Gene, thanks for sharing your time, insights and knowledge, this has been an interesting read, to say the least.
I know you said you don't make markets in the OTCBB, but I'd appreciate your opinions on my comments/questions. I daytrade for a living, and trade mostly BB's. While I find many of the "conspiracy theories" just that, and quite a stretch, it would be nice to sit with you and watch L2 on certain stocks, I think you would either be appalled or just simply shocked. There are many opinions on just what and who is behind the movement of a stock ( referring to the OTC BB's ) whatever it is, I don't complain, I earn a nice living by taking advantage of bounce plays/walkdowns, woops, I guess those don't exist. lol
Anyway, a couple questions for you...A common myth among posters is that a ticker and cusip change will force the MM's to cover their shorts, if indeed they are short. Can you speak to that?
Second, and I don't know if this is as much a question as an observation, let me give you a little play by play of what occurs at times among the several hundred tickers I'm watching and trading on a weekly basis ( be patient, gotta lay the groundwork lol )
XXXX stock is trading normal volume in the range of .6 - .65 or so. Big news hits the wires. Stock does not appear to be frontrun, hence little or no selling on news. Watching L2, all the MM's start to spread way out on the ask...and several MM's move towards inside position so now we have 5 MM's bidding at .635 and 1 MM selling at .65, with the 2nd level MM at .68 and so on. Buys are streaming in, fairly large buys for a BB, 10k, 5k, 20k, 50k, 40k, etc...everything "appears" to be set for a nice run. 40-50 straight buys go off at the ask. (Perhaps a couple of those are traders selling at the ask, to make things fair) NITE, who is usually the axe on many of these plays, is bidding at .635 and has dropped out of sight to above $1 on the ask side. These are all key ingredients that we look for when evaluating a possible run on news.
5 minutes straight of all green, nothing but buys, and then, boom, NITE comes out of nowhere on the ask side and takes the inside position to sell at .65, the buying continues, but we all know what is about to happen, the MM's that were buying at .635 start backing off, NITE downticks to .64 and the selling begins...Now everyone who just bought on great news at .65 starts to panic, and so they begin to sell, first at .635, then .62, .61 etc...and down we go
In the above example, ( and I could give you 15 real-life examples of that, but I know you can't talk about individual stocks ) there appears to be no rhyme or reason. No insider selling so far as we can tell, nothing but the fact NITE, and or HERZOG usually, decide to stop the momentum and just kill it by downticking the ask on all buys. And yet that same stock might run to .75 by the end of day after that initial sell - off. The next day, a similar situation might set up on that stock or a different one, and instead the upticks happen and stock runs from .635 x .65 to $1.03 x $1.06.
And now for the impossible question; WHY?
I try hard to believe that this is based on buyers and sellers and not just MM manipulation, for their own gain, but it sure looks like they get caught off guard and sell a ton of stock and then buy it back for cheaper after causing a panic by down ticking very rapidly on mostly buys, only to then take the stock up to much higher levels on much less buying pressure. Don't know if all of this makes sense, just hoped to hear your comments on why this would occur.
Like I said, I am a daytrader of the OTC BB'S, we are rewarded handsomely by learning how to take advantage of the volatility - like COII running from $3 to $5 in 20 minutes without any news or exceptional volume, lol, but there are days when we just shake our head at what we see and wonder what is going through the MM's minds.
Oh, and don't get me wrong, I think the majority of the BB companies are worthless, and run by idiots, criminals and dishonest insiders, the more I know, the more I don't want to know...but I've always wanted to pick the brain of a MM after watching some of their moves - now if you'd just trade the BB's we could have some fun.
thanks for your time : ) |
