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

To: David Bartkowski who wrote (12083)	12/4/1998 11:37:00 AM
From: Colin Cody	Read Replies (2) \| Respond to of 19331

Dave, True, a nice large buy would explode the stock to $3.87 or higher. BUT it would be short lived. The MMs MUST be allowed to cover. If MMs can not earn money making the DCTC market they will leave. They aren't here for fun. They are here to make a living. Sure, they take a chance and sure, sometimes they lose. But they aren't going to stay around in stocks that cause them to consistently lose. This is what could happen if a buyer appeared: They quickly raise the price. Why? Because there's NO STOCK TO SELL TO HIM. If he/they kept buying the price would rise fast. All the while, by definition, they are selling SHORT to the buyers. This raises their average basis and as soon as they buyer leaves the price MUST fall and fall fast to below the (now higher) average cost of the shorted shares. THEREFORE for a sustained and healthy rally higher, we MUST allow the MMs to cover their shorts on the way up. Stocks do not and can not go in a straight line up forever... The above is one reason why. In a thin stock like DCTC it is a major reason why. Colin