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Strategies & Market Trends : CAVALRY'S SHORT BUSTERS - MAGIC EIGHTBALLS PICKS
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To: Cavalry who wrote (233)9/12/1998 12:40:00 AM
From: Due Diligence  Read Replies (2) of 1637
 
Just a general observation:

There are times when a stock really takes off over a few days or weeks. An MM can see the leveling off later,interest wane,and nothing from the company to back-up the new value or support it. The stock has lost interest by shareholders and starts depreciating. A MM may decide to keep selling shares at a more and more reduced value all the way down to the floor. He may not have the shares,either. To cover those already sold shares when interest starts again for whatever reason, he may cover or call the company,as a last resort, to purchase shares at the reduced price to cover his short position. That's when the fun begins. If the company thinks it's stock is truely undervalued and should support a better price, they pass on selling the MM shares. If the company knows the they are not financially viable, they may sell the shares to the MM to cover. It all depends on what the company BELIEVES the fair share value to be,based on their internal knowledge.
Always open to comments or a different view of this scenario.
Good Trading,
Jimbo

BTW: An individual investor that is in a short position watches for the same indicators. Momentum and no viable support by the company. IE. Solid releases with real information that shareholders believe.
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