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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: dennis michael patterson who wrote (13487)	7/30/1998 9:17:00 PM
From: Robert Graham	Read Replies (1) of 42787

If we were to have a continued rally, stocks like YHOO will be one of the benefactors of the rally. The public speculator is at times all too easy to predict. They have no concept of value. Matter of fact, when a stock reaches close to "100", they will continue to bid it up to see it make 100 and beyond. The "100" number is significant to them. They think "Look at this! This stock went up 100 points! It may go up 100 more!". This is the common short-circuited thinking I have seen in place literally for decades. I remember over 20 years ago having this discussion with my father. He could not understand why anyone would be interested in an over 100 dollar per share stock. He thought that was ludicrous. I told him it is that 100 dollar "value" that interests and excites the type of person that plays a stock such as AMZN and YHOO. So we tracked stocks approaching 100 dollars to see the liklihood of them making 100 or greater in value. Most did even though the fundamentals did not even come close to supporting such a number. Even the stocks that were showing weakness had a sudden burst of energy as it came within spitting distance of 100 that sent the stock above 100 before selling came in. Others after some profit taking continued up like YHOO. He ended up becoming convinced that I was onto something here. High priced stocks excite the public speculator and motivate many to the stock, particularly if the stock got there in a hurry. The only time in the past I have found high prices to impact the performance of the stock is when the stock makes it much above 200. But before the stock fails, the number "200" in of itself can be met with additional buying interest in the stock. Never underestimate the mindlessness of the public money. I have seen much too many people who have underestimated the mindlessness and attempted to short such high flyers and ended up getting burned, and some very badly. Think of it as momentum. Never step in front of momentum. This is like stepping in front of a moving train: you are sure to be killed. Stocks like YHOO can in these situations come back alive again just long enough to burn a shorter. As we continue to move into the latter part of this bull run, you will see even more evidence that as a sane and logical person will have your head spinning in bewilderment. Do not try to understand the "logic". Just understand the pattern and trading charactersitics that this kind of money imparts to stocks. TA can help here for this type of perspective on the markets. Look to TA to tell you when to short. Never short by value, particularly in a bull market. You see, the public has seen YHOO sell off during the market adjustment. Now they see it as a good "value" and are buying it in anticipation of the stock reaching and exceeding former highs. This is their concept of value. It is relative and it is partly based on their greed. I will be checking the charts later today. Bob Graham

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