|
PureBytes Links
Trading Reference Links
|
Hello RT's,
I'm trying to learn how to trade stocks and I have a question. I've been
following Amati Communications (AMTX). Now from Jan. '97 to about Aug. '97
it seems to have made what looks to me like a texts book Head -n- Shoulders
bottom, increased volume on the left shoulder plus increased volume on all
the rallies, reduced volume on the declines, etc. About mid Aug. we have a
break out on high volume followed by a return to the neckline in mid Sep.
This seems to me exactly what it's suppose to do. My question is why is
there a possibility of a rally when the "fundamentals" look so poor.
Example:
P/E: is not calculated due to "negative" earnings.
Price to book: is about 50
Price/Sales: is about 25 (which seems high to me)
I perfectly understand why technical traders in commodities do not follow
fundamentals. You know things like people will always need to buy gas and
eat bread and build a house, etc. But, people really don't need to buy a
share of stock, especially one with poor fundamentals, that's why I'm
confused.
Any assistance to my understanding will be most appreciated.
Also, I've read here that a study of cycles is a good tool to apply to
trendlines, how do I get started in the study of cycles. Thanks very much.
Daniel Cruz
|