NanoTech Entertainment Inc (NTEK)

[NummyNums]

Exhibit A:

There has been a ton of discussion over the years on the subject of short-selling manipulation in the stock market.

I've heard and read many opinions on this very serious matter, but there is, in fact, a sure-fire way to combat the problem, a cure that I have not yet seen discussed anywhere.

First off, this article is not, per se, about naked shorting, which in itself is a staggering problem and, I suspect, still highly rampant in the market place, even with the SEC's recently announced efforts to go after said illegal shorters.

This article, rather, tackles the issue involving a tactic that short-sellers use to pummel the price of a stock lower, which creates panic in long-position holders, and, in fact, convinces anyone interested in buying the stock to simply wait for a lower stock price to enter. Why would any rational "potential-long" buy higher in the face of a short-raid, if he or she can simply wait for the stock to first be pummeled- and THEN buy long.

I have heard a lot of talk about how killing the uptick rule was devastating for stocks, but, in reality- this was only part of the problem.

The real problem is that shorts love to "pin the bid," which is a manipulative technique whereby short-sellers don't first wait for a buyer to come to them at a higher level, say on the ask price, but, instead, they short directly on the bid price repeatedly (called "pinning") until the bid finally "caves in."

Shorts have learned that if they "tag-team" the bid in this manner, it will, undoubtedly, cave, and the resulting bid will be pushed lower, and then lower and then lower still. With the ask price lowering in tandem with a dropping bid price, exacerbated by other shorts on the ask going lower, longs now start to panic and lower their sell (ask) price even further. Many longs then start selling on the bid itself, and, eventually, the bid is also taken lower and lower as longs panic further, and potential buyers lower their bids in trying to buy as low as possible.

Obviously, shorts don't first speak with each other in coordinating a pin-attack, but, in stocks where there is a lot of short interest, and there are (were) many, it doesn't take much for certain shorts, whether fund traders or wealthier individual traders to initiate the pin process, and for other shorts to immediately recognize the attack under way, and then pile in.

One important additional component of the pin-the-bid technique is for shorts to first "load up" at as high as price as possible, then use additional funds available to them to then force the stock lower. In other words, these shorts make money off their "higher-priced" short positions, and then make additional money in relentlessly driving the stock lower.

The key to the latter is that once a pin attack is launched, as I said, long-position sellers panic PLUS those who are looking to buy long will lower their bids to ultimately buy long as low as possible. These two resultant "panic plus bottom-fishing" motives by longs snowballs the bid-pin/downward short manipulation process. In effect: the shorts manipulating the bid downward rely on their technique to cause the snowball, thereby the shorts don't have to do much work (or spend much money during the pin) to cause the stock to sink a lot lower than it normally would have.

And, then, of course, once shorts have made enough money, they begin to cover buy and take their profits.