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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: RDH who wrote (10706)	5/5/1998 10:21:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 14631

Following the big money involves following that of the mutual funds. Mutual funds rotate between sectors. Reading the tape on key stocks in a sector will determine if the 'big money" is accumulating in that sector. Look for large blocks being traded, depending on the price and liquidity of the stock, on the order of 100K, 200K, 500K, and even 800K blocks. I followed some stocks in the high tech sector and discovered that the funds were accumulating the secondary stocks there before the market adjustment. This included CPQ, GTW, HWP, and others. Now the stocks have been posting sizable gains since the correction, which was predictable. For example, the breakout of CPQ was impressive seeing fund money actually chase the price of a stock up which is unusual. Following the "big money" around the market can also involve charts which can be very helpful in finding sectors and stocks that look to be under accumulation or distribution and validate the chart through a look at the tape. Technicals of stocks can be scanned for which can help automate this process to find for instance sectors showing changes in relative strength in relation to the rest of the market. The thinking here goes that the sectors and stocks under accumulation will show good relative strength when compared with the rest of the market. In other words, when the market rises, they will likely exceed the performance of the market. When the market adjusts, this type of stock will not adjust as much as the market and will bounce right back when given a chance. You can also combine market timing with a fundamental approach to the market which can yield good results, better than just a fundamental only approach to the market. Just a few thoughts on following the fund money. Some people here at SI have this down to a "science". Fun stuff. Bob Graham