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Technology Stocks : Seagate Technology -- Ignore unavailable to you. Want to Upgrade?

To: Roger Mory who wrote (6198)	11/4/1998 11:58:00 AM
From: William Epstein	Respond to of 7841

Roger Moray; Yes, that is so. In Feb., 97 after SEG bottomed at 17 and it bounced up 29 5/8. It hasn't gotten above that level since. I would want to see it go into the 30s and stay there for a while. That would convince me that the stock is in a real uptrend. With regard to your reference to short interest. Specialists do use short sales to keep stock prices under control when a stock is rising so that it doesn't rise too fast. Also, they use short sales to maintain liquidity in they daily trading operations which is the purpose for which it was meant. In other words, if the specialist has 100 shares on the buy side of his book and only 50 shares in inventory he may sell short, in order, to supply those extra shares. As time goes by the shorts accumulate. It is a question of how fast they accumulate relative to average daily volume. If they accumulate slowly then the specialist is using them to supply stock and perhaps, to keep prices from going through the roof too quickly. If there is a big overhang that has accumulated fast, that becomes a different matter. In any case, eventually, the accumulation forces prices down. It's just a question of how much is needed to do it. That varies with each stock. Something like Microsoft might need an overhang of 30 or 40 million shares but Seagate needs much less. That is why short interest ratios become important. Short interest does have a legitimate use. However, what I try to do is to make a determination as to what the short interest is being used for. Indirectly, that will usually tell me in which direction the price is going to go. It's an advance indicator. PHOTOMAN/William Esptein