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Technology Stocks : PairGain Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Sosmartinov who wrote (34793)	11/20/1999 5:32:00 PM
From: Doug R	Read Replies (2) \| Respond to of 36349

Sosm..., Rational: There is a charting technique that I have developed which pretty much defines the level of irrational exuberance on individual stocks that has been extremely accurate over the years. The model keys off specific chart activity that is consistent from stock to stock while allowing any stock that conforms to the model to fit the model in its own way. From my data base, there is a less than 1% failure rate for this model to adequately predict price activity once all the conditions are met. In earlier posts I had pointed to certain dates on the chart that could be used as short term target lines. The line I'm now concerned with is related to the same method. I call this line the Impossible Line (IL). It's named that because it's established before a stock makes a drastic run and if you looked at it before the run you'd have to say to yourself, "It's impossible for the price to get there that fast." From the posts on this thread over the last couple months, I can say that back on 9/2/99 (where PAIR's IL originates) nobody would have said the price would reach 24 to 25 next week. The utility of this line usually comes into play when the price closes above it for 2 days. At that point, the stock actually becomes a better short than a long. The time it takes to complete the downswing telegraphed by a break over the IL is usually 1/2 to 2/3 of the time it took to get up there from the time that the IL is "activated". PAIR's IL was activated on 10/15/99. The date of activation keys off another trendline (I call it the ACT). Now....here's the point...once a stock has "violated" the IL, it stands a 99% chance of returning to the ACT. For PAIR, that will mean a drop of approximately 50%. For stocks that violate the IL, a 50% drop is NOT uncommon. The model also encompasses the price activity that ensues after the drop to the ACT. That activity is called "reciprocal retracement" (RR). RR says that the % drop to the ACT from the high that is reached after IL violation will be the same % move seen on a bounce off the ACT. For example a stock that peaks at 20 after IL violation and returns to the ACT at 10 will bounce from 10 to 15. As this situation develops I will absolutely keep this thread informed. Hold yer breath, Doug R