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They are restricted from using this financing vehicle to suddenly become a 5% or greater shareholder in the company. That's 5% total. Not per day or per week or per hour. They can't use this financing to own more that 5% of the OS. Period. It is stated in plain language. All of the financing S-8's have exactly the same terms. It's there for a reason and it is not ambiguous. It is not subject to any other interpretation. It means what it says.
Good luck!
-Fritz
I'll repeat the language from the 10Q. Weirdo and his ilk like to paraphrase. Here is the actual language again.
The Investors have contractually agreed to restrict their ability to convert
the Notes and exercise the Warrants and receive shares of the Company's common
stock such that the number of shares of the Company's common stock held by them
and their affiliates after such conversion or exercise does not exceed 4.99%
of the then issued and outstanding shares of the Company's common stock.]/b]
It could not be any clearer. They can't own more than 4.99% of the OS unless they buy on the open market like everybody else.
Good Luck
-Fritz
Dilution myth:
much anxiety has been willfully spread here by those who only show up when it is convenient for them to drive the price lower. Their favorite theme is dilution, a common concern in penny land. Here, though, it is not the huge issue that some would like us to believe.
How do I know? I read the S-8's. All of them. Do you know what they say about the ability of the financiers to dump shares? It says they can't. From all the S-8's:
The
Investors have contractually agreed to restrict their ability to convert
the Notes and exercise the Warrants and receive shares of the Company's common
stock such that the number of shares of the Company's common stock held by them
and their affiliates after such conversion or exercise does not exceed 4.99%
of the then issued and outstanding shares of the Company's common stock.
Here's the rest of the story for those who want to know. From the 10Q:
Currently,
our Consolidated Financial Statements includes Stronghold Technologies, Inc.
a New Jersey corporation and a wholly owned subsidiary of Dealer Advance, Inc.,
which subsidiary is maintained on a completely segregated basis from the
Company, Dealer Advance, Inc. The Company filed for Chapter 7 bankruptcy of
this subsidiary on January 25, 2007.
The Chapter 7 bankruptcy has yet to be resolved
or closed as of the date of this filing, but it is anticipated to be concluded
soon. The estimated remaining Stronghold Technologies assets available to
liquidate in order to offset liabilities segregated and owed by the subsidiary
entity and subject to the bankruptcy that are a part of the consolidated
financial statements do not represent a material amount.
Wierdo stated:
read the bankruptcy filings on Stronghold..all the secured debt survived ..over 5 million and its in the money..
Please show me in black and white where it says the stronghold debt will survive the bankruptcy and be assumed by the successor corporation (DLAV).
I have read the 10Q 3 times and I have yet to see that.
Thanks
-Fritz
Yes, you are correct. My mistake. I was focusing on the other language in the PR which I thought had more significance, i.e.,
The original server based system is now being replaced in the almost 100 dealerships previously being served.
Regards,
-Fritz
>>>News was good but not sure how well it will be taken, they only signed 3 new dealerships so far but said 8-10 by end of December??????????????????<<<
Did you notice that they also said that 100 existing dealerships are being converted over to the WedDa?????????
Did you also notice that they are using the NOKIA 800?????
Good stuff IMHO!
-Fritz
>>>News was good but not sure how well it will be taken, they only signed 3 new dealerships so far but said 8-10 by end of December??????????????????<<<
Did you notice that they also said that 100 existing dealerships are being converted over to the WedDa?????????
Did you also notice that they are using the NOKIA 800?????
Good stuff IMHO!
-Fritz
Could this be what's coming at the end of the month?
Remember this PR?
-------------------------------------------------------
DEALER ADVANCE™ ANNOUNCES SALES SUCCESS OF WEBDA™
Posted on Nov 13, 2007
November 13, 2007
Addison, TX – (Business Wire)- DealerAdvance™, Inc. (OTCBB-DLAV), developers of proprietary Internet applications for the automotive retail industry announced today that since the release of WebDA™, the web based version of DealerAdvance™, the company has booked in sales revenue of over $600,000. Steven Humphries, in an analyst meeting, announced that he expects to bring on-line an additional 20 clients boosting revenue to approximately $1.3 million by years end...
I think DLAV has a big surprise for everyone after New Years but it seems SH is keeping a lid on it for the time being! I think this is why he isn't answering much anymore. I believe soon he will clarify all and then we will move back into pennies!
P2D: As much as I detest print and his degenerate ilk for spreading purposeful lies, I also think making unsupportable statements like yours quoted above is harmful to long shareholders. Let's strive to make this a fact driven board, which will benefit the stock price for sure.
-Fritz
Bulldog: You are right that the May financing survived the bankruptcy (but the others that you and your compatriots keep mentioning were in fact discharged in the bankruptcy of the predecessor company so they are irrelevant here. If you keep bringing them up you are exposing your bad faith attempt to mislead others.
Furthermore, as to the May financing, you conveniently fail to mention that there is a contractual limit on the conversion of the CDs.
Here it is from the same document you just posted:
ITEM 1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
<SNIP>
The Investors have contractually agreed to restrict their ability to convert the Notes and exercise the Warrants and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company's common stock.
There it is, in black and white. So stop being an alarmist and recognize that this is just an ordinary pullback. Even Charlatan had to concede this point over the weekend.
-Fritz
REDCATCHER do you feel NITE called a halt because they are finished covering after shorting that long run up?
-Fritz
Spamnation probably got an overzealous email from Lordwinmore back when he was emailing every fortune 500 company asking them to look into DLAV. LOL!!
http://investorshub.advfn.com/boards/read_msg.asp?message_id=24897636
(Sorry Lordwinmore, just funnin' ya! LOL!!)
Good Luck!
-Fritz
DD/1: Excellent find. Thanks!
More proof that this is definitely not a fly-by-night company. The whiners here with the attention spans of a gnat will cash out in the next couple of days and leave the stock in the hands of real investors. Good things are coming. Steve Humphries is serious about getting this thing rolling in a big way.
Good Luck!
-Fritz
I just got a text msg also. Must be from a paid PR firm. Still, I don't know how they got my cell #. Hmmmm..........
Thanks!
Hopefully he's signing a bunch of new contracts.
-Fritz
Is Steve Humphries out of town?
I emailed him several days ago and haven't received a response.
-Fritz
Update to the folks here.
Last evening and well into the wee hours there was a spirited discussion between myself, Investor99 and Charlatan. Believe it or not, we came to a sort of rough consensus that many of the concerns raised here yesterday by Charlatan were put to rest. I believe this was a substantive discussion with no fingerpointing and in the end I felt much more confident about this stock. Link back through each of our names and I hope you will agree.
Good Luck!
-Fritz
Yes, It looked good enough to me to persuade me to sink a large chunk o' change into it. It still may work out for some, but I wasn't going to let them steal more from me, if that's what they are in fact up to. Like I said, been there before.
Good Luck!
-Fritz
LOL!
All's well that ends well.
-Fritz
Man, I was bleeding like a stuck pig, wondering what the h*ll was going on, so I started digging a little more. I've been burned before in pinky land on dilution death spirals. I can't swear that this is one but it sure seems that way. I got out today with a big loss.
Good luck!
-Fritz
Charlatan:
If you are really going to voluntarily absent yourself from this board, send me a PM if you come up with anything that you think I may find interesting.
Good luck.
-Fritz
I did the DD, van and I and others all did. The company is real and has so much going for it. I wish I could explain it.
I can't.
Uncle:
go to http://www.stockpatrol.com/.
Type in "Carnes" in the search. Perhaps you will find an answer to your puzzlement.
Good Luck.
-Fritz
Zoro:
I was in SHCM until today. A very nice board full of nice well intentioned people. They are losing badly and no one there knows why.
I think I discovered the reason and got out with a big loss. IMHO nobody there is doing much DD but rather are passing time playing footsy with each other as the stock enters what I strongly suspect will be its death spiral. I wish Charlatan, or someone like him, was there a few weeks ago asking the hard questions and putting a microscope on the character of (one of) the SHCM principals. I would be a bit richer today if he had.
Regards,
-Fritz
Also I note that the applicable percentage was increased substantially in our favor from 25% to "between 50% and 60% depending upon the status of the registration statement to be filed by the Company."
IMHO, that was a significant concession by the capitalists. Maybe they too think that DLAV is more than a one night stand?
LOL!
I think you are asking tough questions and as they are answered one by one I for one am feeling even better about my stake in DLAV. Mindless namecalling is only going to result in ignorance and lost capital. Frankly, I can't afford that. I've got better plans for my cash and it doesn't involve giving it away.
As to the burn rate and potential future default, I would have to answer your question with a question: In light of the way that the recent May 2007 financing was structured (i.e. not a bottomless vortex of billions of dilutive shares) do you think that Humphries and Company put that language in there by accident? I think they had a handle on the predatory nature of the Offshore partners and accordingly acted to put a reasonable limit on their rapaciousness. Do you agree?
Regards,
-Fritz
Thanks, Charlatan,
Coming from you that means something for sure. You have certainly forced me to raise my level of discipline in regards to understanding the financial underpinnings of my investments.
Regards,
Fritz
Apology anticipated:
Clarlatan wrote earlier today:
Look, there is a huge difference between registered shares and non-registered shares. Those shares that make up the over 2B in converted common are not COMMON STOCK.. they are Debentures, Notes or Callable securities. These are debt instruments and not equity. If the Company can not make its monthly obligations to repay the loan (if they can't repay the IRS how the heck they going to repay the loan?) then the holders have the option to convert. Those notes were signed for and PURCHASED via the last 8K. How can you post they have been canceled? They have not been canceled.. they still exist and since the Company failed to register them they are IN DEFAULT of their agreement with the note holders.
I will rescind everything I have said and even make a public apology if the Company were to issue a filing stating that the debt has been removed. They have not done so however so based on filings and the information currently available to the public the Company has in fact defaulted on those notes.
I think we can agree that the company is NOT in default of an obligation undertaken by (the now bankrupt) Stronghold.
Apology accepted :)
-Fritz
Charlatan:
You missed a very important paragraph in the May 25, 2007 8-K.
The Investors have contractually agreed to restrict their ability to convert the Notes and exercise the Warrants and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company's common stock..
More financials:
The recently filed Registration Withdrawal Request explicitly pertains to a registration filing by Stronghold. You will note that the withdrawal request specifically pertains to Form SB-2, File No. 333-131852, which was filed on February 14, 2006 (the “Registration Statement”). If you link to that form 333-131852 it can be seen that this is a Stronghold filing.
Frankly, I'm still trying to determine which financial obligations
were assumed by DealersAdvance and which were (or will ultimately be) discharged through Stronghold's bankruptcy.
The takeaway:
If we can collectively sort out this specific issue, we can independently confirm Merco's conversation with Dave Wange. Regardless of one's feelings about certain posters here, I for one believe that a higher level of DD would benefit us all so let's get this cleared up. Merco is setting the proper tone by his exemplary efforts!
Good luck to us all!
-Fritz
Re: Bankruptcy of Stronghold:
I quote from page 23 of the current 10Q:
Consolidation of Subsidiary Entities Policy
Currently, our Consolidated Financial Statements includes Stronghold Technologies, Inc. a New Jersey corporation and a wholly owned subsidiary of Dealer Advance, Inc., which subsidiary is maintained on a completely segregated basis from the Company, Dealer Advance, Inc. The Company filed for Chapter 7 bankruptcy of this subsidiary on January 25, 2007. The Chapter 7 bankruptcy has yet to be resolved or closed as of the date of this filing, but it is anticipated to be concluded soon. The estimated remaining Stronghold Technologies assets available to liquidate in order to offset liabilities segregated and owed by the subsidiary entity and subject to the bankruptcy that are a part of the consolidated financial statements do not represent a material amount.
Nice find.
One guy talked of a billboard sign. Another said he spotted a Revenge vehicle at a local dealer's showroom. Most of these enthusiasts seem to have had some exposure to Revenge Designs. Just the beginning.
Good Luck!
-Fritz
<<<Also, a big plus during my time in it was offering an ASP model (i.e. hosted services) so the dealer/group didn't incur any hardware or maintenance expense.>>>
As I understand it, this is exactly the difference between the old DLAV and the new improved DLAV. Nice to see you characterize it as a "big plus"!
-Fritz
Thanks, Van, somehow I missed that little tidbit.
Regards,
-Fritz
<<<I, among many other shareholders, have communicated my disappointment in the releasing of the email that targeted investors. Totally unnecessary IMO. BUT...it was NOT SPAM. It was sent out through an opt-in email list server.>>>
How does one get on the listserv? I checked Revenge website and no mention there.
Thanks and good luck!
-Fritz
Slang for momentum.
Good Luck and be careful!
-Fritz
Why do you think there will be news this week?
Thanks and Good Luck!
-Fritz
Everybody needs to read this.
Props to the author Brikk. I found this on another board. REQUIRED reading IMO.
Be smart, conduct good DD, then go LONG!
-Fritz
=================================================================
Learn How to Play the Game: Invest Wisely and Trade Smartly
The savvy long-term investors never chase stocks up. For the most part that is
momentum players and daytraders where most of it or what follows is dumb
money. Instead the long-term investors use a couple of simple strategies in
order to position themselves. One is to find a stock no one immediately sees
has huge potential and accumulate. Long-term investors are not interested in
trading against the public mind or the dumb money. That's where the majority
of the money can be made but even more can be made if the base of a stock is
held extremely strong by investors. However the second is not to doubt the
research which is the underlying basis for going long and holding.
More and more investors are winning the game nowadays despite all bashers that
float through the Internet that has become part of the game. Floor traders of
market makers often watch CNBC, news wires and bulletin boards in order to
follow the market during trading session. OTC BB market makers (MMs) don't use
fundamental and technical analysis. However, what they do realize is a lot of
dumb money does use this newest nitch charting or TA (Technical Analysis) to
run a stock either up or down. To the MMs this is like taking candy from a
baby. Simply they will paint the tape and use whatever tactic to affect the
charting bands. Thus the public and dumb money they will have eating out of
their hands. Effectively the MMs can show a strong stock growing weak by
manipulating the close price in order to generate selling volume, delaying
trading time to manipulate trading activities, or even stalling the ask
without honoring orders to hold a stock price.
MMs follow a simple code of business when making a market in a stock
especially an OTC BB. That is the level that stocks will seek that yields the
most volume. Now this is very important because they make money on the volume
buying at the bid and selling at the ask. In other words, by making the market
they are buying low and selling high. Now smart money adheres to that rule, so
do all the market makers. They could careless whether the stock is at $83 or
at $0.23. All they care about is the action thus being able to sell stock at
the offer (The high) and buy stock at the bid (The low). To increase their
profitability, they make the spread as great as possible on as many shares as
they can especially if the volume falls off.
When they have mostly all "buy" orders, that's not the price that's going to
yield the most volume. They need both buy and sells to get the maximum action.
Remember, MMs play the volume. If the volume decreases and there are mostly
Buys that become a one way volume, Buy volume. So what they do is let the
stock run up to a price where it runs out of steam. They fill all the buy
orders there that they can and then comes the pullback one way or another
naturally or induced. During the pull back they can buy tons of shares and
flip them to those averaging down or trying to catch the bounce. At some
price, the stock will be relatively stable and yield the most volume. Now that
is the average price you will see
The average price is the point where a stock seeks a level where MMs can
profit on the most volume. So during the day that is the price that MMs and
momentum/day traders want to see the stock at. Why? Because they know the
public and dumb money was chasing the price thing up. Most of the time, the
MMs love a flurry of Market Orders which is a dead sign of an artificial run
or momentum. Merely it is money in the bank for them. Most get hung in a
momentum or day trade or by the tactics of Market makers, who are in the
business to screw the public every chance they get and the NASD is not going
to do anything about it. They are merely making the market liquid is there
reasoning.
The market makers have created an added complication to the OTCBB's chaos of
the already volatile intra-day price movements created by dumb money, momentum
and day-traders. MMs can not relate to long-term holders in the OTC BB. That
makes absolutely no sense what so ever. They feel a large percentage of trades
in the OTC BB market consist of short-term or day-trades, MMs merely view the
barrage of buy and sell orders as relatively neutral to the market. How they
figure it is when the average dumb money buys shares in a company, the MMs
feel or rather know with some certainty it is very likely that dumb money will
want to sell back those shares relatively quick on the slightest drop.
Now somewhat comfortable with this logic the MMs merely short sells into the
buying and attempts to take the stock down in an effort to "shake out" the
weak. Since it is tough to know for sure whether a move is the beginning of a
trend, or a routine shake out, this type of deception works quite well for the
MMs. What the long-termers do to a stock is surprise the MMs because instead
of falling the shorting has no effect and the price goes up. Now that puts the
MM at selling low through shorting and thus having to buy high in order to
cover.
Boy, when this happens, the MMs are not very happy campers. The investors and
traders are supposed to be doing that no them. Now it becomes time to pull out
every trick and tactic in the book in order to attempt to get a Bear Raid at
every dollar mark or percent from where the stock started. Could be a penny in
smaller priced securities? What MMs do is give you a chance to make a small
amount of money for your momentum and day trading style by shorting it at
these levels and trying to get a bear raid each time. Each failure is
compounding the MMs short position so they let it go to the next level. Now
come more deliberate tactics MMs use to coerce Bear Raid or panic selling.
Once the MM is caught short and the strength of the buy is overpowering the MM
will want to cover his short position. So the MMs call up one of his friendly
MMs and says some like "the weather is sure rough today." The MM along with
the other "friendly MM initiates a down tick about the same time. Now this can
also be done with a certain amount of shares such as an infamous 100 shares
flag. This down tick gives the illusion of weakness designed to hopefully
begin the bear raid of selling. The fickle, fearful, day trader, momentum and
short term begin to sell out allowing the MM to cover his short position at
lower prices. They will move it down quickly to get it to a price of least
financial damage. Problem they have is long-term investors in the OTC BB. They
start accumulating and buying comes flying in when they take it too far thus
the MMs took it to the point of volume again and not only investors the other
MMs step in the make money on the spread.
Alas the poor MM does not get to cover. Now comes various tactics like
stalling, boxing, or even locking the Bid and Ask for a while.
Of course, MMs aggressively deny any sort of collusion designed to fix quotes
or spreads, but a recent SEC investigation tells another story.
MMs have a vast resource of tactics and it would take probably more than my
lifetime to figure them all out.
So how do investors somehow manage to overcome the obvious deception in OTCBB
arena? One answer is indirection trading style by going long which the MMs do
not expect. In the war between investors and public companies on the OTC BB vs
the MMs, if the MMs have all the advantages due to position or other factors,
direct confrontation such as momentum or day trading hitting the stock is a
definite death sentence.
However, an indirect approach tends to weaken the path of least resistance
before slowly overcoming it. The most effective way is long-term investors
slowly accumulating and holding thus drawing the MMs out of its defenses
making them as naked as their short position. This is war so this slow
accumulation and holding for the long term easily achieves the desired effect
to force MMs to cover and knock off the tactics or bury themselves deeper.
The MMs when caught will especially use every trick and tactic in the book to
get a Bear Raid thus playing on the individual fear of most people. The MMs
feel they have information and position advantages over the investors as long
as the holding of the stock is in weak hands or short term holders. Since they
are OTC BB MMs who believe all OTCBB companies are not worth investing and
management is ineffective regardless what is happening within the company.
Furthermore, MMs know they are in the position to impose a great deal of
influence in OTC BB stocks trading when it suits their needs.
This inherent power of position enables the MMs to move the markets at any
time up or down. As a result, the only way to draw them out of their favorable
position is going long. Now this does not mean just any company but to
effectively nail the MMs, Longs must find the great company on the floor and
accumulate long before the MM tactics and games begin.
Everybody needs to read this.
Props to the author Brikk. I found this on another board. REQUIRED reading IMO.
Be smart, conduct good DD, then go LONG!
-Fritz
=================================================================
Learn How to Play the Game: Invest Wisely and Trade Smartly
The savvy long-term investors never chase stocks up. For the most part that is
momentum players and daytraders where most of it or what follows is dumb
money. Instead the long-term investors use a couple of simple strategies in
order to position themselves. One is to find a stock no one immediately sees
has huge potential and accumulate. Long-term investors are not interested in
trading against the public mind or the dumb money. That's where the majority
of the money can be made but even more can be made if the base of a stock is
held extremely strong by investors. However the second is not to doubt the
research which is the underlying basis for going long and holding.
More and more investors are winning the game nowadays despite all bashers that
float through the Internet that has become part of the game. Floor traders of
market makers often watch CNBC, news wires and bulletin boards in order to
follow the market during trading session. OTC BB market makers (MMs) don't use
fundamental and technical analysis. However, what they do realize is a lot of
dumb money does use this newest nitch charting or TA (Technical Analysis) to
run a stock either up or down. To the MMs this is like taking candy from a
baby. Simply they will paint the tape and use whatever tactic to affect the
charting bands. Thus the public and dumb money they will have eating out of
their hands. Effectively the MMs can show a strong stock growing weak by
manipulating the close price in order to generate selling volume, delaying
trading time to manipulate trading activities, or even stalling the ask
without honoring orders to hold a stock price.
MMs follow a simple code of business when making a market in a stock
especially an OTC BB. That is the level that stocks will seek that yields the
most volume. Now this is very important because they make money on the volume
buying at the bid and selling at the ask. In other words, by making the market
they are buying low and selling high. Now smart money adheres to that rule, so
do all the market makers. They could careless whether the stock is at $83 or
at $0.23. All they care about is the action thus being able to sell stock at
the offer (The high) and buy stock at the bid (The low). To increase their
profitability, they make the spread as great as possible on as many shares as
they can especially if the volume falls off.
When they have mostly all "buy" orders, that's not the price that's going to
yield the most volume. They need both buy and sells to get the maximum action.
Remember, MMs play the volume. If the volume decreases and there are mostly
Buys that become a one way volume, Buy volume. So what they do is let the
stock run up to a price where it runs out of steam. They fill all the buy
orders there that they can and then comes the pullback one way or another
naturally or induced. During the pull back they can buy tons of shares and
flip them to those averaging down or trying to catch the bounce. At some
price, the stock will be relatively stable and yield the most volume. Now that
is the average price you will see
The average price is the point where a stock seeks a level where MMs can
profit on the most volume. So during the day that is the price that MMs and
momentum/day traders want to see the stock at. Why? Because they know the
public and dumb money was chasing the price thing up. Most of the time, the
MMs love a flurry of Market Orders which is a dead sign of an artificial run
or momentum. Merely it is money in the bank for them. Most get hung in a
momentum or day trade or by the tactics of Market makers, who are in the
business to screw the public every chance they get and the NASD is not going
to do anything about it. They are merely making the market liquid is there
reasoning.
The market makers have created an added complication to the OTCBB's chaos of
the already volatile intra-day price movements created by dumb money, momentum
and day-traders. MMs can not relate to long-term holders in the OTC BB. That
makes absolutely no sense what so ever. They feel a large percentage of trades
in the OTC BB market consist of short-term or day-trades, MMs merely view the
barrage of buy and sell orders as relatively neutral to the market. How they
figure it is when the average dumb money buys shares in a company, the MMs
feel or rather know with some certainty it is very likely that dumb money will
want to sell back those shares relatively quick on the slightest drop.
Now somewhat comfortable with this logic the MMs merely short sells into the
buying and attempts to take the stock down in an effort to "shake out" the
weak. Since it is tough to know for sure whether a move is the beginning of a
trend, or a routine shake out, this type of deception works quite well for the
MMs. What the long-termers do to a stock is surprise the MMs because instead
of falling the shorting has no effect and the price goes up. Now that puts the
MM at selling low through shorting and thus having to buy high in order to
cover.
Boy, when this happens, the MMs are not very happy campers. The investors and
traders are supposed to be doing that no them. Now it becomes time to pull out
every trick and tactic in the book in order to attempt to get a Bear Raid at
every dollar mark or percent from where the stock started. Could be a penny in
smaller priced securities? What MMs do is give you a chance to make a small
amount of money for your momentum and day trading style by shorting it at
these levels and trying to get a bear raid each time. Each failure is
compounding the MMs short position so they let it go to the next level. Now
come more deliberate tactics MMs use to coerce Bear Raid or panic selling.
Once the MM is caught short and the strength of the buy is overpowering the MM
will want to cover his short position. So the MMs call up one of his friendly
MMs and says some like "the weather is sure rough today." The MM along with
the other "friendly MM initiates a down tick about the same time. Now this can
also be done with a certain amount of shares such as an infamous 100 shares
flag. This down tick gives the illusion of weakness designed to hopefully
begin the bear raid of selling. The fickle, fearful, day trader, momentum and
short term begin to sell out allowing the MM to cover his short position at
lower prices. They will move it down quickly to get it to a price of least
financial damage. Problem they have is long-term investors in the OTC BB. They
start accumulating and buying comes flying in when they take it too far thus
the MMs took it to the point of volume again and not only investors the other
MMs step in the make money on the spread.
Alas the poor MM does not get to cover. Now comes various tactics like
stalling, boxing, or even locking the Bid and Ask for a while.
Of course, MMs aggressively deny any sort of collusion designed to fix quotes
or spreads, but a recent SEC investigation tells another story.
MMs have a vast resource of tactics and it would take probably more than my
lifetime to figure them all out.
So how do investors somehow manage to overcome the obvious deception in OTCBB
arena? One answer is indirection trading style by going long which the MMs do
not expect. In the war between investors and public companies on the OTC BB vs
the MMs, if the MMs have all the advantages due to position or other factors,
direct confrontation such as momentum or day trading hitting the stock is a
definite death sentence.
However, an indirect approach tends to weaken the path of least resistance
before slowly overcoming it. The most effective way is long-term investors
slowly accumulating and holding thus drawing the MMs out of its defenses
making them as naked as their short position. This is war so this slow
accumulation and holding for the long term easily achieves the desired effect
to force MMs to cover and knock off the tactics or bury themselves deeper.
The MMs when caught will especially use every trick and tactic in the book to
get a Bear Raid thus playing on the individual fear of most people. The MMs
feel they have information and position advantages over the investors as long
as the holding of the stock is in weak hands or short term holders. Since they
are OTC BB MMs who believe all OTCBB companies are not worth investing and
management is ineffective regardless what is happening within the company.
Furthermore, MMs know they are in the position to impose a great deal of
influence in OTC BB stocks trading when it suits their needs.
This inherent power of position enables the MMs to move the markets at any
time up or down. As a result, the only way to draw them out of their favorable
position is going long. Now this does not mean just any company but to
effectively nail the MMs, Longs must find the great company on the floor and
accumulate long before the MM tactics and games begin.