Hi Cal
"DMX off to a low volume start today. Is it going to be, ambush the sellers or are we overbought?"
I did some interesting math last evening. Did you know that since January 29th - the first day of the first draw - 20% of all DMX shares sold on the TSE have been by the 3 Amigos?
That's 1 out of every 5 shares, or 20%. The inverse is that for every 5 shares bid, there are only 4 for sale. Essentially, that means there has been an 25% order imbalance in favour of the buyers.
This artificially manipulates the price by suppressing the pure market forces of supply and demand. Were the stock price allowed to find its own level, unfettered by Acqua, that 25% buyer imbalance would certainly have the price at higher levels. Where exactly that level would be is uncertain, but it would not be where we are now.
Not only does the order imbalance have a negative intrinsic effect on the price, but it also has an extrinsic effect, that being negative sentiment. As the Amigos sell, the price gets weak; as the the price gets weak, people get frustrated; as people get frustrated, they sell!
I think it's clear where I'm going with this. But to bring this back to your original question, I'd say, maybe in the short term. But, if there was not the artificial activity of Acqua, we are very far from being overbought.
joe |
