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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)

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To: Karl Drobnic who wrote (21491)	7/31/1998 7:21:00 PM
From: Richard S. Schoenstadt	Read Replies (1) of 31646

Karl, I don't disagree entirely with you. Although it really is impossible to say for sure. However the precondition for such shorting to be successful is that the stock be weak to begin with. And Tava has been weak since May. On a fundamental level it's weak because Tava disappointed last quarter. And weak because that was four qtrs in a row that Tava disappointed. It's weak because estimates for the 4th quarter were substantially downgraded and because CD sales were admitted to be disappointing. Disappointing earnings and estimate downgrades raises the fear that they will disappoint again and usually = downward stock price. Add to that the following technical milestones. - The failure to break through the old high after earnings. - The failure to respond to the nms listing. - The failure to respond to the road show. - Monster seller in May after earnings. - Poor and continuously deteroriating response to pr. over the last month. This is what broke the back of the stock in my opinion. The last 2 or 3 press releases in particular. When the stock failed to respond a week ago Monday when the stock was around 9 3/8, I considered that a sure sign that 9 3/8 was now the upper limit and that we were headed back to the 8's. And when the stock failed to respond last Thursday to a press release when we were at 8 3/8 I considered that a sure sign that 8 3/8 was now the new upper limit and that we were headed for the 7's. Once in the 7 range we were in dangerous territory because lots of people were beginning to start heading into the red and this was even more true in the 6's and 5's. I suspect a lot of these long time holders sold creating the avalanche that drove us down to 5 1/4. I don't think there is any question that shorts have helped drive the stock down. But it doesn't necessarily take that much. Sometimes just the straw that breaks the camel's back. For example 8 appears to have been a critical support level. All the shorts had to was recognize weakness at 8 3/8 and just pile on enough to drive the stock below 8 and then stops probably did the rest of the work. You may be right to be cautious. My own judgement is that today was a great day to buy and hold - of course I didn't have the guts to do it. And then just wait and see if Tava can continue the momentum to the upside. Put a stop in to protect the downside and get out the next time we close down for a day. Obviously the shorts are going to be watching too. Some will be guessing the top as we go up. Others will be waiting for the top and once it's obvious we're there they will be right back in. However if Tava fails to rally much further that should not be blamed solely on the shorts. It would clearly indicate a lack of conviction by longs - even at these lower levels. RS

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