To the best of my knowledge, there really can't be any short selling on stocks under $5 (it's illegal), although I've heard people say otherwise on SI (but don't know where they got the belief). As far as market manipulators keeping the price low, it works like this:
With the knowledge that a stock is going to have a run up in the future, manipulators accumulate as many shares as they can at the lowest prices they can, before the stock shoots up. If they see the share price rising to $1, say, but want to buy more and there is no news to fuel the stock, they can drop the price by selling their own shares to themselves (using multiple accounts). For instance, they can put in a bid for a small number of shares at $.92 cents, and then sell off their $1 shares to themselves at $.92. The ticker then registers the stock price at $.92. From there, they can do the same thing, dropping it to $.87, then $.81, then $.75, etc. etc. Here, you see posts like "Any idea why this is dropping on so little volume?" and the people (non-manipulators) who bought at $1.00 start to panic and begin to sell their shares, assuming that something bad is up. The market makers then can buy those shares at the bargain prices they lowered the stock to. This is the shakedown. You can often see it happen immediately preceeding a run-up; in fact, just look at the January chart of tpii for a nice example. The clues are a depressed share price and a lot of volume. This occurred today.
Hopefully, this is all good news, because there would be no accumulation without anticipation of a jump in the share price. If you're getting ancy, just hold on.
Of course, if you can't afford to lose, don't invest in the first place. There are no sure things. The only completely honest statement I can make is that I believe in this company, and am risking a substantial amount of my hard earned cash in it. Hopefully it will work out well. I also hope this has helped educate you as you asked.
Chimi |
