Monday, October 29, 2007 3:51:42 PM
Yes, it is really important people realize buying at the ones is not typically a good sign. If in the past it was done on other stocks it was probably because the MMs had spent so much time in the cellar with the stock they eventually starting filling at 1 as well because they didn't feel any fear it would break 2 because then they could really pig out and sell at both 2 and 1.
That could only happen on a pink sheet if they didn't fear being busted for not settling their trades which has been done on stocks that went bankrupt and were delisted in which case they got away with it. But with a tighter regulatory MMs may not want to fill on the 1s that much again even if it is an unsolicited pink. So if it has happened before on other stock it may be less likely in today's environment.
The main math at play here is whether or not people want to risk buying at 2 in large enough quantities to absorb the float which requires billions of shares purchased, at least half a million dollars spent. If somebody wants to do that, then have fun, but this will still have to have a bid support of 3 to make that work profitably even and a 3 bid is three times the current bid so the math is still very hard to overcome in the cellar.
And if the current MMs on the Ask are handling dilution shares for sale those shares were possibly sold for less than 0.0001 because dilution during the past month would not have gotten more for the shares. If somebody got them for half that from the company, say 1B shares at 0.00005, then selling at 0.0002 is a quadruple. You'd have to eat through those shares plus any for sale from retailers.
If you can increase today's volume by four fold and do that for a week or two you might start to see the Ask break down and the bid rise, but that is probably what it will take under current circumstances.
That could only happen on a pink sheet if they didn't fear being busted for not settling their trades which has been done on stocks that went bankrupt and were delisted in which case they got away with it. But with a tighter regulatory MMs may not want to fill on the 1s that much again even if it is an unsolicited pink. So if it has happened before on other stock it may be less likely in today's environment.
The main math at play here is whether or not people want to risk buying at 2 in large enough quantities to absorb the float which requires billions of shares purchased, at least half a million dollars spent. If somebody wants to do that, then have fun, but this will still have to have a bid support of 3 to make that work profitably even and a 3 bid is three times the current bid so the math is still very hard to overcome in the cellar.
And if the current MMs on the Ask are handling dilution shares for sale those shares were possibly sold for less than 0.0001 because dilution during the past month would not have gotten more for the shares. If somebody got them for half that from the company, say 1B shares at 0.00005, then selling at 0.0002 is a quadruple. You'd have to eat through those shares plus any for sale from retailers.
If you can increase today's volume by four fold and do that for a week or two you might start to see the Ask break down and the bid rise, but that is probably what it will take under current circumstances.
