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Technology Stocks : JDS Uniphase (JDSU)
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To: k_maxwell who wrote (11787)7/24/2000 7:52:55 PM
From: onurbius  Read Replies (2) of 24042
 
If I eat my words in the future, so be it, but today's pullback in JDSU was healthy, IMHO. Nothing goes straight up without greater risk of quickly going straight down. Instead of an "exhaust" stroke day, we had a new "intake" stroke, like the action of that beautiful V-twin 4 cycle engine on the motorcycle. Here's my reasoning:

1. I truly doubt that all index fund shares are purchased at the close on index day. They may be assigned then, but not necessarily purchased as a market buy order. Those who do actually purchase at the close will be buying the shares of traders and other fund managers who are jockeying their positions.

2. All this pre S&P day accumulation activity by brokers and funds creates trading opportunities as new shorts are brought on to hedge longs.

3. Pure shorts are added as the stock climbs, creating the opportunity to both cover lower and
go long with shares to sell on Weds or just to hold long.

4. Arbs take on new hedge positions after a rapid advance such as we have seen in the prior two days' trading sessions.

5. Daytraders and institutional traders ride the short term intraday volatility up and down for a quick buck or two or million.

The "compression" stroke comes when all these forces coincide within the next 48 hours. Long term, each "combustion" stroke in the cycle then sends the machine farther down the road. IMO
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