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Technology Stocks : Micron Only Forum
MU 232.33-2.2%3:59 PM EST
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To: Estimated Prophet who wrote (23667)11/7/1997 8:41:00 PM
From: Peter Shaw  Read Replies (2) of 53903
 
Brian,
Stock prices are set only by supply/demand. Fundamental factors which influence desireability of an investment get priced into the investment very quickly and efficiently according to efficient market proponents. Of course, human judgement will create problems for this efficiency as some see the glass half full vs. half empty (see Sridhar vs. Skeeter). If something as obvious as DRAM production costs > ASP's is occuring in the market, everyone who observes this would get short knowing that MU would post a loss for the upcoming Q vs. the gain currently projected. When everyone is short, there's noone left to sell and the path of least resistence points to the upside as a rush of buy orders hits the market (from shorts trying to lock in a profit). Logically, MU should go down, but it spikes up. That's it in a nutshell. Finding the path of least resistence is the trick, and TA theory gives you the benchmarks which most traders are watching. Hint...if all traders believe 25 is major support, a flurry of buying will occur there. It's all a self fulfilling prophecy!!!
Over a longer period of time, major fundamental valuation issues will make mincemeat of technical support/resistence theory. It's only important in the short term!
Hope that helps.

Cheers,

Peter Shaw
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