Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: J. Stone who wrote (20049)	8/2/1998 12:31:00 PM
From: Bruce L	Read Replies (2) \| Respond to of 45548

<Also, you have investors who are looking for a beaten down stock in a hot, growing industry, and COMS fits the bill.> Your pithy observation in a nutshell sums up why I believe in this stock and have gotten myself (dangerously perhaps) concentrated in a single position. IMO there are macro economic factors at play that are now, and will continue, to roil the waters of the American economy. These include: (1)continuing commodity deflation that will wreck havoc with inter alia the chemical, petroleum, metals and their supporting industries. (2) Continuing weakness in Asia, including a very possible devaluation of the Chinese currency, that will exacerbate the tendency of these countries to export their way out of trouble, putting margin pressure on American basic industry. (The WSJ has reported huge bottlenecks at west coast ports of entry and a dramatic shortage of shipping to send to us all the exports that Asian nations want to send.) (3) "Irrational exuberance" by the market in all of the internet related stocks. (4) A dangerous lack of breadth to the market that has seen gains limited to just a handfull of stocks,e.g. Dell, Csco, Msft and Lu. (This like the "nifty fifty" of the 60's has still to play itself out.) In this environment, COMS undisputed technical excellence in virtually every market category in which it competes, given that these are rapidly growing markets, translates IMO into a $50+ stock - like you say- by years end, even in an otherwise difficult market environment. On a different topic(this post is already so long that I've probably lost most readers) I happen to be reading Steve Nison's 2nd book, BEYOND CANDLESTICKS, and came across a concept (which the Japanese chartists call "moving shadows") that may have relevance to COMS at this time. The term was originally coined by a Japanese military genius to describe a ploy that he would use when he did not know the disposition and/or strength of an adversary. He would fake an all out attack and thereby learn valuable information from the reactions of his opponent to the fake/would be attack. As related to Japanese trading the concept of "moving shadows" works like this: large scale traders, who hundreds of years ago were familiar with the concepts of support and resistance, would attempt to glean information about the market in a manner similar to the military one. In effect, these large traders would test the "battlefield" by entering large orders to try and break support (or resistance). For example, a large sell order may be enough to drag the market temporarily below previous support. Now, this trader, as a "moving shadow" will be able to learn about the underlying strength of the market. If the market fails to stay below this (temporarily) broken support area and forms a spring, this "moving shadow" who was probing now has learned something important about the tenacity of the bulls and as a result may decide to cover his shorts. If large traders in Japan hundreds of years ago could think like this, there is every reason to believe that market makers, etc of today are similarly acting as "moving shadows." A while back, COMS had successfully held support at 28 1/2 on at least 4 occasions. Maybe it was one last probe by a "moving shadow" that showed us that we bulls were not that tenacious. I wan't able to watch the market Friday, but from what you guys have said there was a major attack to push the stock below 24 1/2,but that this probe failed. If this was a "moving shadow" maybe our market maker/large trader will be covering Monday a.m.