>The stock is very oversold and over the next two months it should return to 70.>
I remember me and all my friends in the Micron threads in late 1995....The consensus, was that MU was "oversold" and should bounce. Even everyone on CNBC (analysts, John Murphey, etc.) were saying the same thing.
But I learned that all that comes of an "oversold" situation are "dead-cat bounces." Damn, MU faked us out with dead-cat bounces many many times. Each time the stock bounced, we thought the worst was over--WRONG!
Take a look at the CSCO thread. When CSCO bounced from $58 to $65 in the last week or so, everyone decided that I was wrong about CSCO (I said it would perform a series of dead-cat bounces), and that it was going to make a sustained move higher. Unfortunately, they were the ones who were wrong. Can't blame them, though, because dead-cat rallies can appear to be very convincing/bullish. Like I said, I fell for them bigtime when the semis collapsed.
For a recent example of a dead cat bounce, look no further than a chart of CSCO for the last 30 days. You can do the same with COMS, and many other high-tech stocks....
Sal Habash |
