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Technology Stocks : ADC Telecommunications -- Ignore unavailable to you. Want to Upgrade?

To: minorejoy2000 who wrote (880)	7/31/2000 10:58:05 AM
From: OldAIMGuy	Respond to of 1944

Hi again Mino, The moving average shown in the graph of my personal history with ADCT is the 26 week one to which I referred. Although not used in any way to calculate the buys and sells with AIM (PCA is "electronic" AIM), it is presented to show AIM's relative "trading" efficiency. On the far right hand side of the line graph is a yellow bracket that shows the "hold zone" where no AIM trades occur. Also listed on the lower right hand corner of the graph is the next buy and sell prices which is another way of looking at the hold zone. aim-users.com I really don't know what the person was referring to relative to the 200 DMA. I guess it would indicate that there was something either within the company or within the market place that had gotten the Lemmings all Leaping at once. I like to understand the reasons behind such moves and not just look at the "numbers." AIM is set up to take advantage of herd mentality in either direction. It asks "If you were only willing to risk $10,000 when the price was low, why would you now be willing to risk twice that since the price has doubled?" This is a fair question. AIM's set up to sell off the excess above your risk envelope and store the proceeds for rainy days. The correlary to that question is also true. "If you felt the stock was worth risking $10,000, now that it's dropped, shouldn't you add to your position to bring the amount at risk back to $10,000?" AIM wants us to be good shoppers and buy at discounts either to our starting point or to our last Sell point. In no case will AIM EVER have you sell out of a position. You must decide to do that independent of AIM's recommendations. AIM CAN have you buy until you run out of Cash, however. So, it can take you to 100% invested (or beyond if you are willing to borrow money) but it will never take you to 100% liquidity. With each buying cycle, AIM adds not only to the # of shares, but also to the "Risk Envelope." So, when the price starts to climb again the total value will now rise to a higher point than previous before Selling is initiated. So, with enough cycles of buying and selling, the total portfolio continues to grow while the Equity/Cash ratio shifts with the movement of the price. That's shown in the second, Stacked Bar graph. For whatever reason, stocks tend to get bid up around the time of stock splits. Then they return to more normal valuations. I've witnessed it, but don't have a clue as to why it occurs. The price of ADCT in the short term probably is following this peculiarity. In summary, there's nothing magical about moving averages. They're just bench marks. If we see a large movement of the price away from the moving average that has historically been a good bench mark, we then should investigate the cause. In the world of momentum investing and technical analysis, sometimes such bench marks become part of the event. With everyone watching the same "critical" points and reacting in kind, it's still herd mentality with mathematical justification. Best regards, Tom