To: Jane Hafker who wrote (1119 ) 7/12/1998 10:20:00 AM From: John S. Baker Read Replies (2) | Respond to of 2534
Jane, nobody really knows the exact answer to your question ... which is a very valid one. But here IMHO are two *pieces* of the real answer. 1. The 52-week price range has a bottom of 44 cents. 'Tis true that every day, some stocks break their 52-week lows, but I would be *less comfortable* with holding ALYA if the 52-week low were, say, 5 cents. 2. One of my favorite techniques to guesstimate where support and resistance prices lie is called Price-to-Volume charting. There is a site which computes these automatically for you. Bear with me, because it really takes longer to tell how to do it than it takes to actually do it. Go to: bigcharts.com Key in the stock symbol in the left frame. From the pull-down marked "uppper indicator", select "Price to Volume". Pick what you want from the "lower indicator" pull-down; I set "Money Flow" as my default because it gives me a glimpse of whether so-called smart money is flowing into or out of the stock. Now click on "draw" and you'll see the chart. What we see here is a correlation between number of shares which changed hands and the price at which they changed hands ... summed over the time frame selected (12 months is default). In ALYA's case, it shows that the greatest number of shares bought during the past year were bought at about 50 cents. This is *in spite of* the high volumes experienced during the recent runup. Second greatest were bought in the 60 cents range ... hardly any shares at all in the 70 cents range. Also, since the runup (change your "time frame" to 3 months and redraw the chart), there is a relatively even distribution of buying prices between 90 cents and 1.30 I bought a small stake at about $1.30 ... silly me! ... and am holding it. But I look at these two charts and say: if the price drops much below .90, then there is precious little support until roughly 60 cents. But I see a lot of support at the 50 cents level, so I think your question about the possibility of seeing .25 cents is a less likely outcomes. A trader might say to himself, "If ALYA drops below 80 cents, I'm outa here!" Quite frankly, if it drops below 50 cents, *I* would probably bail, because there would be nothing stopping it until it reached zero. Others may see different potential outcomes. And I'm sure that traders have far more precise mechanisms for timing their bail-out points. Price-to-volume charting gives an overview ... a macro perspective ... rather than a micro one. Hope this helps you with your Due Diligence. JSb.