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Microcap & Penny Stocks : BASHERS POST THEM HERE!!!!!
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To: Janice Shell who wrote (86)6/30/1998 9:20:00 AM
From: Larry Voyles  Read Replies (2) of 390
 
Let's talk about manipulation. I need a ruling on the definition of manipulation. Here's a hypothetical scenario:

I own a sizable number of shares of XYZ company that have been accumulated over time (3-5 days). I and other daytraders have agreed to accumulate this stock. We have reached this agreement through private e-mails and other non-public forms of communication.

XYZ company has reached a resistance point where I (and other daytraders) consider it prudent to collect profits. We agree on a date and time to start the "selling plan". We agree on a price point to start selling.

I (and other daytraders) start buying nibbles of XYZ at the ask, hoping that the price will gap up sharply and start buying interest. It does.

At the pre-arranged price point, we turn around and start selling into the gap in huge quantities, which causes the price of the stock to decline and causes other nervous nellies to join us in selling.

XYZ continues its downward momentum (A.K.A. "slaughter") until it reaches an attractive entry point. Many of the daytraders re-enter at this attractive price. The stock recovers somewhat, but still ends up down a point or more on the day.

Over time, XYZ will recover through accumulation, at which point this game will be played all over again. We're the people you read about when CEOs say "We don't know why the price of our stock has (gone up)/(gone down) sharply."

Is this blatant, illegal market manipulation? Is it a legitimate exercise of market forces? Should daytraders not talk to each other? What's your opinion?
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