Don,
I feel your pain, believe me. The problem lies with the way the market makers operate in general. With the general stock market being weak, the market makers get really skittish about getting hit with any stock. So what happens is they'll put up a weak bid. Say they get hit with 1000 shares. In a normal market, they'd stand pat. However, these guys are in there to make money just like us. So they'll get hit with a small number of shares, and immediately turn around, get off the bid and go on the offer trying to cut loose the 1000 shares they just bought. With no preponderance of buyers, they keep going low offer until someone takes the stock from them.
The problem is compounded when, as like today, the market gets stronger, the mm's get a little less skittish, but not much. They concentrate their action in the bigger stocks they make markets in. Joe Public sees the market turning, and decides he's gonna cut loose his microcaps as a source of funds to buy stuff like CPQ or DELL--things that will rebound quickest.
Perfect example: I have a position in Sequus Pharmaceuticals (SEQU). They came out with great earnings and a positive writeup on thestreet.com. Stock ran up a bit on the news, but the HongKong debacle knocked them down in the same fashion as I mentioned above (market makers just wanting to get out of the way of sellers). Now the market's up 160 pts, yet the stock is still down 3/16. Why? Everyone's taking their money and buying the high-flyers. I know, it doesn't make sense--these guys, like KKRO, have no exposure to Asia, yet everyone wants to place their bets on the big stocks since they come back first. That's the problem with microcaps--they get hit just as hard on selloffs as the big boys, yet they always lag the market when the large caps bounce back. It's not fair and on the surface it doesn't make sense, but that's just the way it is.
On a positive note, I am going to be in Baltimore this weekend where I will (hopefully) get to make my first visit to a KooKooRoo restaurant. I live in New Orleans, so the only chicken we see down here is Popeyes. I know there's a KKRO in Virginia and the website says something about one planned for Bethesda. Does anyone know if the Bethesda restaurant is open yet? It would be a lot closer than going to Falls Church.
Good Luck,
Gary |
