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

To: John Chen who wrote (22997)	3/22/1998 6:32:00 PM
From: John Meissner	Read Replies (3) \| Respond to of 97611

I often question the motivations of the so called "experts." It seems that anyone who has sufficient influence to move the price of a stock with words, would be a fool to not exploit that ability. As for the recent price drop(s), here is what I have observed: Last Friday the price was around 25. If you believe the news media, the reason CPQ took a dive Monday was because they announced the inventory reduction sale. CPQ had already announced that the quarter was going to be flat, largely because of inventory charge-off. So, if they can sell some of it, or even give it away, what difference does it make to their profits? What it looks more like to me is that the "Big-Boys" took the news as an opportunity to do a little price manipulation. What they did was drive the price comfortably below a convenient strike price and start writing uncovered calls. To make sure the calls expire worthless, they continue shorting the stock until expiration on Friday. Even if they wind up loosing money, they will continue shorting the stock, because the alternative is that the calls will get exercised. In the long run, it's usually cheaper for them to keep the price where they want it by shorting than it is for them to make good on the contracts. But, they will have to cover, and soon. After the big-boys have covered (and gone long) they will come out with the buy recommendations that CPQ clearly deserves at these levels. During the last week of next month's options, they will do it again. Perhaps not to CPQ, but they will do it. Amazing how easy it is for them to make money, isn't it? Equally amazing is how foolish we all look to them. John