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Technology Stocks : Intel Corporation (INTC)

INTC 48.72

+3.0%

Jan 14 3:59 PM EST

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To: Raymond Thomas who wrote ()	2/2/1997 2:33:00 PM
From: William H Huebl	of 186894

Response to Ibexx on the high flying tech stocks... From a technical standpoint, many of the tech stocks like Intel and including the NASDAQ composite is at or has exceed the Raff channel for the stock and index. What does this mean??? Gilbert Raff invented this charting technique where you lay in the least square line and then put two equidistant parallel lines above and below it corresponding to the maximum excursion either to the high, low or both directions. This gives you a support/resistance channel where moves outside the channel soon reverse to be contained within the channel. As a bent and bloodied options trader, I know it is death if you buy puts on a stock in a strong uptrend... chances are that the stock will lose 1-2% or trade sideways to work out the excesses. I know some are buying MSFT puts... the downside for that stock at present is 20% off the high. THE ONLY EXCEPTION IS IF A CRASH IS COMING... THE CASE FOR A CRASH... INTC, when viewed on a semi-log chart going back to 1986... with the bottom trend line under the lows and a parallel trend line at the pre-crash high in early Oct 1987... intersects perfectly with todays price. Most of the other tech stocks and NASDAQ do also. They say... "THIS TIME IT IS DIFFERENT!" And you can name your poison... 401K plans, trading collars... or whatever... but if several trillion dollars tries to exit the market the same day... it would be like trying to dam mighty Niagra with a surf board. How low can Intel go was the question asked Oct 5, 1995. The answer, if history is a guide is 40% of what it is today. What can an investor do to protect his or her assets besides getting out? Selling call options would partially hedge your position... by the value of the call. Buying really cheap out of the money puts would also... but when will the end come if ever? So the safest response is to short against the box or just sell out. We are talking 100 as the low!!! Note that INTC is starting to show weakness from a technical standpoint in both weekly and daily charts. And both a Bollinger and volatility analysis by Expert software using 6.0 MSWIN shows the expectation of a near-term reversal with consolidation possible to reduce the width of the bands which are now 238% greater than normal. A strong sell-off will trigger many more indicators and probably cause all us TA techies to jump on the bandwaggon... whether that will further exacerbate the sell off or not remains to be seen. So the choices are yours... hang on, sell short against the box, sell, buy puts. or even buy index puts (they aren't cheap). My guess at this point is a long period of consolidation with some really scary sell-offs in between. Check out the Japanese market history... Alan Abelson highlights it in this week's Barrons (Feb issue). Good luck and good trading. Bill

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