Post of the Day
March 1, 1999
Dell Computer Folder
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Subject: Re: Mornin'!
A thorough understanding of statistical analysis is very helpful, IMHO. I also have studied Chaos theory and the theory of strange attractors, and I think that these adequately describe the market. If your background and inclinations make it possible, you should look into those.
I agree -- the number of factors that affect the price of any one given stock has always struck me as so much more an example of Chaos Theory that I've been less inclined to study in depth, or trust much, some of the more arcane combinations of TA, especially when it comes to really laying real money on the line.
Even if all the planets line up in perfect precision and all indicators are 100% in agreement regarding this vs. that action, a "Niles" can appear from nowhere, a Greenspan can hem when he meant to haw, Nepal can decide to test an atom bomb, the USSR can collapse, Brazil can devalue a currency, as can China. Along those lines we can also suddenly have sudden impeachment articles drawn up, M.Dell is killed in a plane crash, a patent is issues on a device that revolutionizes and completely changes the nature of a business (the internal combustion engine, e.g, lose your buggy-whip stock, fast!).
|"BUT: How much of these events and actions by a handful of people, or even some single analysts, can be divined and factored in advance into a stock's price movements by analyzing the "tracks" and "trail" of its various X-DMA -- be it 50-200DMA -- or the shape of its chart? You're trying to predict the future by gazing into the past."|
Also, good news can happen. DELL gets a patent that cuts existing costs in half. It make a deal, an acquisition or merger, that changes everything. New laws are passed that affect the web and Internet.
For the past 3 years, DELL has been the No.1 TOP-PERFORMER of the S&P. It's been TSEL -- the Stock That Everybody Loves. It's gone something like 20+ successive quarters without "disappointing" with its numbers (some get disappointed anyway).
The recent big plummet took an especially big hit because of a confluence of a no. of factors -- the usual runup to DELL's earnings report, which was magnified and accelerated by the fact that such previously reporting cos. as MSFT, chipmakers, and other boxmakers (even AAPL) had such blowawary nos. that DELL just *HAD* to be ready to knock 'em all dead. The pricing runup also started to build the anticipation of a *split*. The volatile nets, concidentially, decided to quiet down, leaving a bajillion new daytraders, momo and quickflippers without clear and easy targets. Ergo, a lot of this type "piled on" -- back to DELL which, until then, had lost a lot of this type of trading and volatility to the nets. Some of us felt "blessedly so."
When Niles appeared as if from nowhere, jitters ensued. While the more LTB&Y shareholders tended to be unfluttered, various demographics of other investors fled for the exits. That DELL suddenly seemed to have climaxed prematurely (sorry), gradually began to affect more and more people, while the pundits debated Niles' results, agenda and intent, along with those of us here.
This overreaction has been exacerbated by the downgrading of MU and the situation with CPQ.
BUT: How much of these events and actions by a handful of people, or even some single analysts, can be divined and factored in advance into a stock's price movements by analyzing the "tracks" and "trail" of its various X-DMA -- be it 50-200DMA -- or the shape of its chart? You're trying to predict the future by gazing into the past.
I'm not really trying to challenge the TA experts here on an across-the-board challenge of the high-art. God knows I love to hear and examine all the input I can get!
BIG BUT: We now have had DELL beaten up and beaten down (contradictory, ain't it) in a quite unprecedented manner. On top of the huge price drop that pretty much everyone ackowledged was an overreaction (markets are like that), we got the domino effect of these other events, declarations, pronouncements, etc., especially re MU and CPQ. More reaction, more overreaction. On Friday, however, while DELL was sent yet another reeling -3 for much of the day, IBM, GTW, CPQ and MU were punished *MUCH* more severely -- by a factor of about 2X to 4X.
|"I feel the last of the "2nd shoes" has dropped. No more bombs, no more bogeymen waiting in the wings. I don't think anyone who hasn't bailed already is going to bail during the last week before the split, and I *do* think many people may be ready to come on board this week."|
FURTHER: DELL recovered pretty well from it's lows, in a steadily upward trending through the day, to close at 80 1/8, with a fairly good burst at the EOD -- obviously, most of the shake-outable had been shaken-out by that time.
FROM THERE: I feel the bargain hunters and those who still feel DELL's fundamentals are in place took over. Some of us feel that even DELL can have the situations that arose last quarter so that *ONLY* *MET* expectations on earnings, and that rollover of some major contracts, etc., to next quarter was a minor, incidental fluke, and a temporary situation.
FINALLY: There are those who still love to buy their favorite stock and favorite co. when they can get it at such a price, and know their shares are about to double, via the split DELL has coming in ONE WEEK.
I feel the last of the "2nd shoes" has dropped. No more bombs, no more bogeymen waiting in the wings. I don't think anyone who hasn't bailed already is going to bail during the last week before the split, and I *do* think many people may be ready to come on board this week.
I don't think charts can reflect *all* these factors and their multiple and combined effects, along with the soming split. That to me, like the weather, is most accurate on the very short-term, and gets less predictable and less accurate as a function over time -- that's Chaos Theory. --Aces
PS: Looking for UP yardage this week, en route to *SPLITS*ville. GO DELL!!!
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