Zeev, while you profess not to short, you show no reluctance to frame subjective viewpoints as factual analysis. You also apply a blunt and indiscriminate broad brush, the reflection of your pedantic approach to investments, which does more to obscure rather than reveal prospects of specific equities.
For example, you provide us with all this nonsense about 'supply', 'overhead resistance', 'overextended', and those infamous imitators of The Monkeys, the 'Bollinger Band(s)' (although Duane Bollinger plays a mean slide guitar). KLIC has gone through 3 periods similar to the present: 1995, 1996-7, 1999-2000. In each case the stock had sharp and spectacular run-ups and showed little, if any, compunction to obey your model of short selling. The best example is the most recent: following the SEA crisis, KLIC treaded water much of 1999. Then this happened:
28 Oct, 2000: $13.83
29 Oct: $14.72
01 Nov.:$14.87
02 Nov: $16.12
03 Nov: $16.09
04 Nov: $16.00
05 Nov: $17.28
08 Nov: $17.47
09 Nov: $19.12
KLIC did tread water AT THESE LEVELS ($17-$20) for ~6 weeks after this spike (going as low as $16.50 on 15 Dec., but rebounding to $22.44 by 21 Dec.) but it essentially never looked back, hitting the mid-forties by March, 2000. The stock never even came close to falling back to what must have been similar voodoo, er, Bollinger, bands.
And, I submit, the fact that the 1999-2000 rally occurred at PRECISELY the same time as the current rally is far removed from coincidence: your overbearing technical approach does not account for powerful seasonal forces that also influence cyclical patterns. The fact that from 21 Oct, 1999 to 09 Mar., 2000 the stock had a virtually straight line run of over 300% argues powerfully that the 'overhead resistance' here is squarely between your ears and not a prudent prognostication for KLIC.
In fact, in all three prior periods, if investors had acted on your suggestion that KLIC may be a short candidate due to its potential 'overextended' position, they would have lost significant monies in very short order.
I know your advice is couched in all those fuzzy phrases so as to deflect criticism that you are providing absolute advice. Your chart-based gibberish completely fogs over highly relevant characteristics of individual stocks. And these long term historical patterns of particular stocks (and, moreover, a knowledge of the degree of cyclicity of the particular industry of a stock) can and will completely undermine the short term algorithms you flaunt.
KLIC is one such case. |
