To: Sober who wrote (4513 ) 2/14/1999 12:50:00 PM From: tk715 Read Replies (2) | Respond to
I believe the answer to your question lies in the price action on the runnup to 3.00, their past behavior, how deep are their pockets. The MMs make money on the spread, yes, but with sustained buying, little selling, and increased buying on the dips, it is my feeling that the MMs were being driven into a more extensive short postion. The net result is that their average price for the stock they sold short would continued to rise. With the buying on the dips, they would having little chance to cover, they would just lose more shares as they dropped the price. These MMs seem to be control freaks, instead of gapping up quickly and moving briskly, on good news like some MMs(ie SNMM) they raise the price slowly and try to minimize the size of the short and make money on the spread. I think the move to just under 3.00 contained the selling by the MMs at a reasonable price, without creating a huge surge. Holding it just under 3.00 convinced potential buyers it couldn't break the overhead supply at 3.0. When the buying volume petered out, and they start running it down, they picked up shares from discourged shareholders at lower prices to cover the shorting and made their profit. Notice the pattern where they held it at a level, then when they saw a stop limit order, they spiked down, picked up the shares and quickly moved up to avoid buyers getting in at the lower price. They did this twice. They were desperate for shares at lower prices, but they had to feel their way down to avoid bargin hunters nullifying their efforts. If you reread the thread, there were a buyers waiting for sub 1.5 prices. They held it above 1.5 until the volume petered out, then at the end of the day before a long weekend, before an expected PR, they sneaked the price to 2.0.
