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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 229.55

+0.2%

3:59 PM EST

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To: Tom Kearney who wrote (96674)	3/16/2000 7:01:00 PM
From: Robert Rose	Read Replies (1) of 164684

<Robert - Do you feel that these activities serve as pillow for a falling market? > Yes, I do. It is conventional wisdom and it stands to reason that shorts' "forced or inevitable buying" will cushion a stock's price drop. It is all about group psychology. "Let's see, last month the short position was 3 days average volume. Even though this is a dog stock who's guts I hate and I KNOW it's going lower, I better cover just a weeeee smidgeon ahead of everyone else.... and lock in these KILLER PROFITS!!! And so L2 displays the beginnings of such activity, the effect begins to snowball, and the trend can then reverse very quickly for a heavily-shorted stock. Why? Because all these shorts KNOW that's how the game works! But left to its own devices, a lightly-shorted stock's trend (up or down) will tend to perpetuate itself until some outside force (news, earnings, split, etc.) impacts that trend.

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