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Non-Tech : Knight/Trimark Group, Inc.
KCG 20.000.0%Aug 17 5:00 PM EST
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To: Gary Korn who wrote (3533)8/13/1999 3:58:00 PM
From: Herschel Rubin  Read Replies (1) of 10027
 
It now appears that the arduous "margin implosion" that we've seen happening to NITE may end as of today:

Why?

If NITE closes today above $32 (which is a given at this stage in the game), all margined investors who had margin calls triggered on the August 10th "critical" close at $30ish will NOT be called on Monday (assuming at the longest case, some brokerages' house calls take 5 days to become due).

So, with the complete absence of margin-related selling (all other margin calls will have already been washed out at higher price levels), we may see some NITE buoyancy on Monday and Tuesday.

This buoyancy, in turn, may inspire short covering. My guess is that NITE may break into the 40's during the first few days of next week and will surprise those of us who watched with amazement as it touched $28.

Indeed, share appreciation can rescue margin called holders from forced liquidation, but share appreciation has to hold for 5 days (as I understand it) in order for the trader to be free of the initial call.

Thereafter, if a NEW margin call is triggered by further declines in share value, the trader will have 3-5 additional days until the call is due, depending on the brokerage house.
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