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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today -- Ignore unavailable to you. Want to Upgrade?

To: De Peepster who wrote (6439)	6/28/1998 1:16:00 PM
From: James Harold Alton	Respond to of 19331

DP, Per your post: "Again, while some disagree with my take on last weeks activity, the fact remains that there is pressure on both the buy & sell side, in that if the buys are 3, 6 or 9 cents below the ask, that ask goes down." I must admit, this is the very first time that I have ever heard of buyers driving a stock down. (G) Here is a simple hypothetical situation that might better explain why placing buy orders below market in our current situation makes no difference and actually might be positive and not negative for our stock. Conditions 1. Seller A: has 10,000 shares he wants to sell and as has been shown in the past is willing to sell those shares down to $1.31. 2. Buyers B: have $8,000 available to invest in DCTC, everyone else is one the sidelines. 3. In this simplistic example we will assume for this example that we have 1 MM on the bid that he is willing to take in 2,000 shares before leaving and that he is replaced by another MM that will also take in 2,000 shares then leave etc. , each time dropping us .06 for each 2K worth of net selling. 4. Our stock starts the day at a $2 ASK. Situation A: Buyers B do not step in to buy at all and our seller dings out all 10K shares. The bid is lowered by 1/16 for each 2K shares sold, ending the day at a close of $1.625 on the ASK. Situation B: Buyers B place orders at the initial ASK price of $2.00 and purchase exactly 4,000 shares. The MM's hold the $2 ASK price while the seller dings out 4,000 matching shares and then begins dropping the bid once again as the next 2,000 share block goes off, the stock settles the day at a $1.75 ASK. Situation C: Buyers B place buy orders at .06 below the ASK: The MM's take in 2K of sells, drop the bid/ASK .06 and stay at this level while the seller sells the 2K the MM will absorb, then another 4,129 shares which represents the $8,000 worth of buying divided by the new ask of 1.9375. Once the buying is absorbed, the price continues to drop .06 on each 2K of selling, ending the day probably the same as in situation B: at $1.75 Situation D: Buyers place $8,000 worth of buying at $1.75 or 4,571 shares. The MM's once again drop our stock .06 per 2K sell, arriving at the $1.75 ASK level having absorbed 8K worth of selling. The MM's fill 2K of the 4,571 order matching the sell of the last 2K shares of our 10K seller, then fill 2K more shares from inventory before that MM leaves the ASK and the ASK goes to the next MM UP 1/16. Our buyer now has to pay 1/16 more to fill his last 571 shares and our stock closes at 1 15/16 on the ASK. Overly simplistic? You bet, but the fundamentals are sound. If the MM's find their inventory of stock rising due to more selling than buying and they do not want to accumulate at that time, then that stock is going down period. The more shares investor $$ can absorb of that inventory, the less downward pressure there will be on our stock period. As investors, we can help ourselves and our stock the most by absorbing and holding as many SHARES as possible from the market, what we actually spend for those shares is irrelevant except for the fact that we can purchase more shares for less $$ if the stock price is lower etc.. Supply/ demand (distorted by occassional doses of MM manipulation) of our shares will determine the market value of our stock and right now we have an excess on the supply side, which is why as bgtit correctly pointed out, we need to fall back for a while, regroup and then when the supply side has dried up to a reasonable amount push ahead towards a fair market value of our stock. With the amount of buying that has been brought into our stock, we would have easily been above $3-4 if the supply side had not increased. Finding out the actual source of those shares should IMO be a high priority. If they are restricted shares being illegally sold for instance, that source should be shut down through legal means. If they are coming from individuals that just want out, then we just have to live through this at a lower price until that selling is done. I do not have any evidence that supports the latter.. Our only problem with this stock is that there is too much supply and not enough buyers and blaming the few buyers we currently do have for our problems is plain silly IMO. James