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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: John Curtis who wrote (4272)	9/26/1998 10:29:00 AM
From: lws	Read Replies (2) \| Respond to of 27311

Hi, John, Welcome back. Vis the recent drop-back in the stock price: Since I am not a technician, ordinarily I don't pay much attention to musings about the daily movement of Valence's stock price. Certainly I have to think that the Valence stock price is mostly driven by its special circumstances rather than the usual "technical" forces driving the stocks of larger and more established companies. The special circumstances of Valence since July 28, however, lead me to the following observation: It seems to me that the July 28 agreements, with their specifications of calender-based progress points, for short-run purposes have converted the Valence share into a kind of decaying asset not unlike an option. All else the same, the value of the stock will drop toward zero as its "expiration" date approaches. The stock, like an option, can receive temporary boosts from good-news announcements like insider purchases or favorable news stories, but in the end it will expire worthless in the absence of announcements of the attainment of the production and sales goals laid out in the July 28 agreements. In the absence of these announcements, on this "option model" basis we can expect a gradual downward trend in the stock price despite occasional spikes from incidental bits of good news. Only the announcements of production and sales will permanently jolt the stock out of this option-like behavior. If this option model of the stock is correct, we can also expect to see relatively larger amounts of selling over the next several months as more and more shareholders look to get out as the expiration deadline approaches. This incentive to get out before expiration will tend to accelerate the downward movement, and will mute the impact of any spikes arising from incidental good news that is not an announcement of production and sales. Regards, lws