To: Ronaldo who wrote (5250 ) 5/12/1998 11:24:00 AM From: Mike Ankley Read Replies (6) | Respond to of 50264
Hi Ronaldo: >> What if MM's are not 1.5-2MM share short? Valid question and one that I may have posed to my tiny brain (I'm a new investor) once or twice in the past couple weeks. I couldn't answer it, because it is very hard to prove a negative. And I, like yourself probably, am still looking for the web site that lists a daily accounting of how short is any stock (I'll probably be looking for awhile). However I rephrased the question ... What if the MM's are short X shares? Then I looked for proof to support that assumption. I watched the stock reaction all of last week. Monday morning, I saw that most incredible stock reaction I have ever saw. The price gapped up to 8 based on huge demand following the Indonesia phone company acquisition. I would have expected an even larger gap considering the news (at least $5M per year in Net Revenue over next 10 years) but oh well. Then what really amazed me ... the price flat lined - NOT because of no volume, but while huge buying volume continued (3:1 buys over sells). This amazed me as I watched my real time screen with every buy/sell and #shares scroll across the screen which was then throughout the day confirmed by Rico who accumulated the count and verified what I was seeing. This continued on the entire day for the most incredible 1 day stock price reaction I have ever seen: Huge demand - no rise in price. Then the next day, a continuation of the same with a new twist, many shares bought: no rise in price, some sold: a tiny dip. Eventually the buying slowed (with never a price increase) and a few more sold with the tiny dips now becoming more exaggerated. As the rest of the week wore on this pattern became more and more noticable ... X shares bought resulting in only a nudge upward of price. X/2 or X/3 shares sold resulting in a substantial dip downward. So as far as this being business as usual ... I very much disagree as I have never seen this as a usual reaction with any other stock. People buy any other stock and the price rises to meet demand. And so I come to the conclusion ... if the MM's are hugely short and they are in this business to make money, are they going to make their money on the shares they are short if the price rises ... no they lose their shorts! However if they can force the price down ... which I saw with my own eyes happening last week, then the have a chance to recover their loss, or at least minimize it. Cheers Mike