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Technology Stocks : DSC Communications -- Ignore unavailable to you. Want to Upgrade?

To: Linda Kaplan who wrote (3210)	12/5/1997 1:54:00 PM
From: DanZ	Read Replies (1) \| Respond to of 4429

Linda, Support translates into that price where demand is sufficient to keep a stock from falling further and resistance is that price where supply is sufficient to keep a stock from moving higher. Many times when a stock consolidates, it will form a pattern on the chart where daily highs are declining and daily lows are rising. In this type of situation, support is rising because the demand is occuring at higher prices and resistance is falling because excess supply is coming on the market at lower prices. Obviously a stock won't maintain this type of pattern forever, although consolidation periods can last a long time and test your patience. I use bollinger bands to guess where support and resistance will occur in a stock, and presently the lower daily bollinger band is rising and the upper daily bollinger band is falling. The direction of the breakout from this pattern will be important, because it is likely that the stock will follow through in that direction for a bit longer. So I guess the next question is which direction do I think it will break? Rather than answer that directly, because I don't think anybody can tell you for sure which way any stock will go, I'll give you some prices to watch for that I think are important. DIGI broke a short term downtrend on Dec 1 so at the moment, the trend is up, although very weakly. This signal will be nulified if the stock closes below 22 and then the longs have to hope that the support at 21 1/2 holds. If the stock plays out like this and 21 1/2 doesn't hold, then I think there is further downside risk to about 20. From my short term trading perspective, I don't like the risk to reward in DIGI right now because it is trading in the middle of it's probable trading range. I would view it as a buy if it declines to support, as long as the chart still looks good to me at that time. Dan