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Microcap & Penny Stocks : JAWS;A P/E of 2 with 150%/yr Erngs Growth!! -- Ignore unavailable to you. Want to Upgrade?

To: Bruno Riccio who wrote (1620)	5/21/1998 11:33:00 PM
From: brodway	Read Replies (1) \| Respond to of 4230

BRUNO................. What you are seeing today is a classic case of short holders trying to bring the stock down so their net capital requirements dont get affected by the "trading loss" they would have if the stock was higher. I guess an easier way to explain it, is this: Every broker/dealer (that includes market makers) have net capital requirements they have to meet on a monthly basis in order to stay in business. This requirement is verified by the NASD or the NYSE depending on the individual firm and their respective membership. Therefore, if they realistically shorted a stock or bought a stock, and that stock turned on them, they would actually show a loss on their books, and incur an actual "hit" on their net capital structure. Many of the market makers that are short TGSK at this juncture, can not afford to show a loss on their books, because some of them are so small that a $200k loss on paper could take them out of business. Thus, when the stock is trading above their short price, they must do everything in their power to bring it down, so the NASD would not fine them or even yank out their membership. In essence, they have to bring the stock low enough, so that the current price is equal to or lower than the price they actually shorted at. As you know, many of the shorters in TGSK have been around since $1, and many of them are still short, although at higher prices(since they averaged up when the stock hit 3). My guess is that their AVERAGE short price is around 1.75, and therefore they were scrambling this morning to bring it down to that level so that their books are not affected when the monthly examiners come in. As you also probably saw, as soon as the stock came down to 1 5/8 or so, a slew of bargain hunters jumped on the bandwagon to get in at this bargain basement level. So the market makers ran off because they didnt want to get themselves into more trouble by continuing to short it at lower levels. When the stock hit 2 and change, many of the traders that hopped on started to take their quick profits, and got out at a nice 3/8 profit. That pulled the stock back to 1,80 or so. Finally, we settled at 1 29/32 to close down an 1/8. My take on this whole bizarre event is that there are plenty of buyers out there who are willing to put up real money when they see the stock below 2. This is a big deal considering we couldnt break 1.50 several weeks back. This also poses a big problem to the market makers because at 2, they are down, since their short price is lower than that. I hope that everyone sees the downward trend that we experience at the end of every month, because the market makers desperately need to get the stock down. We had the same problem last month when they tried to bring it below 1(i wonder if anyone still remembers that). This only proves, that there is in fact a big short position in TGSK and if we continue our trend up, eventually they will have to quit and take their losses. Time is their enemy. The longer they continue to carry a losing investment, the more frustrated and more willing to get out of it they will be. So lets keep up the good work all, and understand the games that are being played here. I was very pleased to see everyone jump on and scare them away today when they tried to bring us down. Happy trading all, and good luck. Brodway.