Let Price Confirm Story
An exciting new product or service can form the basis of turnaround. But I
still insist on heavy buying volume and an extended price advance to confirm
that a company’s fortunes have turned for the better.
Online bookseller Barnesandnoble.com
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PowerRating) and Microsoft
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Monday announced to the first major Internet store selling digital books.
Microsoft’s free software for reading on screens as part of the venture. The new
business one-ups No. 1 Web-based bookseller Amazon.com
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PowerRating). Financial
terms were not disclosed.
Barnesandnoble shares leapt 1 7/16 to 5 3/16 on huge volume. That’s clearly the
buying of institutions, not individual players, a bullish vote for the company.
However, you are still looking at the laggard in the match-up with Amazon, which
in any case has had its own problems. So stay away for now. At minimum, the
stock should clear its 50- and 200-day moving averages, and establish rising
slopes in both those lines, before you should look for entry points.
Think about it this way — if Amazon, the leader in the online bookselling
space, is in a long-term downtrend, why would you want to play in this sector?
Let the fundamentals confirm the story. Then wait for the technicals to confirm
the fundamentals.
