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Strategies & Market Trends : Z Best Place to Talk Stocks

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To: StormRider who wrote (42683)	8/9/2002 9:30:44 PM
From: DanZ	Read Replies (1) of 53068

I agree with you, but stock prices are driven by supply and demand. In the short term you know that there will be more supply than usual because S&P 500 index funds will be forced to sell the stock whether they want to or not. The big unknown is whether there will be enough demand to absorb the extra supply over the next few days. If an institution wanted to buy a lot of PALM, it seems to me that they would sit back and take advantage of the situation. They might buy a little now, but I would think that they will buy most on the close next Tuesday. You have to expect that other people who hold PALM will sell their stock with the hope that the index funds will push it down so they can buy it back cheaper. That just compounds the short term problem. The stock was down another 20% today and there are still two more days to go. I really think that anyone buying now is early, but obviously there's no way to know for sure. If enough people think that the stock is cheap enough, they could absorb all the supply from the index fund dumpers. For the sake of you all who were buying today and yesterday, I hope that's the case. I still haven't bought any, but will next week. I have a feeling that the stock will base for a few days after Tuesday before it starts to move back up. After this kind of short term thrashing, it will probably need to establish a base before the demand can overcome the supply at a higher level. You have to expect that short term traders who are lucky enough to buy near the low will keep a lid on it for a while. Longer term I think that anyone buying at 60 cents will do very well, but absent news to chase away the short term profit takers, it could be a while before it gets back over 1. And then again, I have been wrong before and could be wrong this time. Best of luck with it. Dan

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