Forum Archive Index - January 2002

[Phaedrus <Phaedrus@techemail.com>]

 I don't want to rain on your parade, but thought it would be good to present a 
rather different opinion re LSG, by way of balance, perhaps. 
I know nothing of the fundamentals of this stock, but would not, however, 
consider buying it for the following reasons :-
(1) It has recently broken through its trendline, giving a Sell signal.
(2) There is strong resistance at 85 cents.
(3) There is a large Buy/Sell imbalance (143,434 bid, 586,730 offered) This 
means that over four times as many shares are for sale as are sought.
(4) Buyers are weak - the top Buyer at 81 only wants 1134 shares.
(5) There is very heavy selling pressure at 85 (327,649) This will reinforce 
the resistance already existing at that point, and will make this level even 
harder to penetrate. 
6) This stock is very lightly traded - only 15 trades all day, average trade 
about 5,500. It is all but impossible to make a serious investment in a stock 
like this without pushing the price right up. It is equally hard to exit 
without depressing the price substantially. Slippage is therefore very high.
(7) Larger holders of this stock are getting out, and small holders are getting 
in. This typically happens toward the end of a trend as professionals sell to 
amateurs. (Average buyer 7000, average seller 17,000.) 
(8) If I was interested in this stock, I would have bought and sold at the 
trendline breaks, making well over 30% in 10 weeks. Many traders will have done 
just that - you will be buying from them. The big difference is that you will 
be running a lot more risk than they did, with less chance of reward, to my 
mind.

             Phaedrus. (Back from holiday, tanned and fit!)

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