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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: jfhh who wrote (38894)	5/9/1999 9:21:00 AM
From: gaj	Read Replies (1) \| Respond to of 120523

business week: i haven't tracked it much anymore, but there was a decided 'buy in on friday, sell on monday for nice profit' on business week stocks. however, people have wised up to this, and for the most part, the profits get sucked up by pre-market friday morning gapping..

To: jfhh who wrote (38894)	5/10/1999 12:55:00 AM
From: WaveSeeker	Respond to of 120523

Ah, the infamous APP, or Analyst Pump Pattern... Here's what happens: 1. Two or more prime brokerage houses "initiate" or "reiterate" coverage on a Nasdaq stock with a buy recommendation. 2. A careful examination of the Nasdaq Level II screen shows these same market makers offering (shorting) stock to the unwitting public. 3. Seeing that the recommendation has little or no effect on the price (because of the institutions selling into the recommendation), the public buyers start to become somewhat nervous. Market makers aggressively jump down on the offer, simultaneously reducing their bids to 100-share lots. The lack of liquidity and depth on the bid accelerates the drop in price. 4. The further the stock falls, the greater number of shares are transferred from the weak hands (public) back into strong hands (market makers), who are buying back shares to cover their short sales. 5. At this level, the stock can base and market makers are free to accumulate cheap shares for their institutional clients (funds). I find that market makers such as Goldman Sachs, Morgan Stanley, and Merrill Lynch are truly influential, and the stock will continue in the direction of the recommendation. But any other market maker is immediately suspect (especially bands of them), and it's usually better to wait it out. At the very least, make sure that the one(s) making the recommendation are on the same side as you if they make a market in that stock. The best description of this technique known as a "News Reversal" is documented in "Investment Secrets of a Hedge Fund Manager" by Connors & Hayward, Probus 1995.