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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: chic_hearne who wrote (112854)	5/25/2000 7:57:00 PM
From: Yougang Xiao	Read Replies (3) \| Respond to of 1571672

<<A TA look at AMD, and today :-) >> boards.fool.com Makes a lot of sense. ++++++++++++++++++++++++++++++++++++++++++++++++ Tech analysis is just one factor to be considered in looking at a stock. Of course, in AMDs current situation, base building doesn't happen BECAUSE TA says it needs to. TA just recognizes that cycles do repeat. We all know the future outlook for AMD, but remember, for those not as inclined to look forward, or less informed, the 1 year trailing P/E when we were looking at a price of 92 may have seemed unreasonably high to many investors. This set the stage for the current base building, and it's lower prices, to begin. During such a period, when the market "perception" (false or not), says that the current price makes the stock overvalued, any negative rumors have a greatly exagerated impact on the downside, while good news goes largely ignored. The base period brings you forward in time, until you get close enough to the next milestone, so that the market in general can accept the forward looking picture over the trailing evaluation of "reality". In other words, as we get closer to Q2 earnings, with the company guiding that predictions remain solid, more investors are willing to "believe" the forward looking guidance and use those numbers for their evaluation of the "fair value" of the stock. My hope is that early June, with the introduction of the new processors, will be close enough to Q2 earnings, that the positive news will out weigh the false perception that AMD is "overvalued". In TA, base building isn't some mystical force that effects the stock price in spite of "reality". It is just an observation that a trend is repeated over and over again. When a stock is as hot as AMD, the trend up can bring you to the "perceived" fair value well before the next event, likely quarterly earnings, occurs to justify higher prices using trailing indicators. Once a stock enters a base building period, there are other cycles that repeat, the battle between bulls and bears on the stock price. This leads to a cycle in the base period where the bears pull the price down, until the bulls see a big value, and rally the price back up again. If the rally reaches the point again where there are enough bears that feel the price has reached fair value again, they will lead the price lower again, often below the previous low. This cycle can contiunue a number of times, until a rally takes place where the overall bullish sentiment is strong enough to prevent another deep slide, then the stock can break the hold of the bears. At this point, the percentage of investors willing to base values on the future numbers outstips the bears basing them on trailing ones. The "pardigm" shifts, and the stock moves higher to the next "perceived" fair value. :-) TA goes further, volume on moves can signal where a stock is in any part of the current cycle or sub cycle. When the stock goes up on ever dwindling volume, but doesn't "break out", the rally is likely to sputter. If there is a good up day on LARGE volume(usually defined as volume clearly above the moving average for volume), five to ten trading days into the current rally, you are very likely to break out of the basing cycle, and trend clearly higher. On the downside, a down day with HUGE volume shows that the bears are buying almost as quickly as the bulls are selling, preventing any even sharper drop off that the bears would prefer. Meeting such strong resistance, the bears, for the most part, "give up", and the bulls are free to attempt the next rally. That's the very basic idea behind TA, at least as applies to AMD right now. :-) Yesterday, we went down on HUGE volume. The likelyhood that we would have a second day down on even larger volume was remote, but that's what happened. The fact that the downswing was less at days end, and the volume even higher than the huge volume from the day before, very likley indicates that today is the REAL bottom in the current sub cycle. Today's volume of 10.73 million was the highest since Q1 earnings, and was stronger than the peak in volume with the last low point on May 10th. The volume indicates that the "tug of war" between the bulls and the bears on AMD was at it's most intense today. The fact that the stock rallied from an intraday low of 66 is a very good sign. It is very likely, on the volume we saw, that the majority of bears have "sold off" most or all of their AMD, which should lead to a rally by those of us who see AMD as undervalued. IF the new product announcements, likely on June 5th, ARE positive enough at that point in time to get the majority of AMD investors looking forward for stock value instead of behind, the timing will be very good for a difinitive break out of this base on or around the 5th. The 5th of June would be the 9th trading day in the newest rally, assuming the next rally attempt starts tomorrow. This would be with in the ten days that a rally usually needs to see a break out day if the rally isn't to fail. The best trend to look for would be price trending upwards as volume trends downwards, THEN having a day with the price up on very goog volume. This almost always signals that the rally will "break out", and the base period will have ended. We'll see what happens, but that's what I'll be watching for, for those who want to "play along at home". ;-) One note, IF this next rally doesn't break out, we will likely set up with a down then up cycle that may bring us very close to the actual end of Q2, and if that rally failed, another cycle that would time pretty closely to the actual Q2 earnings announcement in mid-July. I'm hopeful this next rally, leading up to the June 5th new product announcement, will be "the one" to break out. If not, however, we could see one or two more cycles leading up to Q2 earnings reports, when we would almost certainly break out, if we don't so before then. The closer to Q2 earnings we get, the more likely each rally will succeed. :-)

To: chic_hearne who wrote (112854)	5/26/2000 9:48:00 AM
From: Scumbria	Read Replies (2) \| Respond to of 1571672

Chic, "We can thus conclude that rather being seen as an inflation fighter, the FED should be regarded as the sole source of inflation. " newaus.com.au Does the FED fight inflation? By Dr Frank Shostak No. 154, 22 May - 5 June 2000 On May 16 the Federal Open Market Committee, the executive arm of the US central bank, voted to raise the federal funds rate and the discount rate by 0.5 per cent to 6.5 per cent and 6 per cent respectively. In the press release the Federal Reserve said, "Increases in demand have remained in excess of even the rapid pace of productivity-driven gains in potential supply, exerting continued pressure on resources. The Committee is concerned that this disparity in the growth of demand and potential supply will continue, which could foster inflationary imbalances that would undermine the economy?s outstanding performance" It therefore seems that the action taken by the central bank is aimed at countering the possible increase in the rate of inflation. Indeed most experts are of the view that the FED was too soft on inflation for too long and by raising interest rates by 0.5 per cent has displayed strong leadership and determination to eradicate the inflationary menace. In response to the Fed?s tighter stance stock prices rose on investor optimism that the US central bank action would keep consumer prices in check. So it would appear that general rise in prices, labelled as inflation, is caused by an economic overheating i.e. demand exceeds supply. But how is it possible that economic activity can overheat? In a market economy an individual exchanges by means of money goods that he produces for goods and services produced by other individuals. In short he exchanges goods that he produced for money and then exchanges money for goods and services he wants to have. It follows then that before an individual can exercise his demand for goods and services he must produce goods and services that can be exchanged for money. This in turn implies that production must precede consumption. Consequently as long as every increase in consumption is supported by production, no overheating, so to speak, can occur. The overheating emerges once there is an attempt to raise consumption without the backup from production. Namely, an emergence of an exchange where individuals exchange nothing for money and then exchange money for goods and services. This can only occur when the money supply is expanding. The increase in the money stock means that the newly printed money wasn?t earned, it originated out of the "blue". Obviously, once demand for goods and services, which is not supported by production arises, overheating will occur, which will take the form of a general rise in prices, labelled as inflation. Since growing money stock is the ultimate source of overheating why is the FED regarded as an inflation fighter? Surely it is the central bank together with the fractional reserve banking system that makes the increase in the stock of money possible? The reason why the FED can masquerade as an inflation fighter stems from a misleading definition of what inflation really is. According to Mises, "What many people today call inflation or deflation is no longer the great increase or decline in the supply of money, but its inexorable consequences, the general tendency toward a rise or fall in commodity prices and wage rates"1 In short according to Mises inflation is not general rise in prices, it is simply an increase in the money stock. Once inflation is defined as a general rise in prices, then anything, which contributes to price rises, is called inflationary and therefore must be guarded against. Not only has the central bank in this framework nothing to do with inflation, but on the contrary the bank is regarded as an inflation fighter. Thus a fall in unemployment or a rise in economic activity are all seen as potential inflationary triggers and therefore must be restrained by the central bank?s policies. Some other triggers like rises in commodity prices or workers wages are also regarded as potential threats and therefore must be always under the watchful eye of the central bank. This way of thinking views the economy as an unstable entity, which is prone to self-inflicting damages and therefore must be under the constant supervision of the central bank. Accordingly, individuals are depicted as automatons that are driven by mysterious destabilising psychological factors. However, regardless of psychological factors individuals actions are always conscious and purposeful. This in turn means that by striving to attain ends or goals individuals activities cannot be destabilising but quite the opposite. What disrupts this process is the existence of the central bank and the fractional reserve banking system, which permits the expansion of the money stock. It is the expansion of the money stock that gives rise to consumption that is not backed up by production and hence to economic overheating. In other words it is not overheating that causes inflation, but rather it is inflation that causes overheating. The severity of this disruption i.e. inflation, is depicted by the loose monetary stance of the FED. In January 1980 the US Federal Reserve Board?s money base stood at $132 billion. By the end of April the base was $573.4 billion, an increase of 334 per cent. We can thus conclude that rather being seen as an inflation fighter, the FED should be regarded as the sole source of inflation. 1Ludwig von Mises Human Action 1963, p423 Dr Frank Shostak is chief economist with Ord Minnett Jardine Fleming Futures, Sydney. Scumbria