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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: John Curtis who wrote (13216)	7/19/1999 4:05:00 PM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

John, there are several ifs involved in responding to your question. IF Castle Creek is shorting and IF they are also providing support at $6.50, and IF their short position is growing at the same time....then the way I would see it is they were in fact playing the reverse "bouncy bouncy" (with little risk, since their shorts are covered). By providing support when necessary (via covering some of their shorts) at $6.5, it allows them to slowly build up their longer-term short position at higher (and therefore, potentially more profitable) prices. We don't see a "ping ponging" in the overall short position because it takes relatively less shares to provide the support at $6.5 than they are selling at $7.5+. The volume at most of the troughs has been much less than at the tops, so it takes less shares to "support" at $6.5 than to "resist" at $7.5 to $8. Now obviously the above is based on conjecture with little evidence except for the growing short position and the behavior of the stock. But I would see the above as fitting within the rational self-interest of Castle Creek. And yes, I think they may withdraw their support at $6.50 with the variable conversion approaching.