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Technology Stocks : Cadence Design Systems
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To: Sportfish who wrote (395)5/12/1999 11:39:00 PM
From: Carl R.  Read Replies (1) of 668
 
Frequently when a stock sets a major low like CDN did the other day the stock will rally briefly. This is known as a "dead cat bounce", as in "even a dead cat will bounce a little if you drop it far enough". It many cases after this dead cat bounce, the stock will resume its downward trend. Thus the theory would say that investors won't really put much faith in a bottom established in this manner, and the low would have to be re-tested. Once the bottom holds on the re-test, you get a double bottom, which is a much more secure bottom.

How long will the up trend last? Who knows? My guess is that the stock won't go very far very fast for a quarter or two, though we could move back to 15 or so. What we want to see is higher highs and higher lows. Thus a move past 14 is needed.

Carl
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