In my experience with MMs and trading through them, their M.O. 99% of the time is just to make the spread as many times as possible each day. I've never encountered a small MM that wanted to hold inventory for any length of time.
So IMO, it's not MMs buying up the float. It's promoters trading through the MMs. They accumulate huge positions at the lows, then hit the phones to create the demand, run the stock up (which is easy because their buying has dramatically reduced the effective float) while distributing all the way up, then bail out at what they think is the peak and short the crap out of it for good measure. Pretty soon the stock is back to its lows and they can do it all over again.
I think the trick here is to watch the MM lineup to try to figure out which MMs the sleazy promoters are dealing with. When a stock like the ones you named is at a low, watch for new MMs coming onto the bid and just sitting there, especially MMs other than the usual NITE, HILL, SHRP, PGON, FLTT, NAIB, FAHN, WIEN, FRAN, SLKC, MASH, MHMY type. An unfamiliar MM or one like LDWD, DLCR, ISRC, PBLC, WDCO or any of the little Boca Raton firms would make me suspicious that a P&D is in the planning stages.
All of the above is my opinion only and not to state as fact that any particular MM makes a habit of trading for questionable customers <g>. |
