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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Huang who wrote (6029)	3/21/1998 4:24:00 AM
From: VLAD	Read Replies (2) \| Respond to of 23519

You are correct about your statement that............................ you can't tell who is buying/covering or selling/shorting on a level II screen. The statement reflects presumptions (usually valid). For example, when a market maker is at the ask and decides to accumulate shares at a given price it becomes extremely profitable if he be on the inside of the market on both bid and ask. This allows a profit of the given spread on all market orders. In Fridays trading, Merril held the floor on the bid during the morning. Later in the afternoon Merril was inside the market and I presume shorting on the ask. Selling at the ask would be senseless since he sat on the bid 1/2 the morning at 10 1/4 buying tons of shares. In the afternoon he was making the market at bid 10 5/16..ask 10 3/8. Why in the world would he be selling at the ask of 3/8 when he bought in the morning at 1/4---he would be losing tons of 1/8's? At that point simple logic dictates that he was buying or covering at the ask and shorting at the bid at the same time--this way on all market orders he profits on the spread instead of losing 1/8's on his morning buys. Do you understand this? At that point in time for every share he shorted at 3/8's he could cover at 5/16's and make 1/16 on each trade. As for your comment that the shorts are supporting the price in the high 9's, I couldn't disagree more with you. Why in the world would the shorts want to support the price at any level above 0? The support level of vivus at this point in time is dictated and limited by 2 factors 1)if the number of shares of stock available for shorting is dried out and 2) if longs are no longer willing to sell. You can bet that #1 is already in play ie I doubt there is too many if any shares left to short thus shorting can not be a major mechanism for a lower price. The key to vivuses price support is how low are long holders willing to sell. If long holders want to give away their shares for free, the price will go to zero. If long holders decide that they will no longer sell at anything below 10 1/4 then the price will not go lower. At this point I believe that bottom fishers will start stepping in and some short covering will provide added support. With the longs feeling threatened by negative perceptions, the short positions will not be in a hurry to cover. If something comes up such as Viagra problems or better than expected earnings, then the pressure will be on the shorts to cover as buyers will step in to take advantage of the situation.