Post by Sol P on Jun 12, 2005 17:00:17 GMT -5
Orignially posted by David on May 28, 2005
Below are some charts and comments
CMGI
After spending late april-early may in a tight range it broke out and is testing the main uptrend line. If this stock breaks above $2 and holds it will be interesting to see what happens from there.
SOHU
Huge wedge formation, MACD's in an uptrend since july 04. Was having trouble breaking the third leg on the downtrend until about a week ago, once it broke that it ran straight through the 2nd. (Just looked at an updated chart, main trendline broken on thur, looks to me like the next point of resistance is in the 19.50-19.75 area)
JDSU
Very interesting chart. I highlighted the positive divergence in the MACD's Third and fourth downtrend branches were broken. The thing is that this stock could practically double from here and still be in a downtrend.
Something that bothered me was the fact that the stock was selling off on higher volume, a bad sign. After doing some investigating, I found that JDSU has a big interest from rebate traders, which account for a majority of the volume in this stock.
Rebate trading is basically a form of daytrading where traders make money from of ECN rebates, providing liquidity on the inside market of stocks. They trade millions of shares a day in low price stocks in order to make fractions of cents on each share. This results in very high trading volume as welll as a abnormal tight range in the way the stock trades. SIRI is another one. Take a look at an intraday chart of either of these and you will see what I am talking about.
(sidenote: this type of trading is also referred to as "tick fu*king", an interesting concept when you take in considerations Sol's comments at the seminar about trading being an outward expression of sexuality)
The rebate factor lessons the significance that the selloff took place on so much volume. Also there are rumors that rebate trading will soon be gone so that will attract more conservative/institutional money back to these stocks which may fuel a big run up.
