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Message: Anticipatory buys

Anticipatory buys

posted on Aug 29, 2008 12:58PM

A little technical analysis can go a long ways, and while the big money can paint the tape, so to speak, all in all, big money also leaves a trail of bread crumbs to follow as well.

That being said, when one looks at the chart for Sage, you can see that after emerging from a long sideways holding pattern, it came to life a bit in July/07, with some very nice volumes. ( Not shown in the chart below for reasons of clarity.) It poked above the levels of resistance, cleared out the previous bunch of disgruntled shareholders who only wanted to "break even". It succumbed to a bit of selling pressure, ducked back below the recent high to touch it's new support level before creating a rounding bottom which it rocketed out of to new highs with impressive volumes all the way to 80 cents. This is where it had gone parabolic, run away from its trendline, and the savvy short term flippers bailed at the first sign of weakness.

However, the stock held up very well, and subsequently showed a lot of strength with a pennant pattern emerging. Pennants can, of course, break up, or break down. Typically, a pennant will break the same direction leading into it, so an anticipatory buy here would have led one to believe it would continue up once more. That didn't happen. That's the way it goes with trying to anticipate a stock move: if you guess right, you can make some nice profits; if you guess wrong, you can feel some pain.

However, if your DD leads you to believe that the fundamentals are still sound, quality stocks will and do recover. All that is required is time. I purchased some as an anticipatory move myself, and as I've said many times before, am not worried about my investment and the subsequent hit my portfolio has taken. Other stocks I have purchased in the past that had sketchier prospects I've cut loose at the first sign of trouble.

That being said, I still think once Sage gets up above the 20 cent range, we might battle with disgruntled shareholders selling at that range, but once established again we should have a nice base to push off of.

Anyways, I sometimes wonder if our resident grumblers just simply don't have much chops in the market, and this is their fear speaking. Just some thoughts, not a pump or a dump.





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