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To: Chuzzlewit who wrote (34834)	3/18/1998 5:07:00 PM
From: Jacky AY	Read Replies (1) \| Respond to of 176387

Some technical reading on "stochastics" from e-analytics.com The stochastic oscillator compares where a security's price has closed relative to its price range over a specifically identified period of time. George Lane, who developed this indicator, theorized that in an upwardly trending market, prices tend to close near their high; and during a downward trending market, prices tend to close near their low. Further, as an upward trend matures, price tends to close further away from its high; and as a downward trend matures, price tends to close away from its low. The stochastic indicator attempts to determine when prices start to cluster around their low of the day for an uptrending market, and when the tend to cluster around their high in a downtrending market. Lane's theory is these are the conditions which indicate a trend reversal is beginning to occur.

To: Chuzzlewit who wrote (34834)	3/18/1998 5:25:00 PM
From: SecularBull	Read Replies (1) \| Respond to of 176387

ON CHARTS: Paul, I think that stochastics rely on a degree of equilibrium between volume and price to be "accurate". As long as the story remains constant (either upward, downward, or sideways), the ebb of the tide does reveal some indication of where the stock will probably be heading as the oversold or overbought condition moves toward equilibrium. In a sense, it's a way of measuring enthusiasm (approaching overbought), or the total lack thereof (approaching oversold). I don't think that anyone has argued that the charts are 100% accurate, or even close to that. The question that must be answered is whether or not equilibrium,itself, has been disrupted by the CPQ/INTC news, or if it's just a perception that equilibrium has been disrupted. I believe that in the case of DELL, equilibrium is intact, and that it's just a perceived disruption of equilibrium that provides for rough sailing for the next couple of months. DELL's upside prospects may actually be enhanced if, in fact, the other box makers are suffering specifically because DELL is taking their market share.

To: Chuzzlewit who wrote (34834)	3/18/1998 5:39:00 PM
From: Lee	Respond to of 176387

Paul,...Re:<<if "stochastics" are used to judge "overbought" and "oversold" conditions, which in turn are used as predictors of future price action, doesn't that imply that stochastics have predictive power?>> I don't think of it as a predictive indicator, at least I don't use it that way. It only tells me that the odds for a change in direction are better. In looking at the bond futures, for instance, prices can stay in the overbought or oversold area for days. It would be foolish to risk hard earned money each time the oscillator started below the 80% line; however, sometimes when bond prices make a new high and the stochastic makes a lower high, a price reversal occurs. It's simply a graphic illustration of recent price action. If I waited until PSFT got into the oversold region and started up to cross the 20% line, I might just miss out on 25% or more profit.<g> I only use it for bonds and then in conjunction with lots of other indicators, plus FA. I don't have any strong preferences one way or the other, just a nice picture of past price action. Regards, Lee

To: Chuzzlewit who wrote (34834)	3/19/1998 1:57:00 AM
From: Paul van Wijk	Respond to of 176387

Paul, You and I need to diversify, so you buy BAANF, I buy PSFT and we both hope that they smash the germans (SAPHY). Paul

To: Chuzzlewit who wrote (34834)	3/19/1998 7:49:00 PM
From: Ally	Respond to of 176387

Hi Paul... felt compelled to barge in here. An honest coin flipper will result in an entirely random result of head or tail on each flip. Have a skilled artist flip the coin, and the outcome can be influenced. Some may see the market as a random walk, a coin being flipped each day. Reality is there are influences... market makers, institutional big boys, insiders.. etc. Influences lead to trends. TA, to me, is simply a mathematical activity to show price and volume action and graphical trends. The predictor is the human, interpreting trends, and making market bets on them. Bottom line... pure fundamentalists risk buying higher than necessary. D.