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Technology Stocks : ASD Systems, Inc. (ASDS) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Stept who wrote (115)	11/20/1999 2:13:00 PM
From: 5handicap	Read Replies (1) \| Respond to of 491

Actually I think the earnings and the other fundamentals of any stock are important to the extent that they get people to buy the stock. There are plenty of other reasons that people will buy a stock: recommendations, hype, etc. But these are all secondary in the sense that the only reason a stock price goes up is supply and demand imbalance. In this particular case, what's causing that imbalance is material only if you want to predict the future. In the here and now, the fact that over 25% to 50% of the available shares are being traded every day means there is the demand. I've tired of doing endless hours of DD looking for value stocks, often being convinced I have found a diamond in the rough, only to have the stock go nowhere. COHU is a prime example. Lately I have done much better by identifying stocks that are increasing in price with increasing volume. That is an indication of supply/demand imbalance, and to be honest I don't care if the fundamentals justify it or not. After all, I'm not buying stock certificates to tuck away on the bookshelf after all. I don't typically hold a stock for more than 1 month.

To: Jon Stept who wrote (115)	11/20/1999 2:16:00 PM
From: gladman	Read Replies (2) \| Respond to of 491

Jon, what most people don't understand is it's the selling that can really drive the price up, many times the MM's will bid the stock up to discourage small time traders from buying and forcing their hand... When you hit certain overhead levels and the selling starts coming in at 1000-2500 share lots, the MM's may actually move the bid higher to squash the 100-200 share buyers from forcing them to move the price EVEN HIGHER, it's a defensive tactic. There's a seller here in ASDS, but I believe he'll be out of ammo soon. Dave

To: Jon Stept who wrote (115)	11/20/1999 8:02:00 PM
From: Schmedley	Read Replies (3) \| Respond to of 491

Hi Jon, Hi Rocky Thanks for sharing your views. Your discussion is one which has raged in my head for some time. Rocky, I too have observed that volume versus float is a significant factor currently driving the high flying internet stocks. In fact, while the records no longer exist, I remember making this observation somewhere here on SI back in 1997. I only wished I'd backed my words with actions. I would be retired by now. Since then I've had many opportunities to observe the Volume vs. Float scenario and have refined my viewpoint; it isn't an observation of market direction or of supply and demand, but one of increased liquidity which then translates into MOMENTUM. It then becomes a study of how far a stock can move and its thrust while doing so (increased average daily range) as opposed to a predictor of direction. Compare it, lets say, to a rubber band propelled toy airplane; it's thrust is proportionate to the thickness and length of the rubber band. The thicker the rubber band the greater the airplanes thrust given that the length of the rubber band is fixed. There are other variables such as aerodynamic design for example, but for the sake of simplicity we'll consider those factors to be fixed as well.In my stock market / toy airplane metaphor, the relationship between a securities volume vs. float is similar to the toy airplane's rubber band thickness vs. length. As compared to the length of the rubber band, the company's fundamental value (float being a single factor) changes slowly (quarterly), so we'll consider the float to be fixed as well, now the primary focus of our observation becomes the thickness of the rubber band or daily volume as it relates to the fundamentals (the float). Volume vs Float only remains relevant as long as the company's fundamental characteristics do not change. But it is one of the few studies which take both the fundamental and sentimental characteristics into consideration and it does so simply. While I'm not a subscriber to the MM conspiracy theory, I do know that a certain amount of conspiracy by design exists in the form of a desire for a greater return on money and time for the MM's. The MM's are supposedly there to create market liquidity but in fact the reverse is true; Market liquidity draws the attention and participation of the MM's. Stock prices are then bid up (or offered down) to extremes in order to accommodate the larger number of big (and active)market participants. Just my take on it all Schmedley