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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: Hope who wrote (6952)	3/6/1999 8:34:00 PM
From: MTHONER	Respond to of 8307

T/A on EGGS???? WHY???? There are NO "buyers", and lots of "sellers"...for good reason. DELL just thwarted any hope for EGGS...Watch for the rest of the industry to follow...(Gateway, IBM, Compaq, H/P, et al/etc...) EGGS is/are cooked...Wish I had seen the "obvious" coming....

To: Hope who wrote (6952)	3/6/1999 9:23:00 PM
From: SkyDart	Read Replies (1) \| Respond to of 8307

The real question here is what is the best entry point. A bullish divergence occurs when price traces a lower low and the MACD [or other indicator like Price Rate of Change, Money Flow On Balance Volume, Elder ray, Force Index, etc] traces a higher low; ie the MACD [or other indicator] fails to confirm the new price low. I agree with you that the MACD is down and the price is also down. But I respectfully must disagree with you about the absence of a divergence. If you look at the askresearch chart, you will note that the previous closing low downpeak in January was above 15. The MACD then registered a negative peak at - 1.25 magnitude. Currently we have a new price closing low of 13 11/16. However the MACD negative peak is at -1.0 magnitude [ie not as low as the MACD downpeak in January] This is a type 1 bullish divergence between price and MACD. When the price goes lower and the MACD is not lower but higher you have a type 1 divergence. This is a strong buy signal. The strongest buy signal possible would be a type 1 bullish divergence that repeats 3 times, a rare event, a triple bullish divergence; the best buy signal. A weaker buy signal than a type 1 bullish divergence would be where the MACD is level while the price is lower; a type 2 bullish divergence. Here we do not have this. We have a type 1 bullish divergence which essentially indicates that the selling pressure is weakening relative to the price fall. When this occurs, a rally almost always follows. The issue is not if EGGS will rally but when. Therefore I agree with you that the real question is timing the best entry point. Certainly one could adopt your approach and wait for the MACD slope to rise or for another indicator to turn positive. However, the rally will likely be explosive [given the presence of the bullish divergence, the fall to the 200 day EMA, the bearish sentiment, the high short interest] and a late entry IMO might give up too many points. (Incidentally there is also a bullish divergence between price and the Price rate of Change indicator. At the January stock low of 15+ this read a negative 5. Now that the stock is lower at 13 11/16, the Price Rate of Change is higher at negative 3; another Bullish Divergence.) Dart