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Strategies & Market Trends : Position Trading Forum -- Ignore unavailable to you. Want to Upgrade?

To: CJ who wrote (6786)	11/13/1998 7:46:00 PM
From: Don Pueblo	Read Replies (1) \| Respond to of 7247

Hiya CJ. Two things: first, it's not legal to short a stock that you have not arranged in advance to borrow. People do it all the time, and that is undoubtedly what exacerbated the AVCO move from 22 up. One particular market maker appeared to be supporting the stock at that price; bidding on all offers. When the shorts figured out they were screwed, the stock ran to 31. After the market closed at 4, trades in the after market were still going off on ISLD (which I can trade on if I want to). There was obviously "someone" who had shares to offer to the shorters that had failed to cover. This person/institution upped his offer to 50. What that meant was that if you had failed to cover (for example you could not hold the stock overnight due to the fact that you had illegally shorted it and had no shares available to short, or you just couldn't wait for the next day to cover) you had no choice but to take that offer of 50 bucks and cover your short position. The bid at the time was around 34. That's a $16.00 spread on a stock that traded at 2 dollars just a few hours before. Nasty. It's illegal for a market maker to artifically support the price of a stock, the SEC just settled a case with several of the largest houses for doing that exact thing (billions of dollars paid by the MMs). Still, the game of the illegal MM games and the illegal shorter's games go on. Somebody yanked about 10 million bucks out of the market on that little play on AVCO yesterday. Secondly, about Joe Kernan; last summer, he would mention a stock on CNBC (usually a NASDAQ stock) that had run hard that day. At the moment he would mention it,it would run hard. We called it the Joe Kernan Special. We were fast enough and knew the tickers of these deals, so we could get in about 15 seconds before the crowd, and sell to them for a 2 or 3 point profit in less than a minute. The one I recall specifically was WCAP, which a couple of us were long on for the whole day. Check that chart and you'll see the day I'm talking about. It ran from around 8 to 13 1/8. (I recall the top because my buddy got out at 13. I got out at 12 and was happy as a clam.) Joe did that yesterday on AVCO, it was 12 bucks when he gave the ticker symbol, and 14 by the time he said it was "trading at 12". Then it ran to 31. I have one second execution; if I decide I want the stock, it takes me one second to own it, and I stay away from all that stuff. The funny part is that CNBC claims that they don't have any influence on the market. Wrong.