ON CHARTS: Paul, I think that stochastics rely on a degree of equilibrium between volume and price to be "accurate".
As long as the story remains constant (either upward, downward, or sideways), the ebb of the tide does reveal some indication of where the stock will probably be heading as the oversold or overbought condition moves toward equilibrium.
In a sense, it's a way of measuring enthusiasm (approaching overbought), or the total lack thereof (approaching oversold). I don't think that anyone has argued that the charts are 100% accurate, or even close to that.
The question that must be answered is whether or not equilibrium,itself, has been disrupted by the CPQ/INTC news, or if it's just a perception that equilibrium has been disrupted. I believe that in the case of DELL, equilibrium is intact, and that it's just a perceived disruption of equilibrium that provides for rough sailing for the next couple of months. DELL's upside prospects may actually be enhanced if, in fact, the other box makers are suffering specifically because DELL is taking their market share. |
