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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: Susan Saline who wrote (1221)	6/23/1998 1:20:00 AM
From: HeyRainier	Respond to of 1720

[ Retracements ] Hi Susan, A retracement is similar to the concept of "pulling back" on a stock. In this case, however, the word retracement can apply for price advances as well. When a stock advances from 10 to 20, then pulls back to 15, it can be said that the price has "retraced" 50% of its advance (Net advance of 5 points divided by the overall 10 point movement). This concept is derived from the Fibonacci sequences. Key retracement levels are 33%, 50%, 66%, and others in between. This means that if a stock declines by 10 points, one can expect the price, on a dead cat bounce, to retrace about 33% of its prior decline. For many issues though, I seem to find it retracing according to the 40% to 50% levels, and sometimes to the 60% level. Issues that have discounted Doomsday, have terrible financials, or even terrible outlooks, tend to retrace according to these levels. It just seems to be a part of human nature; Try it out. You'll find that even the crummiest of stocks will retrace about 33% of their decline. Regards, Rainier

To: Susan Saline who wrote (1221)	6/23/1998 1:53:00 AM
From: HeyRainier	Respond to of 1720

[ Retracement Example: EQNX ] Let's apply the concept of retracement levels to our most recent example, EQNX: I will provide below two sets of retracement levels, each based on two different price points for the calculations (as each is a legitimate possibility): *Case One* Price Peak : 18.300 Price Trough: 7.375 Retracement Levels: 33% 11.024 40% 11.750 50% 12.850 60% 13.950 66% 14.670 *Case Two* Price Peak : 17.450 Price Trough: 7.375 Retracement Levels: 33% 10.730 40% 11.400 50% 12.410 60% 13.420 66% 14.080 So you can see, even from the most bearish scenario, one can expect EQNX to retrace to at least the 10.73 level, or about 33% of its price decline. This of course, assumes that the price trough is pegged at the 7.375 level. And with the company's outstanding financial strength (no debt, 39% cash level relative to the price, share buybacks, etc.), it would appear likely that EQNX's share price will have a good chance of advancing to one of the above mentioned retracement levels. For another example, look at Micron (MU), particularly from the first week of May to the first week of June. The price retraced exactly 40% of its losses, before resuming its decline. Or if you want declines on a grander scale, look at MU again from April of last year to February of this year. That retracement was about 40% as well. See the patterns? FWIW, Ascend Communications (ASND) just completed its 50% retracement, before declining today. Regards, Rainier

To: Susan Saline who wrote (1221)	6/23/1998 2:09:00 AM
From: HeyRainier	Read Replies (2) \| Respond to of 1720

[ More Retracements ] Okay Sue, I'm on a roll with the retracements. Here's another one: CCSI. If you recall, this issue was destroyed recently by the recent announcement that one of the most prominent short sellers in the industry had taken a short position in the stock. Despite the recent price destruction, accompanied by arguments why this should be driven to zero, the stock recently retraced 30% of its losses from its bottom (30.09% to be exact). Regards, Rainier