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.

Strategies & Market Trends : The Darvas Box Thread - Using the Nicholas Darvas system -- Ignore unavailable to you. Want to Upgrade?

To: jan_mike who wrote (308)	2/3/1999 6:06:00 PM
From: Dow Beater	Respond to of 498

Mike, Just my opinion. Remember, Darvas was looking for stocks that would keep going up, not just a quick spike. As I recall, Darvas bought stocks worth $100 +. That was because of the commission structure when he was investing. I believe he also liked to buy in 100 share lots. Again, as a result of the commission structure when he was investing. He was basically a chartist, with a few fundamentals thrown in for good measure. Basically, he wanted to know the company he was investing in wasn't going to go belly up. Also, he knew other investors like earnings, which he was not particularly interested in other than the fact that those other investors were going to drive the stock price up because of projected and/or real earnings. Darvas was a TECHNO-Fundamentalist. So, where does that lead us? I believe that my recent buy in Gateway (GTW) is a reflection of a great Darvas stock (though it isn't yet at the $100 + level). Is Gateway going to fall off a cliff? Probably not. It's the No. 2 computer company. Is anything new happening? Darvas liked new. There's talk of a deal with YAHOO on CNBC and an interview with the CEO coming up shortly. Does Gateway have a strong image? They sure do. They look like a cow! MOO – that translates to momentum – and that translates to a Darvas stock. -- Dow Beater

To: jan_mike who wrote (308)	2/3/1999 8:47:00 PM
From: Iceberg	Read Replies (1) \| Respond to of 498

>Applying Darvasian theology today makes correlating volume and price a little tricky. Mike, IMO, correlating volume and price is more than tricky even in the absence of any complications from Darvasian theology. But my understanding is that Darvas paid a lot of attention to volume, even though he didn't explain much about it [at least to my satisfaction] in his $2M book. I know very little about interpreting volume and price action, but my impression is that a sudden change in volume is reflective of investor interest. If a volume surge reflects interest, and you look at the direction of the price, then you might be able to say that the prevailing interest is in the direction of the price. If so, then perhaps Darvas used volume as an early indicator of even greater interest developing later on. I've seen quite a few charts where there is a sudden volume surge, and it continues for weeks, months or even years. But the idea is to somehow get in early, and not wait until everything becomes crystal clear. By then, it's often too late. Of course, and as you suggested, a sudden volume surge could be just a transient flash in the pan that quickly fizzles along with the price. But so what? Darvas protected himself by placing close stops. Then he'd go on to the next deal. As far as news is concerned, did Darvas worry about news at all? I don't recall news being of any particular concern to Darvas. But I could be wrong about that. I was thinking Darvas did his fundamentals, then made his investments based upon the action of the stock's price, the stock's volume and the boxes he supposedly constructed in his mind after reading Barron's...all the while dancing away the hours and going from gig to gig. I think that's the gist of how he made his $2M in the market. Plus, IMO, he had more than his share of "luck" along the way. <g> Ice