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Technology Stocks : Applied Magnetics Corp

APM 1.260

0.0%

3:58 PM EST

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To: Jonathan Bird who wrote (10560)	12/3/1997 9:55:00 PM
From: Don Earl	Read Replies (2) of 12298

Hi Jon, Thanks (I think). Even though it might not make a great deal of sense to most folks, this is the type of playing field where I tend to do well. The full explaination is beyond the scope and bandwidth of the thread and probably isn't something I would care to advertise anyway. A partial explaination would boil down to the theory that Wall Street does not run on logic, but on greed and panic. From the stand point of pure speculation, let's suppose that next Q they beat estimates by .02. What would be the most likely reaction of 10+ million short shares expecting another downside blow out. As others have mentioned there hasn't been much guidance on what to expect and there aren't enough analysists covering the stock to form a real consensus. The estimate for this quarter is over 50% less than actual results for last quarter. Is a negative surprise of say 10 cents or around +.30 probable? I honestly don't know but that would seem to me to be the sure thing short bet. Going back to the long bet, what happens with a small up side surprise? First there will be the predictable percentage of long players that will place market orders to buy at the open, plus the also predictable percentage of short players that will do the same thing to cover. Big gap. Blind panic in short land. Bang! Take a quick look at todays 1 minute chart and a glance at the 10 day %K line on a stochastic chart. Is this really that bad a point to average down to $16.44? Regards, Don

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