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Technology Stocks : DIGL... Digital Lightwave.... Making Waves.... -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (887)	1/19/2001 8:02:01 PM
From: UnBelievable	Read Replies (2) \| Respond to of 934

I Trade Almost Exclusively Based On Technical Analysis At this point I think that traditional fundamental analysis is of little value since all stocks are trading at levels and in ways that are just not based on their business fundamentals. This is not to say that I don't consider characteristics of the company. Including things like industry, the activities of insiders and institutional investors, as well as the interest of the investment banks with whom they work. Another thing I like to review is how the stock trades, both in relation to the overall market and how the market makers tend to work the stock. I have not traded Digital in a few months so I am not that familiar with the current perception among investors of the company vis a vis competitors and its current products and management. My prior comment to you was based on a quick look at its chart and that is all. On the chart I saw two things that would be significant warning signs for me if I were holding the stock. These were that the upward progress of the stock was stopped today by a resistance line based on a gap from 10/25, and the recent upward movement formed a pattern known as a rising wedge on a intraday (36 minute) chart. After bouncing off of the resistance line the stock moved towards and penetrated the lower trend line of the rising wedge. If the pattern is in fact a rising wedge breakdown it would have as its target the origin of the wedge which in this case is about 33. In many cases however a rising wedge when violated does not break down. Rather the stock will drift horizontally for a while and then resume a further rise in a parallel wedge. In addition to the specifics of this chart any stock that has increased as rapidly as DIGL has recently is always vulnerable to some degree of retracement. I trade stocks rather than invest. Given the low transaction costs associated with buying or selling I do not maintain a position, long or short, unless I have a reason to believe that a movement in the expected direction is especially likely. While I have no way of knowing what actually will happen based on my quick look at the chart it does not seem to me that further gains are especially likely in the near future, whereas there is cause to be concerned that it may pullback. If I owned the stock at this time I would consider selling it. Which doesn't mean that I might not buy it back in a few days or weeks but right now, without having a good understanding of mitigating facts it seems that there is more downside than upside. When considering my perspective also keep in mind that I make many unprofitable trades. <gg>