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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: danderso who wrote (39704)	2/11/2000 10:02:00 AM
From: StockOperator	Read Replies (1) \| Respond to of 99985

danderso, What you say may very well be true. But because I limit myself to just trading the chart without the fundamentals I usually don't try to fill in the blanks as to why a stock will rally or not. That is one of the most amusing things about Wall Street. The market will always fill in those blanks for us. Thats why a stock like AMZN will rally on apparent bad news, or why bonds will rally despite an inflationary report. Regarding ADSP, you sound like you're much more familiar with the fundamentals. I made that comment yesterday because I do recall this stock getting caught up in the Linux frenzy of a few weeks ago. But more importantly, the overall pattern of prices is telling me that some sort of rally will at least be attempted here. Why? First of all I think it's in the market makers best interest to do so. Granted, we all compete with one another for the best possible pricing on the stocks we buy. But our biggest competition is the MM through his whole inventory process of keeping an orderly flow. Think about how difficult that is with a stock like ADSP that goes from $3-60 in two days and then back down under 10 a few weeks later. This overall pattern of huge move coupled with weeks of consolidation is usually a very good sign for at least another breakout move to the upside. This second breakout also does something very important which is to build your overall pattern for some future breakout on the chart down the road. Of course there are still many times when this pattern does not play out. An example would be FLBK about eight months or so the stock rocketed to 43, lost all of those gains, and never recovered. All the more reason to be short term oriented if the rally fizzles early. Didn't mean to go on a tangent here, but it's easy sometimes to get carried away.<g> Good trading. SO