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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (35727)	12/10/1999 3:27:00 AM
From: Bilow	Read Replies (2) \| Respond to of 93625

Hi Zeev Hed; I also think that when the institutions quit selling this stock it is going to make a good move to the up side. I've been watching for this, but not very carefully. As the number of down days continues to mount (in terms of days where the stock dropped intraday, not necessarily in terms of a lower close than the previous day), it seems like a turn around should be more and more likely. I fully expect to see it soon. There is one nasty thing that I have observed institutional traders (on the 1-minute bars) do, and I eventually figured out why they do it. Typically, you see a lot of buying pressure in a stock, with a single market maker or INCA (or BRUT or sometimes even BTRD) holding it down. Naturally, as a daytrader, you look at the level-2 screen and assume that when that single seller quits selling, the stock will go up due to the buying pressure. (Buying pressure is indicated by prints mostly at the ask, and lots of willing quality market makers at the bid.) So you buy shares the instant that INCA pulls, and, for a minute or two, you have an eighth profit or so. Hopefully, you take that profit. Because then, suddenly, a huge surge of selling pressure begins. All the bids get hit and the market makers lower their bids. The stock then drops a like a rock. The first time this happened to me, I was left staring at the screen in disbelief, but now I kind of expect it. What is going on is this: Institutions almost always get rid of shares by offering them out at the ask. They do this in order to control how quickly they drive the stock price down, they get somewhat better prices this way. But traders get paid according to how well they beat the market, so institutional traders try to sell shares at a price higher than the day's average share price. As long as they sell at the ask everything is cool, they will have sold at prices 1/16th or so better than the prices that people who sold with market orders got. But to really make themselves look good, they try to make the stock tank with the last of their shares. If they can get a good panic sell-off started, with lots of volume at low prices, they will end up having sold shares at the day's higher prices, and they will look like great traders. So instead of selling all their shares out at the ask, they reserve a certain fraction of them in order to trash the stock with. They basically try to do as much technical damage to the stock as possible with those last few shares. Consequently, it is very common for stocks to end a long institutional selling slide with a huge volume down spike. These are great times to buy stocks, but I'm not sure we've seen it on RMBS yet. I really don't follow the stock much, though I did own it once for a short time. -- Carl P.S. 29 seconds...