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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: jjeannie who wrote (2668)	11/2/2001 6:26:08 AM
From: Steve Lee	Read Replies (1) \| Respond to of 99280

A distributory top is where a stock stays at or revisits a relatively high price for a period of time, and the volume is greatest at the times the stock is at the highest points. This shows that despite a lot of activity in the stock, it is not enough new buying sentiment to outweigh the new selling sentiment, and therefore reach new highs. This happens for two reasons: 1) Significant stockholders have decidied that the high prices are the maximum valuation they think the stock can sustain, and therefore worth selling. 2) After the first visit or visits to the "high", people see a pattern and it becomes a self fulfilling prophecy. Especially for people who either previously bought at the high and have been kicking themselves, or people who failed to sell at the last time the high was reached and have been kicking themselves since, praying for another opportunity and vowing not to miss it next time. This is called "overhead supply". After a few visits to the high, people tend to rapidly give up on the chances of it going higher, and then a sharp decline is likely. That is why I have puts on KKD. This 1 year price/volume chart of KKD is a good example. quote.yahoo.com For a chart of a short term Nas channel, you can visit Larry's site at: geocities.com Larry uses software to draw his channels but some can be seen by eye. The long term downchannel can be seen on a 2 year chart of the NDX 100: quote.yahoo.com^NDX&d=c&k=c1&a=v&p=s&t=2y&l=on&z=m&q=l You can draw a straight line connecting many tops between Sep 00 and now. This is the "downtrend upper channel boundary". There is no guarantee that any rally will be repelled when it reaches that line, but there is a good chance that it will.