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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: Solid who wrote (20096)	3/11/2000 1:44:00 PM
From: MIKE REDDERT	Respond to of 29970

The Case for a Bottom One significant aspect of ATHM's behavior in the past 4 days has been a significant increase in volume coupled with a failure to "sell off" in a proportional manner. If one uses Stochastics as a convenient way of viewing the relative price firmness and strength, one can see that on volume that exceeds 2X the average, ATHM has held a rather volatile "floor". Before going farther, we might also note that the retail investor has entered a capitulation phase. This began at the 33 level and continued thru the end of the week. We can assume this because we can sample any number of chat rooms, and we find great despair. Ma and Pa are dumping and daytraders have little interest in this stock. So... if the retail investor has exited, and the traders aren't trading, and the shorts are selling every uptick, why isn't this stock plunging on the high volume that exists ? Why is it holding this level ? The answer is that someone with deep pockets is positioning to absorb the fallout... they want to take positions, and they are buying the capitulation weakness... this is the perfect scenerio for institutional accumulation. Institutions are not traders in the aggregate, so when they buy, they hold. Institution ownership of ATHM increased to about 23% in February and judging from the action of the past 4 days, that percentage has increased. Because institutions hold longer term, the effect of this accumulation is a contraction of the float. IOW, ATHM's de facto float is far less than the "listed" 98M shares. At most, we can assume with a reasonable degree of certainty that the maximum de facto float is 75M. By observing the volume traded over and above the average daily volume in the past 4 days, we might hypothesize that at least another 20M shares now rest in strong institutional hands. That brings the DFF down to 55M. And lastly, we must assume that there are those "Die Hard" Ma and Pa investors who refuse to sell, making their hands at least as strong as the institutions... maybe we could conservatively attribute 7M to them. All of this leaves us with a DFF of approximately 48M, with over 20M shares shorted. As we look out over the news horizon, we have an abundance of expected news. We have the Portland decision, the new Excite Site, the tracking stock, the @Work IPO, Earnings, and more. All of these might be reasonably expected to have positive influence, and it would appear that there is a shortage of negative news. So the question becomes... when this plethora of news begins to hit the wires, where will the shorts find shares to buy ? Mike