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Technology Stocks : Zenith - One and Only
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To: flickerful who wrote (4626)3/16/1998 5:37:00 PM
From: Scott Lerner  Read Replies (1) of 6570
 
I think that whomever has been manipulating ZE maintains two accounts; one with the huge short position and another with a much smaller long position. I think that the short will occasionally sell long shares of ZE into the close at the sell side to mark it down. This accomplishes two things. First of all it "breaks down" ZE's momentum. Today, for example, I was surprised ZE held 7 considering the stock was bidding less shares than what was sold at the close. I think that if my theory is correct, then the short is kind of pissed at ZE's "hidden" support. Could be the specialist buying for his own account behind the existing bid. The second reason is that "marking" ZE down at the close has a tremendous effect on the margin in the shorts account. It will either free up capital or it prevents a call if he is very extended. Maybe the short is nervous about getting a margin call? Maybe we'll get that mother of all squeeze's.

The bottom line: the closing pressure on ZE is very unnatural and will very likely cease as ZE picks up liquidity due to positive press.

BTW, ZE has to make their announcements by 3/31 as dictated by SEC regulations. I would expect the delay to be a positive for us as it most likely means that ZE has been working on some huge PR effort. Interesting note, Kevin Brindley's voice mailbox was full for the first time when I just called.

Sincerely,

Scott
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