Market Makers: Tricks of the Trade

[Capitalist]

You know what? I had a thought today about wide spreads and a possible way to play them. It may be because my Freetrade account is active now, which means I have margin and the ability to sell short for the first time in years.

Suppose a stock is trading at 0.50 bid by 0.58 offered, a pretty wide spread as often happens with the lower priced issues. Couldn't I kind of "play market maker" in that stock by placing limit orders on both sides inside the spread? For example, in the stock above, I might place an order to buy 1000 at 0.51 and an order to sell short 1000 at 0.57, thus placing myself in the position of having an inside spread of 6 cents. If both orders filled, I would have a net flat position, but positive cash flow of $60. Then I could unwind the position by placing an order to sell long at 0.57 and an order to buy to cover at 0.51. Assuming THOSE orders are also filled, I'm unwound with ANOTHER net profit of $60.

Of course I'm sure my life wouldn't be as rosy as this all the time, as one order might fill while another might not, and in the case of a large move in one direction or the other this could be dangerous. Also, other traders and MMs would be trying to jump in front of my bids and offers as I try to jump in front of theirs. But stocks seem to bounce between intraday support and resistance levels the vast majority of the time, and it seems like I could take advantage of this in a small way just the same way that MMs do.

Thoughts?

Cap

[Capitalist]

They battle each other as well as us (we battle each other too in a sense; if I think a stock is going up and you think it's going down). Blurring put a good link on the IBox that I used to use at Fidelity to get a sense of how it is to be a MM. It's a game on the Nasdaq site. Check it out!

[B.E.O.]

Question: When one MM is the AX and keeps the stock from moving, do you think the other MM's get annoyed.

beo

[blurring]

PKCY, pretty clear that WDCO is the ax here

[blurring]

example: MDDM, today i played the bounce on this pink. i got in early at $4.55, but as the stock eventually hit $4.67, there was a profit. for OTC, only limit orders are allowed, so to make sure that i would get shares, i put the order in for $5. high, yes, but i was in a hurry and so i hit 5 and accept....and waited. normally this is never a problem; the mms almost always give the ask. by law they have to fill at the ask. this time, however, a mm took my order instantly, filling it....at $5.00.

.45 cents above the ask.

i immediately emailed my broker, Freetrade (they do not have phone support), complaining. they contacted the mm, but the mm insisted that it was a good fill, that the ask was $5.00 at the time of order. no, not so. but i had to wrangle. i had to create a JPeg of my time and sales, and i had to make certain Freetrade followed through, as either the brokerage CSR or the mm kept stalling, making me jump through hoops. it took two and a half hours to get the order price improved.

but it saved me over $500.00.

time and time again, the mms will attempt to make it very tough on you if you complain about an incorrect fill. be persistent. be focused. don't give up. mms are not supposed to fill you above the ask, period. if they could fill above the ask, believe me, they definately wouldn't have price improved my order.

always end up with this:

Dear Valued Freetrade Client:

They improved it to 4.55.

Sincerely,

Client Services
Freetrade by Ameritrade
Division of Ameritrade, Inc.

[blurring]

LQID, pretty obvious that PERT is the ax.


selling lots and lots of shares, rouphly a million today alone.

[Capitalist]

Beo,

I just put a new link under "Basics" in the IBox. It's an article on About.com about "Finding the Ax". That should help clear it up.

Cap

[B.E.O.]

Could someone explain "The Axe" and what it is and does?

Thanks, beo

[blurring]

VIEW, FRAN, FRGP possible axes for GZFX

1) Posted by: TRSTURGUT-18
In reply to: None Date:3/8/2004 9:40:01 AM
Post #of 3563

GZFX...VIEW the MM that has been on the ask @.084 all week and selling tons has now backed off to .094

2) Posted by: EVO
In reply to: Sentinel who wrote
Date: 3/12/2004 3:17:46 PM
Post # of 70540

NITE hasn't been a major seller on GZFX...FRAN and FRGP have been the problem MMs on this one...if we can get a couple bids and get TDCM to leave here we'll run to the HOD and close really strong...should see .10 monday morning

[blurring]

CRWN the possible ax for CIRT

Posted by: harbs
In reply to: None Date:9/4/2003 11:46:18 AM
Post #of 15881


CIRT - nice ut's on great volume for this stock...MM crwn the one to watch if he backs off selling...

[B.E.O.]

Dear Valued Freetrade Client:

The listing is arbitrary.


Sincerely,

Client Services
Freetrade by Ameritrade
Division of Ameritrade, Inc.


Original Message Follows:
------------------------
I don't know if you are able to answer this question or not but I would like
to try.

On the level II screen when the Market Makers are lined up on the inside bid
or ask , are they first in line for those orders or is the listing just
arbitrary?

[B.E.O.]

Dear Valued Freetrade Client:

No, we route orders to several different market makers, Knight being one of them. The orders are routed via electronic matrix and are looking for the market makers that may have the most trading activity or liquidity in a particular stock.

In answer to my question:

Do you route all of your orders thru NITE or is it based on the stock?
Different MM for a every stock or is it different for all stocks and there
is no order to it?
thanks

[blurring]

i'm pretty sure that the actual mm order at a particular price level is arbitrary. you'll need to watch over time, looking for the mm that is most interested in buying or selling, and is consistantly jumping to the inside ask or bid.

if anyone knows differently, please feel free to correct me on this...

[blurring]

mms filling you ABOVE the ask?

mms will sometimes fill you a penny, or couple of pennies (or more) above the ask, hoping that the process/aggravation of complaining and getting a correction (i.e. contacting a broker, getting the broker to talk to the mm, getting the mm to actually change your entry to reflect the actual ask at the time of the trade) will bludgeon you into submission.

they should be filling you AT THE ASK for mkt orders. period.

NOT ABOVE.

don't let them get away with this crap. always complain. this is the only way traders can even come close to keeping mms in check.

mms are counting on the fact that you won't bother. don't submit. always send an email or call the broker. the brokage is paying the mm to manage an accurate order flow. you are paying the brokerage for accurate fills. make sure the brokerage follows through, and provides you with a resolution.

[B.E.O.]

Is it accurate that when the the level II showes a MM on the top of the bid or offer that that is the one doing the buying or selling. First in line first in the market???


Beo

[blurring]

at first blush, sounds good! basically a sneak attack

you'd have to keep your involement very quiet, tho

[Capitalist]

What a great post!

As I read through that, I started to have some thoughts about how the MM's vulnerability might be used to burn them out, but I'm not sure if I've really thought it through enough yet. I guess it's more of a fantasy scenario, but it goes something like this:

1. Company has 100 million shares outstanding, and the "cellar box" tactic begins with no bid/offer .0001. Now, pretending that I'm a stuckholder who happens to have substancial financial resources (I don't but some on these boards might), here's what I might do.

2. First, I figure out that as long as the outstanding shares is equal to 100 million, I can theoretically buy this entire company for $10,000. But not if there is dilution. Gotta head that off at the pass.

3. I visit the company and talk to the board/ceo or whoever I need to in private and say "Look, these MM's are KILLING your company, and they're killing me on other positions I own with these tactics. Let's work together. Don't dilute your share base. Let me buy you out instead under an agreement where I will turn control back over to you at a certain specified date, or if certain conditions are met."

4. They say "But we have to dilute!!! We can't pay the bills this month if we don't." And I say, "Bills Schmills!!! I will personally loan the company the money it needs each month to meet its payroll and bills, and I'll do it at BELOW PRIME!"

5. So in my fantasy world, they agree to this. Then I start buying up shares. $10,000 worth. $20,000. $40,000. $70,000. $100,000!!!!!

6. Wait a second, how can I have so many shares? I've got like a BILLION shares here in my account, yet the company only has 100 million outstanding and available for trading. Well I know perfectly well how I got them; the MM's sold them to me through naked short selling.

7. But the company never diluted, because here I am loaning them the cash to pay their bills.

8. Now I pick up my phone, and call my broker. I ask how many shares I have, and I'm told 1 Billion. With a big smile I say "Thank you. I'd like you to send the certificates to me please...."


Now I'm not sure if this makes sense yet because it just kind of occured to me as I read your post.

Thoughts anyone?

Cap

[blurring]

Market Makers use Tradestation II to do their jobs:

NASDAQ Workstation II: http://www.nasdaqtrader.com/trader/tradingservices/productservices/productdescriptions/nwiidescripti...

[blurring]

"Cellar Boxing"

There’s a form of the securities fraud known as naked short selling that is becoming very popular and lucrative to the market makers that practice it. It is known as “CELLAR BOXING” and it has to do with the fact that the NASD and the SEC had to arbitrarily set a minimum level at which a stock can trade. This level was set at $.0001 or one-one hundredth of a penny. This level is appropriately referred to as “the CELLAR”. This $.0001 level can be used as a "backstop" for all kinds of market maker and naked short selling manipulations.

“CELLAR BOXING” has been one of the security frauds du jour since 1999 when the market went to a “decimalization” basis. In the pre-decimalization days the minimum market spread for most stocks was set at 1/8th of a dollar and the market makers were guaranteed a healthy “spread”. Since decimalization came into effect, those one-eighth of a dollar spreads now are often only a penny as you can see in Microsoft’s quote throughout the day. Where did the unscrupulous MMs go to make up for all of this lost income? They headed "south" to the OTCBB and Pink Sheets where the protective effects from naked short selling like Rule 10-a, and NASD Rules 3350, 3360, and 3370 are nonexistent.

The unique aspect of needing an arbitrary “CELLAR” level is that the lowest possible incremental gain above this CELLAR level represents a 100% spread available to MMs making a market in these securities. When compared to the typical spread in Microsoft of perhaps four-tenths of 1%, this is pretty tempting territory. In fact, when the market is no bid to $.0001 offer there is theoretically an infinite spread.

In order to participate in “CELLAR BOXING”, the MMs first need to pummel the price per share down to these levels. The lower they can force the share price, the larger are the percentage spreads to feed off of. This is easily done via garden variety naked short selling. In fact if the MM is large enough and has enough visibility of buy and sell orders as well as order flow, he can simultaneously be acting as the conduit for the sale of nonexistent shares through Canadian co-conspiring broker/dealers and their associates with his right hand at the same time that his left hand is naked short selling into every buy order that appears through its own proprietary accounts. The key here is to be a dominant enough of a MM to have visibility of these buy orders. This is referred to as "broker/dealer internalization" or naked short selling via "desking" which refers to the market makers trading desk. While the right hand is busy flooding the victim company's market with "counterfeit" shares that can be sold at any instant in time the left hand is nullifying any upward pressure in share price by neutralizing the demand for the securities. The net effect becomes no demonstrable demand for shares and a huge oversupply of shares which induces a downward spiral in share price.

In fact, until the "beefed up" version of Rule 3370 (Affirmative determination in writing of "borrowability" by settlement date) becomes effective, U.S. MMs have been "legally" processing naked short sale orders out of Canada and other offshore locations even though they and the clearing firms involved knew by history that these shares were in no way going to be delivered. The question that then begs to be asked is how "the system" can allow these obviously bogus sell orders to clear and settle. To find the answer to this one need look no further than to Addendum "C" to the Rules and Regulations of the NSCC subdivision of the DTCC. This gaping loophole allows the DTCC, which is basically the 11,000 b/ds and banks that we refer to as "Wall Street”, to borrow shares from those investors naive enough to hold these shares in "street name" at their brokerage firm. This amounts to about 95% of us. Theoretically, this “borrow” was designed to allow trades to clear and settle that involved LEGITIMATE 1 OR 2 DAY delays in delivery. This "borrow" is done unbeknownst to the investor that purchased the shares in question and amounts to probably the largest "conflict of interest" known to mankind. The question becomes would these investors knowingly loan, without compensation, their shares to those whose intent is to bankrupt their investment if they knew that the loan process was the key mechanism needed for the naked short sellers to effect their goal? Another question that arises is should the investor's b/d who just earned a commission and therefore owes its client a fiduciary duty of care, be acting as the intermediary in this loan process keeping in mind that this b/d is being paid the cash value of the shares being loaned as a means of collateralizing the loan, all unbeknownst to his client the purchaser.

An interesting phenomenon occurs at these "CELLAR" levels. Since NASD Rule 3370 allows MMs to legally naked short sell into markets characterized by a plethora of buy orders at a time when few sell orders are in existence, a MM can theoretically "legally" sit at the $.0001 level and sell nonexistent shares all day long because at no bid and $.0001 ask there is obviously a huge disparity between buy orders and sell orders. What tends to happen is that every time the share price tries to get off of the CELLAR floor and onto the first step of the stairway at $.0001 there is somebody there to step on the hands of the victim corporation's market.


Once a given micro cap corporation is “boxed in the CELLAR” it doesn’t have a whole lot of options to climb its way out of the CELLAR. One obvious option would be for it to reverse split its way out of the CELLAR but history has shown that these are counter-productive as the market capitalization typically gets hammered and the post split share price level starts heading back to its original pre-split level.

Another option would be to organize a sustained buying effort and muscle your way out of the CELLAR but typically there will, as if by magic, be a naked short sell order there to meet each and every buy order. Sometimes the shareholder base can muster up enough buying pressure to put the market at $.0001 bid and $.0002 offer for a limited amount of time. Later the market makers will typically pound the $.0001 bids with a blitzkrieg of selling to wipe out all of the bids and the market goes back to no bid and $.0001 offer. When the weak-kneed shareholders see this a few times they usually make up their mind to sell their shares the next time that a $.0001 bid appears and to get the heck out of Dodge. This phenomenon is referred to as “shaking the tree” for weak-kneed investors and it is very effective.

At times the market will go to $.0001 bid and $.0003 offer. This sets up a juicy 200% spread for the MMs and tends to dissuade any buyers from reaching up to the "lofty" level of $.0003. If a $.0002 bid should appear from a MM not "playing ball" with the unscrupulous MMs, it will be hit so quickly that Level 2 will never reveal the existence of the bid. The $.0001 bid at $.0003 offer market sets up a "stalemate" wherein market makers can leisurely enjoy the huge spreads while the victim company slowly dilutes itself to death by paying the monthly bills with "real" shares sold at incredibly low levels. Since all of these development-stage corporations have to pay their monthly bills, time becomes on the side of the naked short sellers.

At times it almost seems that the unscrupulous market makers are not actively trying to kill the victim corporation but instead want to milk the situation for as long of a period of time as possible and let the corporation die a slow death by dilution. The reality is that it is extremely easy to strip away 99% of a victim company’s share price or market cap and to keep the victim corporation “boxed“ in the CELLAR, but it really is difficult to kill a corporation especially after management and the shareholder base have figured out the game that is being played at their expense.

As the weeks and months go by the market makers make a fortune with these huge percentage spreads but the net aggregate naked short positions become astronomical from all of this activity. This leads to some apprehension amongst the co-conspiring MMs. The predicament they find themselves in is that they can’t even stop naked short selling into every buy order that appears because if they do the share price will gap and this will put tremendous pressures on net capital reserves for the MMs and margin maintenance requirements for the co-conspiring hedge funds and others operating out of the more than 13,000 naked short selling margin accounts set up in Canada. And of course covering the naked short position is out of the question since they can’t even stop the day-to-day naked short selling in the first place and you can't be covering at the same time you continue to naked short sell.

What typically happens in these situations is that the victim company has to massively dilute its share structure from the constant paying of the monthly burn rate with money received from the selling of “real” shares at artificially low levels. Then the goal of the naked short sellers is to point out to the investors, usually via paid “Internet bashers”, that with the, let’s say, 50 billion shares currently issued and outstanding, that this lousy company is not worth the $5 million market cap it is trading at, especially if it is just a shell company whose primary business plan was wiped out by the naked short sellers’ tortuous interference earlier on.

The truth of the matter is that the single biggest asset of these victim companies often becomes the astronomically large aggregate naked short position that has accumulated throughout the initial “bear raid” and also during the “CELLAR BOXING” phase. The goal of the victim company now becomes to avoid the 3 main goals of the naked short sellers, namely: bankruptcy, a reverse split, or the forced signing of a death spiral convertible debenture out of desperation. As long as the victim company can continue to pay the monthly burn rate, then the game plan becomes to make some of the strategic moves that hundreds of victim companies have been forced into doing which includes name changes, CUSIP # changes, cancel/reissue procedures, dividend distributions, amending of by-laws and Articles of Corporation, etc. Nevada domiciled companies usually cancel all of their shares in the system, both real and fake, and force shareholders and their b/ds to PROVE the ownership of the old “real” shares before they get a new “real” share. Many also file their civil suits at this time also. This indirect forcing of hundreds of U.S. micro cap corporations to go through all of these extraneous hoops and hurdles as a means to survive, whether it be due to regulatory apathy or lack of resources, is probably one of the biggest black eyes the U.S. financial systems have ever sustained. In a perfect world it would be the regulators that periodically audit the “C” and “D” sub-accounts at the DTCC, the proprietary accounts of the MMs, clearing firms, and Canadian b/ds, and force the buy-in of counterfeit shares, many of which are hiding behind altered CUSIP #s, that are detected above the Rule 11830 guidelines for allowable “failed deliveries” of one half of 1% of the shares issued. U.S. micro cap corporations should not have to periodically “purge” their share structure of counterfeit electronic book entries but if the regulators will not do it then management has a fiduciary duty to do it.

A lot of management teams become overwhelmed with grief and guilt in regards to the huge increase in the number of shares issued and outstanding that have accumulated during their “watch”. The truth however is that as long as management made the proper corporate governance moves throughout this ordeal then a huge number of resultant shares issued and outstanding is unavoidable and often indicative of an astronomically high naked short position and is nothing to be ashamed of. These massive naked short positions need to be looked upon as huge assets that need to be developed. Hopefully the regulators will come to grips with the reality of naked short selling and tactics like "CELLAR BOXING" and quickly address this fraud that has decimated thousands of U.S. micro cap corporations and the tens of millions of U.S. investors therein.

[blurring]

i find this to be valuable info: OTC MMs have 90 seconds before they have to report a trade....

that means that mms can make it appear that a stock has stalled, that no shares are being exchanged for 90 seconds.

http://www.otcbb.com/aboutOTCBB/tradereprules.stm

OTC Market Makers shall, within 90 seconds after execution, transmit through ACT last sale reports of transactions in OTC Equity Securities executed during normal market hours. Transactions not reported within 90 seconds after execution shall be designated as late.

Non-Market Makers shall, within 90 seconds after execution, transmit through ACT or the ACT service desk (if qualified pursuant to Rule 7010(i)), or if ACT is unavailable due to system or transmission failure, by telephone to the Nasdaq Market Operations Department, last sale reports of transactions in OTC Equity Securities executed during normal market hours. Transactions not reported within 90 seconds after execution shall be designated as late.

[Capitalist]

oops, you beat me to the "contrary indicator thing" lol.

I agree about using the chart for the overall play and MM action for entry and exit.

The MM's can control what happens INSIDE a daily bar, but have much less control about the overall pattern of those daily bars.

[Capitalist]

Hello this is me reporting to work!!! I'm helping with this board as well but I've been tied up with mine for a while.

Beo, I wonder if this is a "chicken and egg" kind of thing.

Is the stock running because the MMs are lined up on the offer or are they lined up on the offer because they see outside buying pressure coming in and they stock is running?

Maybe it doesn't matter. It sounds like you may have hit on a possible "contrarian MM indicator" here.

[blurring]

y, often times these are fake asks, mms presenting a phoney wall of large numbers of shares. sometimes, the wall will effectively stop a run, if there is not enough momo. mms often work to protect each other if they know that one or more of the mms are in trouble (say, short a stock that moving up).

what you are contemplating is the use of a bit of a contrary indicator. i love watching those mms simply melt away, when i am right! seeing that happen really confirms that volume is pouring into the stock and the mms may have lost control.

still, sometimes the wall will not fall away.

one that i'm trying to do is to stay away from level II until it's time to exit or enter a stock, unless i'm only interested in scalping. that means i trust the chart. that means i use level II only as a way to refine my exit/entry.

mms are incrediblely good at faking the direction of a stock, imo. i have been shaken out many times by the diverse array of tricks and fakes mms throw at traders.

[B.E.O.]

I have seen this happen, they all disappear in the blink of an eye.

However I have been making an observation that maybe someone can clarify.

It seemd to me that everyone always gets excited when the bid gets firm. However I have notived that the stocks that are running have many more lined up on the offer then on the bid.

I was watching MOBL, It was 2x9 I thought there was no way the stock could move with a MM wall of 9 on the offer. However it moved very rapidly. So I wounder if the line up on the offer can be more telling then the support on the bid.

any comments please.

beo

[blurring]

an example of how one trader thinks about time and sales information:

first Capt Nemo ( http://investorshub.com/boards/profile.asp?User=3198 ) posted EOD t&s from ABTG:

Ya think the last trade was earthlink Keith?

AMBIENT CORP (OTCBB:ABTG)
INTRADAY PRICES

Date Time High Low Close Volume

03/06/04 16:10:25 0.426 0.426 0.426 1,000,000
03/06/04 16:05:02 0.450 0.450 0.450 12,000
03/06/04 16:01:29 0.466 0.466 0.466 151,000
03/06/04 16:00:38 0.450 0.440 0.450 21,000
03/06/04 15:59:39 0.445 0.445 0.445 17,200
03/06/04 15:57:15 0.445 0.440 0.440 42,500
03/06/04 15:56:38 0.445 0.440 0.445 32,600
03/06/04 15:55:03 0.445 0.440 0.445 11,000
03/06/04 15:52:57 0.447 0.440 0.445 209,000
03/06/04 15:51:10 0.445 0.440 0.440 26,600
03/06/04 15:50:01 0.450 0.430 0.440 27,000
03/06/04 15:48:00 0.440 0.430 0.440 27,400
03/06/04 15:46:51 0.440 0.430 0.440 25,100
03/06/04 15:45:06 0.440 0.430 0.440 38,700
03/06/04 15:44:32 0.450 0.440 0.440 76,400
03/06/04 15:43:06 0.450 0.440 0.442 48,000

Then, Hacktheripper ( http://investorshub.com/boards/profile.asp?User=22656 ) analyzes the data:

I read it as a transfer of stock between MMs it will get sold off to keep the price down... look for the stock to churn above that price util unloaded... then they will bring the price back down to the mid 30's shaking out the weak hands who just bought and buy back at cheaper prices.. then take the stock back up again.....

Only in my opinion...

Thanks to these traders for allowing this presentation...

[Ruellit]

Heres a great post from Excel:

Mind Games Of A Trader.................

I see a lot of posts from traders who jump in momo's only to see they jumped in at HOD.
That can become very discouraging.

As a trader there will be days you have trigger lock.
You made good bank the other day and now don't want to give it back.
Or you just can't decide what to buy.
Had one of them the other day.

Days where when you jump in on a momo when it's up .02, it stalls, and there you are in dead money.

There will be days after doing that you see the same set up, decide not to jump in, sure enough the stock being up .02 goes up another .05 and you are just sitting there asking yourself why me?

Then you continue to read all kinds of posts about making bank today as you made little, if any.
Your timing sucked.
Your fills sucked.
And all you are doing is sitting there reading about ther winning trades.

You will always every day read about the winners.
Rarely do you hear about the losers.

To be a trader it is like a lot of things in life.
You got to keep a level head.
Keep things in perspective after you made a bad trade.

A way to win this game is to use a service like freetrade or some other low cost service so jumping in and out of trades the phycological commision cost won't even have a chance to play in the back of your mind.

Another way is to remember this isn't about you losing trades.

It is about you shoving your ego and denial asside and taking a small loss instead of staying in only to see what was a small loss, turn into a huge loss.

There will be times you got shook out and the MM's take it way up. Yes, that happens.
But percentage wise it happens less then when L2 is telling you support is gone it's time to save your capitol.

When you stay in a trade hoping to get your money back only to see it go down farther after telling yourself you should get out now, not only are you losing more money then the small loss you should have taken, you are losing money on your next winning trade.

If you would have cut your loss short instead of having denial overcome you, your next winning trade would had have more shares bought.

Instead those shares are sitting in no mans land.

Keep your head up.
I sometimes have rotton days when all I read about is others winning.

Other times I have great days when I don't read a lot of posts about others winning.

Limit your losses.
It's all about making more winning trades and stopping your losses short.

Keep a level head and don't be discouraged about reading all the posts saying they made great bank
Your days will get better.
Hard work will change your state of being down, to I can win at this game also.







Excel

Every day that you attempt to see things as they are in truth is a supremely successful day.


http://www.investorshub.com/boards/read_msg.asp?message_id=2539013

[Ruellit]

Heres a nifty Daytraders clock, and I have to give credit to lancebps for finding it.




It's actually pretty close to being right as far as buying stocks is concerned! Never buy stocks first thing in the morning! Your percentages of a good trade isn't very good then! There's a saying going around on a posters signature here at Ihub that states: "Plan the Trade and then Trade the Plan" and thats one very good guide line for tradeing stocks!

[blurring]

From Omnitrader: "Sparing"

"way to win this game is to use a service like freetrade or some other low cost service so jumping in and out of trades the phycological commision cost won't even have a chance to play in the back of your mind.

I like to call it sparing: i like 2 spar with stocks throw a few shares at em and see how they responed to it just like boxing so i can get a feel of what the market makers are doing. are they flash filling or they taking 4 ever to fill.

I can do this with freetrade because it doesnt cost but a measly 1.00 to find out the action is on a stock.

if and when I get the beat on it then I start wanting to buy more.

if i lose or wrong on the trade I take a small loss. I dont show my true intentions upfront.

visit his board at: http://www.investorshub.com/boards/board.asp?board_id=2059

[blurring]

Recent Article on Short Selling: from VCWTrader

Keep in mind that the deadline for this action has recently been advanced to April 1st, 2004.

SEC Reported Ready to Crack Down on Naked Shorters /
September 25, 2003. (FinancialWire) The Securities and Exchange Commission will consider changes to short-selling rules this fall, looking to ease restrictions on short-sales of big companies while tightening them for small firms, reports the Dow Jones (NYSE: DJ) newswires.
"It's expected that the commission will consider short selling reforms in the next few months," SEC market regulation division director Annette Nazareth said in a telephone interview with Judith Burns, a reporter for Dow Jones.

If approved, said Burns, the SEC would lift restrictions on short-sales of the largest U.S. corporations on a trial basis while imposing more controls on short sales of stocks traded in the over-the-counter Bulletin Board. Burns said the SEC has received more than 2,700 letters on the subject, many of them from small companies that say they have been victimized by manipulative short selling.

Burns states that short-selling, which involves selling shares of borrowed stock, isn't illegal, but has been subject to SEC oversight since the 1930s. However, naked short selling, in which no settlements occur, is illegal.

Burns said SEC rules now allow short sales of exchange-listed stocks only when the stock price is rising. This "tick test" has come under scrutiny since U.S. markets began pricing stocks in decimals, rather than fractions. Critics of the short-sale rule say decimal trading has resulted in fast-moving price swings that make it hard to tell whether the last price was an uptick or downtick. However, none of these rules apply to the over-the-counter bulletin board marketplace, which was the subject of several resolutions advanced this past week at the annual SEC Small Business Forum by the CEO Council.

"A tick test makes very little sense" in today's world, Burns quoted Howard Kramer, a former SEC associate director, now a partner with the Washington law firm of Schiff, Hardin & Waite.
Burns said the SEC staff is expected to propose scrapping the tick test and replacing it with a bid test already in use in the Nasdaq Stock Market. That would allow short-selling if the last bid - an offer to buy a stock - is higher than the previous bid. Advocates say that would make the short-sale rule easier to apply and give short-sellers more flexibility.
In a more dramatic move,Burns said the SEC will consider an experiment that eliminates the bid and tick tests for short sales of the most actively traded stocks. After a trial period, the agency would decide whether such restrictions should be removed permanently for certain large-cap stocks.

However, Burns did not say whether the “most actively traded stocks” applies only to the large caps, since many OTCBB and pink sheet stocks trade more actively than those on the big boards.

She did sy that “new restrictions on short sales of smaller companies are also being contemplated in an attempt to curb ‘naked’ short sales,” the subject of a series in FinancialWire for the past ten months.
“Short sellers profit when stock prices decline because they can replace borrowed securities at a lower price. A naked short sale occurs when the short seller doesn't intend to borrow and deliver stock to settle the trade,” said Burns. She quoted Kramer as saying the practice "is a problem and should be regulated."

To combat such abuses, the SEC will look to increase borrowing requirements for some short sales and call for stronger enforcement, including late charges or other financial penalties for short sellers who fail to cover short positions by the settlement date, said the Dow Jones. "It will address problems that we have seen with naked short selling," said Nazareth, in what appears to be the first admission by an SEC regulator that naked short selling is occurring.
“Such changes would be welcome news for small companies who say the SEC hasn't done enough to combat manipulative short sales,” said Burns, in what may be an understatement.
Burns noted Wednesday’s story in FinancialWire regarding Universal Express Inc. (OTCBB: USXP), which operates private postal stores and offers luggage-delivery services, is so fed up it is urging shareholders to complain to Congress about short-selling abuses.

"We're going to declare war on the naked short sellers," Universal Express President and Chief Executive Richard Altomare told Dow Jones Newswires a day after he was quoted in FinancialWire on the same subject. “He said he isn't opposed to legitimate short sales, but believes naked short selling is a national scandal that is costing investors millions of dollars in annual losses,” said Burns.
“Altomare has seen the problem up close, as Universal Express stock skidded from more than $2 to just pennies a share in 1998. Altomare said the company was attacked by manipulators who used naked short sales to drive the stock into the ground.
“New York-based Universal Express fought back and won $526 million in judgments in two jury trials in Florida, including $275 million in punitive damages. It has yet to collect the funds,” concluded Burns.

There are 117 public companies that have so far been touched by the growing national financial scandal.
Some thirteen on the list of 117, such as A.G. Edwards, Inc. (NYSE: AGE), Ameritrade Holding Corp. (NASDAQ: AMTD), Deutsche Bank AG (NYSE: DB), E*Trade Group, Inc. (NYSE: ET), FleetBoston (NYSE: FBF), Goldman, Sachs & Co. (NYSE: GS), Knight Securities, LP (NASDAQ: NITE), Ladenburg Thalmann & Co., Inc. (AMEX: LHS), M. H. Myerson & Co., Inc. (NASDAQ: MHMY), Olde / H&R Block (NYSE: HRB), Charles Schwab (NYSE: SCH), Toronto-Dominion’s (NYSE: TD), TD Waterhouse Group and vFinance, Inc. (OTCBB: VFIN), have been accused by one or more public companies as allegedly participating in short selling activities or abuses, or of failing to settle trades.
Observers have said that trades to not settle because broker-dealers do not effect buy-ins, as required by law, and that there is an unspoken understanding that any brokerage that tries to force a buy-in will be retaliated against.
The remaining 104 companies have issued press releases or been named in the media as having been victimized, or as taking various actions, either alone or in concert with other companies, to oppose manipulative trading in the form of illegal naked short selling. The actions have ranged from lawsuits to withdrawals and threatened withdrawals from the electronic trading system managed by the Depository Trust & Clearing Corp., to withdrawals from toxic financings, to the issuance of dividends or name changes designed to squeeze manipulators, to joining associations or networks or to contacting regulatory authorities to provide documentation of abuses or otherwise complain.
On June 4, the SEC stated “the issues surrounding naked short selling are not germane to the manner in which DTC operates as a depository registered as a clearing agency. Decisions to engage in such transactions are made by parties other than DTC. DTC does not allow its participants to establish short positions resulting from their failure to deliver securities at settlement. While the Commission appreciates commenters' concerns about manipulative activity, those concerns must be addressed by other means.”
Nevertheless, short positions do in fact exist due to failures of the electronic settlement system to balance their electronic books, and the SEC has provided shareholders and small companies with no inkling of what the Commission has in mind in “addressing” these concerns “by other means.”
Recently the NASD revealed its plan to stop the practices that have ravaged these public companies and their shareholders – a wrist-slap to perpetrators such as Paragon Capital Markets, which was “censured” and fined $35,000 after the NASD said it had “executed short-sale orders in certain securities and failed to make an affirmative determination prior to executing such transactions.”
The complete list of those 104 companies include Advanced Viral Research Corp. (OTCBB: ADVR), AdZone Research, Inc. (OTCBB: ADZR), Amazon Natural Treasures (OTC: ANTD), America's Senior Financial Services (OTCBB: AMSE), American Ammunition, Inc. (OTCBB: AAMI), AngelCiti Entertainment (OTCBB: AGLC), ATSI Communications, Inc. (OTC: ATSC), Federal Agricultural Mortgage / Farmer Mac (NYSE: AGM) Allied Capital (NYSE: ALD), American Motorcycle (OTC: AMCYV), American International Industries (OTCBB: AMIN), Ameri-Dream (OTC: AMDR), Adirondack Pure Springs Mt. Water Co. (OTCBB: APSW), Bluebook International (OTCBB: BBIC), Blue Industries (OTCBB: BLIIV), Bentley Communications (OTCBB: BTLY), BIFS Technologies Corporation (OTCBB: BIFT), Biocurex (OTCBB: BOCX). Broadleaf Capital Partners, Inc. (OTCBB: BDLF), Chattem, Inc. (NASDAQ: CHTT), Critical Home Care (OTCBB: CCLH), Composite Holdings (OTC: COHIA), CyberDigital, Inc. (OTCBB: CYBD). Diamond International Group (OTCBB: DMND), Dobson Communications Corp. (NASDAQ: DCEL), Eagle Tech Communications (OTC: EATC), Edgetech Services (OTCBB: EDGH);
Also, Endovasc Ltd. (OTCBB: EVSC), Enviro-Energy Corporation (OTCBB: ENGY), Environmental Products & Technologies (OTC: EPTC), EPIXTAR Corp. (OTCBB: EPXR), eResearchTechnologies, Inc. (NASDAQ: ERES), Flight Safety Technologies (OTCBB: FLST), Freddie Mac (NYSE: FRE), FreeStar Technologies (OTCBB: FSRCE), Geotec Thermal Generators, Inc. (OTCBB: GETC), Genesis Intermedia (OTC: GENI), GeneMax Corp. (OTCBB: GMXX), Global Explorations Inc (OTC: GXXL), Global Path (OTCBB: GBPI), Group Management (OTCBB: GPMT), Hop-On (OTC: HPON), H-Quotient, Inc., (OTCBB: HQNT), Hyperdynamics Corp. (OTCBB: HYPD), International Biochem (OTCBB: IBCL), Intergold Corp. (OTCBB: IGCO), International Broadcasting Corporation (OTCBB: IBCS), InternetStudios, Inc. (OTCBB: ISTO), ITIS Holdings (OTCBB: ITHH), Investco Corp. (OTCBB: IVCO), Lair Holdings (OTC: LAIR), Lifeline BioTechnologies Inc. (OTC: LBTT), Life Energy & Technology (OTCBB: LETH), MBIA (NYSE: MBI);
Also, MegaMania Interactive (OTC: MNIA), MetaSource Group, Inc. (OTCBB: MTSR), Midastrade.com (OTC: MIDS), Make Your Move (OTCBB: MKMV), Medinah Minerals (OTC: MDMN), MSM Jewelry Corp. (OTC: MSMC), Nanopierce Technologies, Inc. (OTCBB: NPCT), Nutra Pharmaceutical (OTCBB: NPHC), Nutek (OTCBB: NUTK), Navigator Ventures (OTC: NVGV), Orbit E-Commerce, Inc. (OTCBB: OECI), Pitts & Spitts (OTC: PSPP), Sales OnLine Direct (OTCBB: PAID), Pacel Corp. (OTCBB: PACC), PayStar Corporation (OTC: PYST), Petrogen Corp. (OTCBB: PTGC), Pinnacle Business Management (OTC: PCBM), Premier Development & Investment, Inc. (OTCBB: PDVN), PrimeHoldings.com, Inc. (OTC: PRIM), Phlo Corporation (OTCBB: PHLC), Resourcing Solutions (OTC: RESG), Reed Holdings (OTC: RDHC), Rocky Mountain Energy Corp. (OTCBB: RMECE), RTIN Holdings (OTCBB: RTNHE), Saflink Corp. (NASDAQ: SFLK), Safe Travel Care (OTCBB: SFTVV), Sedona Corp. (OTCBB: SDNA);
Also, Sionix Corp. (OTCBB: SINX), Sonoran Energy (OTCBB: SNRN), Starmax Technologies (OTC: SMXIF), Storage Suites America (OTC: SSUA), Suncomm Technologies (OTC: STEH), Sports Resorts International (NASDAQ: SPRI), Technology Logistics (OTC: TLOS), Swiss Medica, Inc. (OTCBB: SWME), Ten Stix, Inc. (OTCBB: TNTI), Tidelands Oil (OTCBB: TIDE), Titan Construction (OTC: TTCS), Trezac Corp. (OTCBB: TRZAV), Universal Express, Inc. (OTCBB: USXP), Valesc Holdings, Inc. (OTCBB: VLSHV), Vega Atlantic (OTCBB: VGAC), Viragen (AMEX: VRA), Viragen International (OTCBB: VGNI), Vista Continental Corporation, (OTCBB: VICC), Viva International (OTCBB: VIVI), Vtex Energy (OTCBB: VXENE) and Wizzard Software (OTCBB: WIZD), WorldTradeShow.com (OTC: WTSW) and Y3K Secure Enterprise Software, Inc. (OTCBB: YTHK).
For up-to-the-minute news, features and links click on http://www.financialwire.net
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FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. Additionally, Investrend provides a wide range of forums, independent research and webcasting platforms for shareholder empowerment. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on http://www.investrend.com/contact.asp

http://www.investrend.com/articles/article.asp?analystId=0&i...

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A list of 119 potential companies that could have been naked shorted:

Enjoy!

December 15, 2003. (FinancialWire) The charges lodged against Andreas and Thomas Badian, of Rhino Advisers, Inc., for alleged manipulative naked short-selling of Sedona Corp. (OTCBB: SDNA), which at the time was listed on the NASDAQ, is having far-reaching implications for the shareholders of at least 60 other public companies, including Avanir Pharmaceuticals (AMEX: AVN), Hollywood Media Corp (NASDAQ: HOLL), and Viragen Inc (AMEX: VRA).

December 15, 2003. (FinancialWire) The charges lodged against Andreas and Thomas Badian, of Rhino Advisers, Inc., for alleged manipulative naked short-selling of Sedona Corp. (OTCBB: SDNA), which at the time was listed on the NASDAQ, is having far-reaching implications for the shareholders of at least 60 other public companies, including Avanir Pharmaceuticals (AMEX: AVN), Hollywood Media Corp (NASDAQ: HOLL), and Viragen Inc (AMEX: VRA). The 60 are among 76 companies, some of them no longer public, who were financed by AMRO International, one of the offshore funds used by the Rhino Advisors, and the same fund that was involved in the financing of Sedona Corp. Taped conversations in the hands of the U.S. Department of Justice indicate that there may have been a pattern to the "unbridled" and "mercilous" naked short selling the Badians demanded of their brokers. Other funds used by Rhino included Celest Trust and Austost, Markham, Roseworth. Rhino's offshore trust agents included Bachofen and Hacki, as well as Ultra Finanz of Zurich for AMRO, Batliner of Lichtenstein for Markham and Roseworth, Trevisa-Treuhand-Anstalt of Lichtenstein for Celeste. There are likely hundreds of these deals. The 60 public companies that were financed just via Bachofen & Haackl, or Amro, include: All American Food Group Inc (OTC: AAFGQ), Amanda Co Inc (OTC: AMNA), Antra Holdings (OTC: RECD), Aquis Communications Group Inc (OTCBB: AQUIS), Avanir Pharmaceuticals (AMEX: AVN), Bionutrics Inc (OTC: BNRX), Brilliant Digital Entertainment Inc (AMEX: BDE), Bravo! Foods International Corp. (OTCBB: BRVOE), Butler National Corp (NASDAQ: BUTL), Calypte Biomedical Corp (OTCBB: CYPT), Chemtrak Inc/DE (OTC: CMTR), Clicknsettle Com Inc (OTCBB: CLIK), Corporate Vision Inc (OTC: CVIA), Crown Laboratories Inc/DE (OTC: CLWB), Dental Medical Diagnostic Systems Inc (OTC: DMDS), Detour Media Group Inc (OTC: DTRM), Also, Digital Privacy Inc/DE (OTC: DGPV), Senior Services Inc (OTC: DISS), International Inc (OTC: DYNX), Endovasc Ltd Inc (OTCBB: EVSC), Corp/CA (OTCBB: ESYN), Focus Enhancements Inc (NASDAQ: FSCE), Frederick Brewing Co (OTC: FRBW), Greystone Digital Technology Inc (OTC: GSTN), Havana Republic Inc/FL (OTCBB: HVNR), Henley Healthcare Inc (OTC: HENL), Hollywood Media Corp (NASDAQ: HOLL), Ibiz Technology Corp (OTCBB: IBZT), Diagnostic Systems Inc/FL (OTCBB: IMDS), Imaging Technologies (OTCBB: IMTO), Integrated Surgical Systems Inc (OTCBB: RDOC), Also, Interferon Sciences Inc (OTC: IFSC), Interiors Inc (OTC: ITRNA), Laminaire Corp (OTC: THMZ), Medisys Technologies Inc (OTC: SCEP), Milestone Scientific Inc/NJ (AMEX: MS), Nevada Manhattan Group Inc (OTC: NVMH), Innovations Inc (OTCBB: NTGE), Systems Group (OTC: OSYM), Pacific Systems Control Technology Inc (OTCBB: PFSY), Professional Transportation Group Ltd Inc (OTC: TRUC), Rnethealth Inc (OTC: RNTT), Also, Sand Technology Inc (NASDAQ: SNDT), Sedona Corp (OTCBB: SDNA), Silverado Foods Inc (OTC: SVFO), Stockgroup Information Systems (OTCBB: SWEB) Surgilight Inc (OTC: SRGL), Tasty Fries Inc (OTCBB: TFRY), Tech Laboratories Inc (OTCBB: TCHL), Teltran International Group Ltd (OTC: TLTG), Titan Motorcycle Co of America Inc (OTC: TMOTQ), Trans Energy Inc (OTCBB: TSRG), Motorcycle Co (OTC: UMCC), Universal Communication Systems Inc (OTCBB: UCSY), Medical Systems Inc (OTC: UMSI), Vianet Technologies Inc (OTC: VNTK),Viragen Inc (AMEX: VRA), Webcatalyst Inc (OTC: WBCL), Worldwide Wireless Networks Inc (OTCBB: WWWNQ), and ZAP (OTCBB: ZAPZ). Earlier in the year, the U.S. Securities and Exchange Commission fined Rhino Advisors, Inc., $1 million for its representation of Amro International in the financing and manipulation of Sedona Corp. Amro, also known as AMRO, was registered in Panama, a secretive offshore haven, but was not named in the SEC settlement. Rhino and Amro specialized in death spiral financing, which has been used by many companies who are either complicit, desperate or ignorant of the impact that convertible debentures with fluctuating conversion terms can have on a company's stock price. Despite a contractual provision otherwise, the SEC said that "Rhino engaged in extensive short selling and prearranged trading on behalf of its client prior to exercising the conversion rights under the debenture. This short selling increased the supply of shares in the market and depressed Sedona's stock price. "As a result of the depressed stock price, Rhino's client received more shares from Sedona when it exercised its conversion rights under the debenture than it otherwise would have received. Following the conversions, Rhino engaged in wash sales and matched orders to cover the short positions and conceal the client's involvement in the scheme." Amro shorted almost 873,000 shares of Sedona in March, 2001, of which more than 785,000 shares were sold short before its first exercise of conversion rights of its debenture. These delivery failures triggered clearing failures at Depository Trust and Clearing Corporation, which in turn prompted the National Association of Securities Dealers to placed a shorting restrictions on Sedona shares on March 22, 2001. Under these restrictions, further short sales would be subject to a mandatory closeout if there was a failure to deliver the securities after 10 days. According to Stockwatch, Rhino then did an "end run" around the U.S. regulator by shorting Sedona in an Amro account Mr. Badian controlled at a helpful Vancouver brokerage, shorting another 350,000 shares of Sedona between March 30, 2001 and mid-April. "The aggressive shorting helped knock Sedona's market price down from $1.43 a share, the average between Jan. 26 and March 1, 2001, to $0.75 by March 23, after three weeks of continued shorting. Four days later, Amro did its first conversion at just under $0.80, based on a VWAP of $0.94. Subsequent conversions the next month were done at prices down to $0.64. The SEC stated that in the five trading days prior to March 27, the conversion day, Badian's trading averaged more than 25 per cent of all Sedona volume," said Stockwatch. "This was not all. Under the skillful hand of Badian, Rhino rigged the market further. The SEC notes that instead of delivering the converted shares directly to U.S. brokerages where the short sales occurred, Rhino did wash sales and matched orders out of the conversion shares account to the short selling accounts." The SEC stated that "this created the appearance that the accounts that had short positions were purchasing shares in the open market and not covering short positions with shares obtained through conversion of the debenture." "On at least 10 occasions during April, 2001, Badian directed transactions involving no change in beneficial ownership of shares of Sedona stock or placed buy orders for shares while simultaneously placing sell orders of substantially the same size and price." According to Stockwatch, the SEC stated that Rhino's trading allowed client Amro to profit from the scheme in at least two ways. "First, the short sales locked in a sale price for the Sedona shares that was higher than the conversion price for the shares ultimately used to cover the open short positions. Second, Rhino's short sales increased the supply of Sedona shares in the market and depressed the price." "As a result of the depressed market price, the client converted the debenture to a greater number of shares of Sedona stock, which were already discounted to the market, and which it then used to cover its previous short sales made at higher prices," a court filing revealed. Naked short-selling has embroiled at least 119 public companies, including 13 brokers such as FleetBoston (NYSE: FBF), Goldman, Sachs & Co. (NYSE: GS), Knight Securities, LP (NASDAQ:NITE), Ladenburg Thalmann & Co., Inc. (AMEX: LHS), M. H. Myerson & Co., Inc. (NASDAQ:MHMY), Olde / H&R Block (NYSE: HRB), Charles Schwab (NYSE: SCH), Toronto-Dominion's (NYSE: TD), TD Waterhouse Group and vFinance, Inc. (OTCBB: VFIN). A.G. Edwards, Inc. (NYSE: AGE), Ameritrade Holding Corp. (NASDAQ:AMTD), Deutsche Bank AG (NYSE: DB), and E*Trade Group, Inc. (NYSE: ET), which have been accused by one or more public companies as allegedly participating in short selling activities or abuses, or of failing to settle trades. Andreas Badian has been released on $2 billion bail after pleading not guilty to securities fraud, but his younger brother Thomas is thought to have left the country. An arrest warrant has been issued. Rhino and Thomas Badian had already paid $1m in February to settle SEC claims, but the SEC did not charge Andreas Badian or their client, Amro International, based in Switzerland. The Wall Street Journal reports that Andreas Badian told his broker to sell Sedona shares short with "unbridled levels of aggression," and to be "merciless" with it, and later congratulated the broker on a "good job" because the stock price had "collapsed. " This account was supported by tape recordings of telephone calls to the broker. Judith Burns noted in her article in the Wall Street Journal that "Naked short selling occurs when short sellers fail to borrow stock before engaging in short sales. The SEC proposed changes this fall to curb manipulative, naked short sales, but it has yet to act on the measure, to the dismay of companies and investors that claim to have been victimized by the practice." Some observers have predicted that the criminal charges are only the tip of the iceberg, and that before it is over, numerous stock manipulators will be charged. Not content with the current effort by the U.S. Securities and Exchange Commission to enact "Regulation SHO," intended to curb illegal naked short selling which the SEC describes as rampant in the U.S., a group of individual investors are seeking to "investigate the SEC" via petition at www.investigatethesec.com for what it calls years of inaction as investors lost millions, perhaps billions of dollars. In the U.S., the controversy is the subject of Regulation SHO, which is available at the U.S. Securities and Exchange Commission website through January 5. The SEC said that comments should be sent by hard copy or e-mail, but not by both methods. Comments sent by hard copy should be submitted in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Comments also may be submitted electronically at the following E-mail address: [e-mail]. All comment letters should refer to File No. S7-23-03. Comments submitted by e-mail should include the file number in the subject line. Comment letters received will be available for public inspection and copying in the Commission's Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Electronically submitted comment letters will be posted on the Commission's Internet web site (http://www.sec.gov). Observers have said that trades to not settle because broker-dealers do not effect buy-ins, as required by law, and that there is an unspoken understanding that any brokerage that tries to force a buy-in will be retaliated against. Some 106 companies among the 119 named to date have issued press releases or been named in the media as having been victimized, or as taking various actions, either alone or in concert with other companies, to oppose manipulative trading in the form of illegal naked short selling. The actions have ranged from lawsuits to withdrawals and threatened withdrawals from the electronic trading system managed by the Depository Trust & Clearing Corp., to withdrawals from toxic financings, to the issuance of dividends or name changes designed to squeeze manipulators, to joining associations or networks or to contacting regulatory authorities to provide documentation of abuses or otherwise complain. The complete list of those 106 companies include Advanced Viral Research Corp. (OTCBB: ADVR), AdZone Research, Inc. (OTCBB: ADZR), Amazon Natural Treasures (OTC: ANTD), America's Senior Financial Services (OTCBB: AMSE), American Ammunition, Inc. (OTCBB: AAMI), AngelCiti Entertainment (OTCBB: AGLC), ATSI Communications, Inc. (OTC: ATSC), Federal Agricultural Mortgage / Farmer Mac (NYSE: AGM) Allied Capital (NYSE: ALD), American Motorcycle (OTC: AMCYV), American International Industries (OTCBB: AMIN), Ameri-Dream (OTC: AMDR), Adirondack Pure Springs Mt. Water Co. (OTCBB: APSW), Bluebook International (OTCBB: BBIC), Blue Industries (OTCBB: BLIIV), Bentley Communications (OTCBB: BTLY), BIFS Technologies Corporation (OTCBB: BIFT), Biocurex (OTCBB: BOCX). Broadleaf Capital Partners, Inc. (OTCBB: BDLF), Chattem, Inc. (NASDAQ:CHTT), Critical Home Care (OTCBB: CCLH), Composite Holdings (OTC: COHIA), CyberDigital, Inc. (OTCBB: CYBD). Diamond International Group (OTCBB: DMND), Dobson Communications Corp. (NASDAQ:DCEL), Eagle Tech Communications (OTC: EATC), Edgetech Services (OTCBB: EDGH); Also, Endovasc Ltd. (OTCBB: EVSC), Enviro-Energy Corporation (OTCBB: ENGY), Environmental Products & Technologies (OTC: EPTC), EPIXTAR Corp. (OTCBB: EPXR), eResearchTechnologies, Inc. (NASDAQ:ERES), Flight Safety Technologies (OTCBB: FLST), Freddie Mac (NYSE: FRE), FreeStar Technologies (OTCBB: FSRCE), Geotec Thermal Generators, Inc. (OTCBB: GETC), Genesis Intermedia (OTC: GENI), GeneMax Corp. (OTCBB: GMXX), Global Explorations Inc (OTC: GXXL), Global Path (OTCBB: GBPI), GloTech Industries, Inc. (OTCBB: GTHI), Green Dolphin Systems (OTCBB: GLDS), Group Management (OTCBB: GPMT), Hop-On (OTC: HPON), H-Quotient, Inc., (OTCBB: HQNT), Hyperdynamics Corp. (OTCBB: HYPD), International Biochem (OTCBB: IBCL), Intergold Corp. (OTCBB: IGCO), International Broadcasting Corporation (OTCBB: IBCS), InternetStudios, Inc. (OTCBB: ISTO), ITIS Holdings (OTCBB: ITHH), Investco Corp. (OTCBB: IVCO), Lair Holdings (OTC: LAIR), Lifeline BioTechnologies Inc. (OTC: LBTT), Life Energy & Technology (OTCBB: LETH), MBIA (NYSE: MBI); Also, MegaMania Interactive (OTC: MNIA), MetaSource Group, Inc. (OTCBB: MTSR), Midastrade.com (OTC: MIDS), Make Your Move (OTCBB: MKMV), Medinah Minerals (OTC: MDMN), MSM Jewelry Corp. (OTC: MSMC), Nanopierce Technologies, Inc. (OTCBB: NPCT), Nutra Pharmaceutical (OTCBB: NPHC), Nutek (OTCBB: NUTK), Navigator Ventures (OTC: NVGV), Orbit E-Commerce, Inc. (OTCBB: OECI), Pitts & Spitts (OTC: PSPP), Sales OnLine Direct (OTCBB: PAID), Pacel Corp. (OTCBB: PACC), PayStar Corporation (OTC: PYST), Petrogen Corp. (OTCBB: PTGC), Pinnacle Business Management (OTC: PCBM), Premier Development & Investment, Inc. (OTCBB: PDVN), PrimeHoldings.com, Inc. (OTC: PRIM), Phlo Corporation (OTCBB: PHLC), Resourcing Solutions (OTC: RESG), Reed Holdings (OTC: RDHC), Rocky Mountain Energy Corp. (OTCBB: RMECE), RTIN Holdings (OTCBB: RTNHE), Saflink Corp. (NASDAQ:SFLK), Safe Travel Care (OTCBB: SFTVV), Sedona Corp. (OTCBB: SDNA); Also, Sionix Corp. (OTCBB: SINX), Sonoran Energy (OTCBB: SNRN), Starmax Technologies (OTC: SMXIF), Storage Suites America (OTC: SSUA), Suncomm Technologies (OTC: STEH), Sports Resorts International (NASDAQ:SPRI), Technology Logistics (OTC: TLOS), Swiss Medica, Inc. (OTCBB: SWME), Ten Stix, Inc. (OTCBB: TNTI), Tidelands Oil (OTCBB: TIDE), Titan Construction (OTC: TTCS), Trezac Corp. (OTCBB: TRZAV), Universal Express, Inc. (OTCBB: USXP), Valesc Holdings, Inc. (OTCBB: VLSHV), Vega Atlantic (OTCBB: VGAC), Viragen (AMEX: VRA), Viragen International (OTCBB: VGNI), Vista Continental Corporation, (OTCBB: VICC), Viva International (OTCBB: VIVI), Vtex Energy (OTCBB: VXENE) and Wizzard Software (OTCBB: WIZD), WorldTradeShow.com (OTC: WTSW) and Y3K Secure Enterprise Software, Inc. (OTCBB: YTHK). For up-to-the-minute news, features and links click on http://www.financialwire.net FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Additionally, Investrend provides a wide range of forums, independent research and webcasting platforms for shareholder empowerment.

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due to the high number of complaints against naked short selling, the Nasdaq recently moved to clean it up.

this is a highly important development, and some believe explains the volatility currently seen in the OTC/BB markets.

in a nutshell, no more naked short selling, if you want to be a Nasdaq stock:

IMO: MMs are the single biggest participant in the practice of Naked Shorting of stocks.

http://www.nasdr.com/pdf-text/0403ntm.txt

NASD Notice to Members 04-03

SEC Approves NASD Rule Proposal Requiring Members to Make Affirmative
Determinations for Short Sale Orders Received from Non-Member
Broker/Dealers; Effective Date: February 20, 2004

Executive Summary

The Securities and Exchange Commission (SEC) approved amendments to
Rule 3370 (Prompt Receipt and Delivery of Securities—the "Affirmative
Determination" Rule) that expand the scope of the affirmative determination
requirement to include orders received from non-member broker/dealers.1 As
revised, Rule 3370 applies to orders received by member firms from both
customers and non-member broker/dealers, as well as most firm proprietary
orders. The revisions also add an exception for "proprietary" short sales of non-
member broker/dealers provided the member can establish that the order meets
certain conditions.

The text of the amendments as provided in Attachment A become effective on
February 20, 2004.

Questions/Further Information

Questions concerning this Notice may be directed to Gary L. Goldsholle,
Associate General Counsel, Office of General Counsel, NASD Regulatory
Policy & Oversight, at [phone].

Discussion

NASD Rule 3370 requires, among other things, that no member or person
associated with a member shall effect a "short" sale order for any customer in
any security unless the member or person associated with a member makes an
affirmative determination that the member will receive delivery of the security
from the customer or that the member can borrow the security on behalf of the
customer by settlement date. Because NASD's definition of "customer"
excludes a "broker" or "dealer," the affirmative determination requirements did
not apply to orders from "non-member broker/dealers."2 The failure to subject
short sales by such persons to the affirmative determination requirement affects
the integrity of the marketplace by increasing the possibility of failures to deliver
and also creates regulatory disparity by allowing certain firms to effect short
sales outside the purview of NASD's affirmative determination requirements.
To address these concerns, NASD has amended Rule 3370 to apply to short
sale orders for any customer or "non-member broker/dealer."

The amendments also provide an exemption for certain proprietary orders of
non-member broker/dealers. Specifically, Rule 3370(b)(2)(B) provides
exemptions for, among others, proprietary orders of member firms that are
bona fide market making transactions, or transactions that result in bona fide
fully hedged or arbitraged positions. Proprietary orders of a non-member
broker/dealer likewise are exempt from the affirmative determination
requirements if they meet the same conditions for the exemptions applicable to
proprietary orders of member firms, and the following two conditions are
satisfied: (1) the non-member broker/dealer must be registered with the SEC;
and (2) if using the market maker exemption, the non-member broker/dealer is
registered or qualified as a market maker in the securities and is selling such
securities in connection with bona fide market making.


Endnotes

1 File No. SR-NASD-2001-85 (Nov. 27, 2001), SEC Release No. 34-
48788 (Nov. 14, 2003), 68 Fed. Reg. 65978 (Nov. 24, 2003).

2 While NASD member broker/dealers are excluded from the definition
of "customer" under NASD Rule 0120(g), such firms have an independent
obligation to comply with NASD's Affirmative Determination Rule.

©2004. NASD. All rights reserved. Notices to Members attempt to present
information to readers in a format that is easily understandable. However,
please be aware that, in case of any misunderstanding, the rule language
prevails.


Attachment A

New text is underlined; deletions are in brackets.

3370. Prompt Receipt and Delivery of Securities

(a) No Change

(b) Sales

(1) No Change.

(2) "Short Sales"

(A) Customer and non-member broker/dealer short sales

No member or person associated with a member shall accept a "short" sale
order for any customer or non-member broker/dealer in any security unless the
member or person associated with a member makes an affirmative
determination that the member will receive delivery of the security from the
customer or non-member broker/dealer or that the member can borrow the
security on behalf of the customer or non-member broker/dealer for delivery by
settlement date. This requirement shall not apply, however, to transactions in
corporate debt securities or transactions in security futures, as defined in
Section 3(a)(55) of the Act, or proprietary orders of a non-member
broker/dealer that meet one of the exceptions in subparagraph (B) below,
provided, however, that (i) the non-member broker/dealer is registered with the
Securities and Exchange Commission, and (ii) if using the market maker
exception, the non-member broker/dealer is registered or qualified as a market
maker in the securities and is selling such securities in connection with bona fide
market making.

(B) No Change

(3) No change

(4) "Affirmative Determinations"

(A) No change

(B) To satisfy the requirement for an "affirmative determination" contained in
paragraph (b)(2) above for customer, non-member broker/dealer, and
proprietary short sales, the member or person associated with a member must
keep a written record [which] that includes:

(i) if a customer or non-member broker/dealer assures delivery, the present
location of the securities in question, whether they are in good deliverable form
and the customer's or non-member broker/dealer's ability to deliver them to the
member within three (3) business days; or

(ii) No change

[blurring]

Always Remember that Market Makers communicate with each other!

that means that they can act in COORDINATED fashion. when you see 8 market makers leave the bid in the space of a few seconds, ask yourself: was that a planned, coordinated action? my bet is, it was...

and if so, why?

[Capt_Nemo]

I guess the first and most obvious tactic , is many MM displaying their offers at bid, we'll say 7 mm at bid 2 at ask, and the matter of a blink of an eye, that is gone or has reversed, A bear trap I call it, as do others!!!! They are looking for every advantage to sway the trade in their favor!!!!! And also, displaying REAL and TRUE amounts they have for sale, These 1000 5000 lots on otcs makes me laugh, It is the required amount they have to fill, but when they have millions just sitting there, and a stock trades millions of shares with no PPS appreciation, then a small sell comes in and the stock drops!!! Mega shady way of dumping S-8 shares or their personal inventory!!!!

anything I say here will be my Opinion and nothing else!!!!

[Capt_Nemo]

Haaaaaaaa Love the board blurring, Boardmarked and I will contribute what I can!!!! Good luck here!!!!

[blurring]

Welcome: Tell us what you know about Market Makers!