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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: RockyBalboa who wrote (2415)7/9/1999 2:47:00 PM
From: Q.  Read Replies (3) of 2506
 
Let's look at the BB stocks that were deleted at the beginning of July:

SSLKE (Shopping Sherlock)
EPSOE (enterprise solutions)

These were the two stocks that traded > $5 before the deletions.

SSLKE was fairly thinly traded. It had trades approximately every-other-day. It was trading at 8 in early June, before the E. It did not drop immediately when the "E" was added. About June 17, volume picked up and the stock began dropping, and it closed at 5 7/8 on the last day, July 2. My broker called a big market maker and was told that there have been no trades since July 2 and there is no bid/ask. The co. put out a news release on July 1 saying that it is working on the SEC filings. I'm not sure, however, whetehr the trades today were on the bid or ask, so it's possible that you wouldn't be able to cover for a gain this large.

EPSOE traded more often than SSLK. It didn't move at all, after the E was added. The last 6 trading days it dropped from 15 to 14, which is not very much, maybe just the spread. Now that it has been deleted, it is trading on the pinks. My broker told me that today's trades have ranged from 8 3/4 to 9. That's a drop of 36% in a little more than a week.

So this is beginning to look promising. It looks like the best time to short might be anywhere from a day to a week before the deletion, and the stock will either drop when it goes to the pinks or it won't be quoted at all. I'm not sure which of these two outcomes is better.
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