re: 1/16/98 Volpe Brown Ups CheckFree To Strong Buy From Buy
Hi Boris
While I share your suspicion of the market makers, I think it may be misinterpreting what was observed on the level II screen Friday to say that Volpe has set up a "suckers rally". Indeed Volpe was at the "ask" on the close (at the high of the day) selling into the advance, but only after a significant intraday runup. By selling a small portion of their portfolio during rallies, market makers are able to ensure that they have cash available to support the stock during downturns. Typically, during selloffs, the market makers are the only ones buying thus stemming the freefall. Such was the case as CKFR hit new lows on Friday. For Volpe, this behavior, coupled with their upgrade suggests a commitment to higher prices. To believe that the MM's only buy a stock AFTER they've given an upgrade would be the utmost in naivete'. In truth, they "work" the stock higher through an ongoing campaign of renewed accumulation at higher lows and distributions at higher highs. If they simply bought all available stock until their price objective had been met, they would never be able to unload their
accumulated portfolio at a profit. All this being said, despite the fact that Volpe was there on the ask during the latter part of the day, it is my belief that they intend to take the stock significantly higher.
Thanks for your response
Schmedley |
