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Technology Stocks : JDS Uniphase (JDSU)
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To: Jeffry K. Smith who wrote (8757)4/14/2000 10:26:00 AM
From: Hank Stamper  Read Replies (3) of 24042
 
Distribution: One characteristic of the market topping and bear process is distribution. It is typically, large scale selling (by a relatively few major players) into a rising or flat market. Wall-streeters refer to it as "stock moving from strong to weak hands." The 'strong' hands believe that the conditions in the market--e.g., inflation is approaching and the Fed is raising rates etc.--and, therefore, the market has minimal upside left. The 'strong hands' begin selling. The 'weak hands'--often individuals who don't understand how market bubbles work--buy the top, despite deteriorating conditions. You often see large blocks put onto the market for sale that are snapped up in many small lot sales (the Amaritrade data referred to by that post). In terms of price action, this is often characterised by days of high volume but with little upside movement.

Once the 'weak hands' use up available cash, and since the big guys stop buying, the market begins to drop sharply. As the bear market continues, the 'strong hands' sell remaining stock into the counter-trend rallies--more days of distribution--as the 'weak hands' buy on the mistaken belief that the good old days have returned. This happens all the way down.

Ciao,
David Todtman
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