To: Brian who wrote (4295 ) 4/2/1998 12:13:00 PM From: James Harold Alton Respond to
Brian, I will paint you the scenario I see that caused the drop yesterday, but understand that this is based on my speculation and not facts given to me. I believe that the drop yesterday was in response to the accumulation we had several days before when the price did not move. Why would the price not rise if we were under accumulation? One possibility is that someone or some group is using a large market sell order (that is large enough that the MM's don't want to take it as an "all or nothing" order) just over the bid to hold down the price, while hitting the ask. The only thing I can be sure about here is that we had several days, where there was a good bit more buying than selling and that this buying did not move us up. So where does the stock inventory required to fill more buy orders than sells come from? It could come out of the MM's inventories, or perhaps the MM's know someone wanting to sell and they can get those shares. With the recent problems some have had having buy order filled, I think the likelihood of the MM's having access to extra inventory or having a lot of inventory on hand is low. So what is the other option available to the MM's to handle the imbalance? They have the option to short the stock, in effect sell shares that they don't yet own. Since they have to cover that short position and because it's more profitable for them to replace those shares which cheaper shares, guess which direction the MM's want to take us? So long as DCI shareholders panic in reponse to a price drop and dump shares, this tactic will continue to work. We are up from the open this AM because we appear to be under accumulation again, (note the close bid/ask) but notice that we again appear to be stuck at a level again with apparent buying going on. It appears to me, from the many large blocks going accross at the ask that our buyer is back and that we again have a large sell order capping the market. I need to go back over the TL's, but recall that the accumulation started in the 1.80 range, I rather doubt that our buyer expects to lose $$ on his purchases... Don't be surprised if the MM's don't try dropping the price again once our buyer pauses again. Eventually supply and demand will prevail. If the MM's get hungry enough for shares and can't scare shareholders out of theirs by dropping us, then they will have to look to the upside for their supply. It will sure be interesting to see how this all plays out. Once again these are my personal speculations of what is currently happening and I welcome any input on this from those that perhaps understand MM's better than I do.
