To: Rick who wrote (850 ) 2/3/1998 3:25:00 AM From: Robert Graham Read Replies (1) | Respond to
Man, you are a "one direction" thinker. This is dangerous particularily with the more volitile high tech stocks. As an option player you should already be aware of this. If a stock can uptrend in short tome frame, this also increases the likelihood of the stock downtrending. This is called *volitility* which for that matter is what options are priced on. For instance, as an extreme example, a stock price can drop through the floor but the option can remain basically where it is for a period of time. This is becuase the stock's volitility dramatically increased which was priced into the option. In other words, just as the stock dropped, the option player was anticipating the possability of the stock bouncing and moving back up. As long as their is "volitility", there is the possability of the stock moving either direction at a give time. Now if the stock is in a well established trend, the likelihood of a proportional counter move is diminished but certainly not eliminated for a given period of time. However, there will be consolidations and corrections, and there will even be major corrections. You can count on this. This is natural for a stock even though you may not in a given historical time frame find these corrections. To think the stock will quantitatively repeat the patterns that you have seen it do in a given historical time frame is IMO very naive. Even the technicians and the chartists do not buy into this. I honestly do not know where you are coming from with your very unique brand of chart reading. Nothing personal, but I think you do live dangerously. But hey, what do I know. I am one of those "peasants".
