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Microcap & Penny Stocks : Madera Int. (WOOD)
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To: Richard L. Williams who wrote (3651)3/26/1999 12:30:00 PM
From: David T. Groves  Read Replies (1) of 3693
 
It's not really that odd Richard. There are about 8 active marketmakers on theis stock. Look back at the runaway market we all so loved at the end of December, beginning of January. 10's and 20'millions of shares trading every day.

Here's how it was explained to me. You put an order at E*Tade for 10,000 shares. They go to the first market maker on the list. If he doesn't fill the order they go to the next on the list, He knows that if he doesn't fill they will just move on, but if he does fill he will become the go to guy for E*Trade until he doesn't produce. So he fills. He gets another order for 100,000 shares and goes short of stock to fill that. Mean while the price is shooting up and the demand is great and he is shorting more and more. Remember it is the market makers job to keep a flow of trade on the stocks that he covers. Now here is wood at $.30 and he has an accumulated short position 2,000,000 shares at an average price of $.22 that he has to cover. What does he do? Cover at $.30 a share and lose $.08? NEVER

He and the other MM's that just covered a 24,000,000 share day are in charge of the flow of the stock. They ARE going to push it down so that they can cover at a point that they WILL make money, and refresh their stores of the stock. Then try to keep it fromm going up so sharply again.

They do have rooms of people that post on these sites to scare the investors. Did you really think all these people were crazy?

Those are my recollections of the article. Perhaps I can find it.

Dave

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