Ames Department Stores (AMES) Message Board

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Microcap & Penny Stocks : Ames Department Stores (AMES)

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To: DPG who wrote (841)	12/4/1997 10:33:00 AM
From: Arthur Tang	of 1911

Thank you, Donna. Market makers do not have enough stock on hand to sell to the demand. They borrowed stock and have to move the price up to buy back later at a lower price. So, they then lower their price to buy back when demand stops. We watch that action most to predict price movements. As long as demand continues, the nice moves continue. When demand ebbs, the pull back will come. Then we watch the average price the market makers got for their borrowed stock. Moving average, on the number of the days of the run, can predict the average price of the borrowed stock. We have to expect the pull back will be some percentage below the averaged moving average during the run. Down 30% from the peak is the rule, because average is 20% below the peak and 10% be the profit. Runs are usually shorter then 5 days(a week). More like two to three days at the most. Unless the market makers feel the stock (great companies)should go up much higher. Then the price just pause and go up again and again. The moving average goes to longer and longer number of days. 200 day moving averages are used by some people. But why stop at 365 days? Some companies just go up and up forever it seems.

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