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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: John Curtis who wrote (4643)11/2/1998 8:59:00 PM
From: lws  Read Replies (1) of 27311
 
Hi, John,

Thanks for reposting the article vis middlemen; it reconfirmed my understanding of the market process (and added the doubling-redoubling twist to think about).

The question I raised about the sources of Tuesday's (Oct 27) selling remains, however. Your middleman article treats the mechanics by which the middlemen can maneuver the price downward, but the mechanics presume willing sellers. At the extreme of a "sellers' strike," for example, it would not work at all; the middlemen (as a group) would have to close their positions at higher prices.

In this sense, the mystery for me of the huge sales volume of last Tuesday is where the huge volume of selling came from. No doubt some came from middlemen buying and selling among themselves, and no doubt some came from traders taking profits if they got in early and minimizing losses if they got in late. But I don't think these factors alone account for the million plus share volume, a volume at least 5 times normal. I have to wonder if there are more weak hands holding shares than we might like to think. Tuesday sure seemed to flush out a lot. It was a striking contrast with the prior day, when it looked like a lot were buying in for more than a quick trade.

Regards, lws
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