Technical analysis differs from other forms of psychology in that it is the analyst, not the patient, who is looking at the Rorschach. A good technician on a good day is not just looking at stock charts, he's looking into the market's soul.

"Each day's trading pattern," says John Bollinger, president of

, "portrays the fight between fear and greed, between optimism and pessimism. It's a picture of a psychological battle."

Nowhere has that battle been so pitched as in the


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Protein Design Labs

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of this world -- stocks whose runs have seemed to defy not just the law of gravity, but of the imagination itself.


Big moves usually start with a bang. Typically, the stock has been trapped in a range, and often it has recently seen a bit of a pullback. A great example of this is


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, the specialty chip developer that has sprinted 303% since the beginning of February.

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Take a look at a Rambus chart going back to January 1999 and you'll see that the company was mired in a pretty broad range until last month -- that range took it as high as 117 and as low as 51. It also had a pullback a little into the year -- on Feb. 7, it was 14% off its January high. But then ... Rambus caught fire.

Rambus Busts A Move

The company had its annual meeting Feb. 9, and despite some commentators suggesting that things weren't so rosy, clearly there were investors who liked what they saw. The next day, Rambus gained 13% in heavy trading. This, according to

Lehman Brothers

chief technical analyst Steve Shobin, is the way a move higher usually starts.

"The hallmark is usually the clearing of a hurdle -- which we call resistance -- and surging volume," he says. "The other thing we see is a significant degree of skepticism accompanying the breakout. Rambus had lots of puts on the day of the breakout, and has had more puts than calls all the way up." (An investor who buys a put option in a stock is betting it will go down; a call buyer is betting it will go up.)


The ends of these moves also have their hallmarks. Often -- and this is one of the things that makes it really nerve-wracking to exit a highflier -- a hot stock will go absolutely ballistic toward the end of its run.

"Qualcomm is a very good example," says Greg Nie, chief technical analyst at

First Union Securities

in Chicago. "In the end, it got to a point where enough was enough. You'll find this is a very common pattern with these issues. They're well into their advance, and then they accelerate even further." It's something like the reverse of the capitulative selling technicians look for at an overall market bottom. Everybody has thrown up their hands and piled in. There just isn't anybody left to get bullish on the stock.

Qualcomm, the wireless communications company that last year gained 2,619% but this year has slipped 27.9%, shows other characteristics typical to a strong stock that's run out of steam. Take a look at the action around its top.

Qualcomm Tops Out

Qualcomm closed at a new high Jan. 3, adding 3 3/16 to finish at 179 5/16. But it had opened at 199 1/4 and, shortly thereafter, hit an intraday high of 200. A lot of investors had suddenly changed their minds about Qualcomm in the middle of the trading day. Volume was a heavy 31.76 million shares.

"If you get one of these big volume days where you open dramatically higher and close lower, that's a warning sign," says Bollinger. "It's the juncture where euphoria meets fear and is overcome."

And the fear was still in Qualcomm the next day -- it dropped 17 1/4 to 152 1/16. Qualcomm closed below its open for seven of the next 10 trading days. If that wasn't sign enough that things had changed for the stock, it came shortly thereafter. On Jan. 19, the

Nasdaq Composite Index

hit a new high. Qualcomm, which had come to embody the index's big move in 1999, was 18% below its record close.

There was no longer any doubt. The most amazing stock run the world had ever seen was over.