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Microcap & Penny Stocks : International Automated Systems

IAUS 0.0400

0.0%

Jul 8 5:00 PM EST

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To: r laird who wrote (75)	6/26/1996 3:07:00 PM
From: acell bown	of 7618

Hi Lord of the Manor, I have been watching Iaus all day. Strange that it would retreat just one day before their moment of truth. I called one of the MM that I am friends with to see what was up. He said that with the demand being up of late that the MM's had almost totally run out of inventory on this stock. He stated that their brokerage had zip. With no inventory the usual course of action is to widen the spread and raise the sell price so that any sell orders will go over to one of the other MMs. I ask: "what do you do if it still comes to you." Simple, he said, we are obligated to short it. Now that is scary even for market makers when the price is going up. So what do they do then. "Simple, he said, at least in this case." We lower the price and hope that the other MMs will do the same. As the price is lowered some people panic and sell. MMs continue to lower the ask/bid until they can cover their short position with a nice profit. The only risk in this is if a big buyer beats them to the punch before they can cover, or a whole bunch of little buyers do the same. I've often wondered if the MMs call each other up and conspire. Nooooo they wouldn't do that. He also said that some of the MMs (there are only four in this stock) wanted to accumulate some more stock for the demand that will arise after the the Demo. So they suckered some of us into selling. Not me. It seems to me that the way to beat them at their game is to buy when they lower the price instead of selling. Then they can't cover their shorts. Or if you can't buy any more at least don't sell. Pretty soon they will have to cover even at a loss. It happens. Remember this: you can't lose any money until you sell. Just a thought, ace

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