Thursday looked like a classic day of MM trying all their tricks to get shares back so they would not run short for next week.
If you are new to trading, consider the following. If you are experienced, then skip this post since it will probably bore you. Or if you read it and do not agree, then please post your response.
Put yourself in the shoes of a market maker. They are responsible for making an orderly market in PNLK. They have to buy or sell stock as the public requests it. Of course they set the prices for the stock, but consider how they decide to set the prices.
Last week there was far more people buying stock from the MMs than selling back to them, and after a few days of this the MMs become very aware that they are running out of shares to sell. Remember, the float is only a few million shares. They try to raise the price thinking that eventually a high enough price will stop the buying frenzy, but instead it just heats it up, and so they raise the price some more and still the buyers come faster than the sellers.
Most of us long players just sit and are amused and happy to see the plight of the market makers trying to stop the buying. When they can no longer control the rapid interest by raising the prices, guess what they do??
They decide not to raise the price at all, no matter how many people place buy orders. Just look at thursday and during the first hour or so there was nothing but buys, but they did not raise the price as you would expect when there is so much interest. Why? Because they knew if they made it look like that was the ceiling, then share holders would become afraid the price might start down.
And that's what happened, because even though there were 10 buys for every person selling, the buys were ignored, but with every sale, they notched the price down. At that point, the weak hands started to chicken out and sell for profit, which becomes further chance for the MMs to reduce the price, which causes more shareholders to bail out, etc. etc.. all the way down.
The whole time this is happening, the MMs are in heaven. They are getting the shares back at a lower price and are now ready to continue making an "orderly market" again. What a joke!
I would love to see, just once, what would happen if when the MMs ran out of shares and started playing their games, no one sold them shares back out of fear.
Consider holding your shares at least until after the new site. You will not see any sustained period of down trend between now and the release date, so you have nothing to loose, and a lot to gain. I used the dip on thursday as an opportunity to pick up another block at a great price, and you watch next week to see what that becomes worth.
Those are my thoughts, for what they are worth. I hope they help at least a few newer traders understand why there are such ups and downs in these emerging companies.
Barry
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