Good Morning James,
Well, I already broke one Holiday promise. Got up at 4:00 a.m., put the coffee on, walked a couple of miles, turned on the computer and have just poured my first cup of coffee. The irony is the fact that I was thinking exactly the same thing that you wrote about as I was taking my walk.
I have discussed the same thing with many other shareholders in regards to price movement. I would be very content to see a nice steady rise in our stock as opposed to these wild-ss fluctuations that we have seen in the past. I know from first-hand experience, as I have ridden that train on 4 or 5 separate occasions in the last year and a half. I would be very content to see a nice rise of 1/8-1/4 on average per week. For long-term investors, basing their investment on fundamentals and growth in sales and earnings, we need to have this type of mentality. This also takes a huge advantage away from day-traders and real short termers that base alot of their moves on a network of very well orchestrated hype and faith in having access to news coming. Most have already set their entry and exit points and can wreak havoc with price fluctuation. I am by no means criticizing those who day trade by any means. Some are very successful but many do get caught with their pants down. It is a very difficult thing to do and you must be equipped with all the tools to do so successfully. One minute behind real time can make all the difference in the world.
James, one thing I noticed about our last retracement from the 3'ish level. On other retracements that we have encountered in the past, the Market Maker's were very quick to drop the bid on any little bit of selling on low volume days. They managed to do a lot of accumulating of stock on those past occasions. They also kept anywhere from an 1/8 to 1/4 spread between the bid and ask, making it very unappetizing to investors to accumulate. I know I don't like buying a stock when I know that I will immediately be down 12 1/2 to 25 cents as soon as I get executed. (No Pun Intended) This go-around has been completely different. For the past 3 weeks we have traded in a very tight trading range, have showed nice resiliency in the 1.50-1.625 range, and the Market Makers have kept a very tight spread (even on the low-volume days). Most of the time the stock has traded in the .03 cent range between the bid & ask with an occasional spread of .6 cents or so. They tried to "shake and bake" on only a couple occasions and when they found no sellers they were very quick to move the bid back up and make a legitimate market on the stock. One of the reasons is the fact that the stock has been under a nice, steady accumulation during this time period. Look how long it took us to get OLIE (Olsen, Layne & Co.) out of the picture. He was the last one, IMO, that a significant amount of inventory. Now, it does not appear to take a bunch of buying to knock the other MM's off the ask and see the bid follow. This to me is an indication that their inventory is very low at this time. This does not mean that they will not try other methods to accumulate stock from time to time, especially if the buying pressure continues. It is very easy for someone that does not have access to live quotes and MM tracking to assume large selling if they see the bid drop by 1/8 of a point. I have seen them drop it like that on sells of 500 shares in the past. I have one particular friend, who owns slightly over 100,000 shares, that called me one day asking me "what the -ell is going on? I'm down 12,500 bucks already today!" That particular day we had had 3 small buys of less than 2,000 shares and the next was a sell of 500 shares when WIEN, who was the only one on the bid, dropped it 1/8.
Getting back to this theory on the last few weeks action. Give the Market Makers some credit too. They know that this company has now produced two consecutive winning quarters and I'm sure they know that things are getting better. They have their sources and they are professionals in a highly competitive industry. They do not always act in a professional manner, IMO, but there are some pretty good ones out there that will take the time with you to try and explain the nuances of their job.
James, I also agree with your point that it was good to see some selling on top of all that buying yesterday. It makes for a healthier situation in the long run and a much more orderly market, which is what someone needs when they have invested in the future of the company and have not invested on Tuesday's morning's price in hopes of making money by Tuesday afternoon. Have a great weekend. I really enjoy reading your posts and can see that you really stay on top of things.
"Grupo Brad" |
