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Technology Stocks : Newbridge Networks

NN 17.07

+0.2%

Dec 26 9:30 AM EST

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To: Mark Kubisz who wrote (4137)	4/18/1998 8:15:00 PM
From: Brett Nelson	Read Replies (2) of 18016

<because the charts are revised backwards to take into account stock splits> It is because of this fact that you can compare todays prices against historical prices. Let's say you had 1 share of a stock which traded for $100 and faced resistance at this level. If it split 2-1, you would have 2 shares of a stock priced at $50. All previous prices would be divided by two to adjust prices to the current shares outstanding. The resistance shown on this adjusted chart would be $50; it would be silly to say it was $100, a full 50 points away from the current price. In other words, think of resistance in terms of market value, not absolute price per se. The market is rejecting that this hypothetical stock's market value is worth more than $100. Whether that's 1 share @$100 or 2 shares @$50 is immaterial as long as your chart is adjusted for the new shares outstanding.

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