie:

As you asked, I pulled Gary Smith's TSC column on GMST dated 2/19/00 and copied the original question below. I will try to summarize Smith's chart analysis below the question. I can't get the chart to reproduce but it's available at,
thestreet.com

"Hey Gary,

I love Gemstar's (GMST:Nasdaq - news - boards) fundamentals, but I'd love your opinion about the technicals. Are we headed for the long-awaited breakout?

Len Digout"

Smith's written comment on the chart is as follows,

"Are we headed for a breakout Len?"
"Only if that opposite "shoulder" is taken out. if not, we may be headed for a breakDOWN."

Then there is an arrow drawn on the column commentary pointing from the commentary to a line labeled "resistance" and the resistance line is drawn horizontally from the late December price peak at 83.26 through a higher peak above the 83.26 price that was reached in mid-January to the projected mid-February prices where the second "shoulder" has not reached the height of the first "shoulder".

I think that in TA this is typically referred to as a head and shoulders pattern in that the first and third peaks are each lower than the second peak in the middle. Usually, the commentary associated with head and shoulders pattern is that it's a very negative short term indicator.

I used TA to scare myself out of a position in Incyte/INCY that I held for about 18 months-much to my regret (as I'm sure Rocketman can attest) and now value its analytic content much less than I did before that fiasco. (A VERY EXPENSIVE LESSON IN HOLDING ONTO ONE'S OWN CONVICTIONS.)

Although, TA can be useful for pricing entry and exit points I've found GG analysis more consistent with my own LTB&H temperament. Smith may well be right about GMST's short term vulnerability but THIS time I'm listening to my own convictions about the company's excellent long term prospects.
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