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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 150.43+0.1%1:08 PM EST
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To: Paul Dieterich who wrote (5874)6/16/1998 6:57:00 PM
From: Jess Beltz  Read Replies (1) of 10921
 
Paul, I think the answer has to do with market psychology, and there may actually be a way to play it. I think there is a ton of money waiting to flow into the sector and catch the next cycle at its bottom (implicit assumption on the fact that the cycle will continue in the future as it has in the past.) Therefore, on each abatement of bad news, some of that money will start flowing in thinking (more like hoping really) that this is the bottom. I think that they're doomed to more disappointment until there is real and meaningful reform in Japan, but they have a right not to see it that way. The play:

Buy towards the end of a big downward day (or the next morning),
Wait for the optimism-induced bounce,
Sell and wait for the next downward day.

With respect to this strategy, the obvious downside risk is that you'll miss the real bottom and sell out when you should have held.
The upside is that you'll almost certainly be out of the market if the yen continues to decline, the Yuan gets devalued, etc., with the chance to pick up some real profits off of a series of dead-cat bounces.

I DO NOT RECOMMEND this strategy. It involves serious timing games and I am notoriously bad at that. My own strategy is to wait until I see some end to the mess here, and then jump in with both feet into selected issues.

jess.
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