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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Zeev Hed who wrote (14680)9/20/1999 2:02:00 PM
From: kolo55  Read Replies (4) of 27311
 
Your theory isn't consistent with the facts in this case.

You wrote: In the case of VLNC most of these shorts are in "positive territory and probably will be so at least up the the $6.5 to $7 area (very rough guess).

The average price since the floorless was activated on July 27 is around 5.35 a share. This is also the period when the heaviest selling attacks occurred. Your guess is much higher.

You wrote: When the stock gets down to the $4 area, they may be covering and they may be reinstituting those shorts (all within the reporting period for the short) and then some in the $5.5 to $6 area (thus causing the overhead resistance we saw there).

The buying that we saw in the 4s didn't seem to come from the same MMs who were selling heavily on the way down.

Your theory proposes that the shorters are "super traders" who can time the stock precisely. This isn't a very credible theory. If they were one of the predominant forces pushing the stock down, then they couldn't very well accumulate enough shares on the rally to make a decent trading profit... the stock took weeks to go down, and only four to five trading days to rebound.

The most likely theory is that these guys shorted a lot of stock at about an average price of about 5.30 to 5.40 in August, and still are short the majority of this stock at the present time.

Zeev, you need to be careful about changing the facts to suit your theory. Instead, you need to modify the theory to fit the facts of this particular floorless situation.

Paul
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