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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!!
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To: ron delany who wrote (4561)10/7/1998 6:29:00 PM
From: DanZ  Read Replies (2) of 6565
 
Ron,

I don't generally like to forecast prices because nobody really knows what will happen to a stock. However, I'm open minded and would be very interested in knowing why you think VLSI will trade lower. Instead of forecasting prices, I prefer to buy stocks near support and bail if the market moves against me and below support. While I'm not perfect and don't always practice this, it is a strategy that has proven successful for me in both bull and bear markets.

That said, VLSI has demonstrated strong support at 7. In addition to holding above 7 on recent nasty days for the Nasdaq, five of the past six weekly bars show lows near 7. IF this is the bottom, the stock has a lot of upside potential and there isn't much risk in buying it now. I define risk as how much money I have to put on the line before I will bail, and it isn't much with the stock trading at 7 1/8. In light of this, I added more to my position at 7 3/16 today.

I look forward to your input.

Dan

PS to Linda: There are three ways that I can think of to directly hedge your position in VLSI. 1.) buy puts; 2.) sell calls; 3.) short against the box. You can also put on an indirect hedge by shorting other stocks in the group, but that might not work as well. I'm not suggesting any of these hedges and I'm not hedging myself at this time.
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