CMKM Diamonds Inc. (fka CMKX)

[Ignutz]

Can you say SHORT SQUEEZE and really mean it?

http://ragingbull.lycos.com/mboard/boards.cgi?board=CLB01219&read=133028

**CMKX - Volume Madness**


What I am about to post might be able to be destroyed very easily by someone who knows more than myself. I'm gonna take a stab at it, though. The volume in CMKX has experienced huge surges at random times in the past. Just last week we had a day with volume in the 35 billion range. We only have access to the last two months of trading for CMKX so that is all I can base this on. Here are some numbers...


(Cluster 1)
2004-12-16 8,855,262,613
2004-12-15 6,412,790,643
2004-12-16 8,855,262,613
2004-12-15 6,412,790,643
2004-12-10 13,118,500,699
2004-12-09 39,651,063,181


(Cluster 2)
2004-10-19 12,097,133,652
2004-10-18 13,098,033,776
2004-10-15 16,119,767,711
2004-10-14 14,770,182,549
2004-10-13 17,605,571,590
2004-10-12 12,198,049,570
2004-10-06 14,838,183,007
2004-10-05 16,615,152,695


There are a many days in between, also, which had higher volume days. Now, we know that there is a lot of manipulation in the penny market and there are rules which are supposed to be followed, but the manipulation is so widespread and the enforcement of rules has been very minimal in the past. We know that CMKX has a great lawyer, Roger Glenn, and it's highly likely that CMKX is being watched more than the typical penny stock. CMKX is most likely on the radar screens of the regulatory agencies. So, why is this significant. Here's what I am speculating on. This is from the NASD website...

"On May 20, 2004, NASD, through its subsidiary, The Nasdaq Stock Market, Inc. (NASDAQ), filed for immediate effectiveness with the Securities and Exchange Commission (SEC) proposed interpretive material to Rule 6130 clarifying that, as currently required by the text of Rule 6130 (Trade Report Input), a "short sale" or "short sale exempt" indicator, as applicable, is required in all short-sale transactions reported to the Automated Confirmation Transaction Service (ACT), including transactions in: (1) NASDAQ National Market (NNM) securities; (2) NASDAQ SmallCap Market (SmallCap) securities; (3) over-the-counter (OTC) transactions in exchange-listed securities; (4) OTC Bulletin Board; and (5) OTC equity securities.1 New IM-6130 is set forth in Attachment A. Because of confusion that may have existed in the marketplace regarding the application of these requirements, NASD and NASDAQ are providing members additional time to re-program their systems, if necessary, to comply with the clarification. Accordingly, the operative date of these requirements is July 26, 2004."
2004"http://nasd.complinet.com/nasd/display/display.html?rbid=1189&record_id=1159001370&highlight....


My guess is that CMKX would be included in (3) or (5) in the passage above. If you check out other rules on the NASD site it specifically mentions that these rules apply to the "Nasdaq National Market" only, but here it lists other markets. This would mean that, theoretically, the short position on CMKX would need to be reported. It wouldn't surprise me that with a majority of penny stocks this is insignificant, but since CMKX is being watched this could carry some weight. It is in many of our opinions that Roger Glenn created a situation by which it would become known what the o/s really is through dividends. Roger Glenn made it very clear to the regulatory agencies, etc. (SEC, NASD, DTC) what was really taking place with regard to the CMKX share structure.

Now look at this...

"3210. Securities "Failed to Receive" and "Failed to Deliver"

(a) No member, or person associated with a member, shall sell a security for his own account, or buy a security as a broker for a customer (except exempt securities), if,
(1) in respect to domestic securities, he has a fail to deliver in that security 60 days old or older; or
(2) in respect to foreign securities, he has a fail to deliver in that security 90 days old or older (except American Depositary Receipt and Canadian securities, which shall be subject to the provisions of subparagraph (1))."

http://nasd.complinet.com/nasd/display/display.html?rbid=1189&record_id=1159000611&highlight....


The key phrases above are the following: (a) and (1)

This, basically, says that no member can trade a particular security if it has a fail to deliver in that security for 60 days or longer. Now let's go back to the volume above. There were two clusters of surging volume. If you notice the time period that elapsed between the two periods was roughly 45-60 days. So, here's my theory. Could it be that since the market makers are being watched much more closely than the typical penny stock, that they are being very strict in following the rules listed above?

The rules above say that a short position must be covered in 60 days, and since we have experienced a huge surge of volume roughly 60 days apart it could apply here. The rule doesn't say that the short position needs to be covered by real, legitimate shares. It just says that the shares need to be covered. Now, how would the market makers cover their shares without real shares? Here's how: market maker 1 buys naked shorts from market maker 2 to cover his old shorts, and then market maker 1 sells new naked shorts back to market maker 2. In the end market maker 1 and 2 net the same amount of shorted shares, but market maker 1 has updated naked shorts. Thus, the 60 day time frame starts over. Now if they keep doing this they could, theoretically, naked short forever.

Regulation SHO is going to change this, however, because now for any new naked shorts they create on a threshold stock they will have to cover it with a real, legitimate share, instead of covering it with a naked shorted share from another market maker.

My question for someone who knows a lot more than I do: could this situation be taking place with CMKX? Perhaps, I have referenced the wrong rules from the wrong agency or maybe not, but this seems to be what is taking place in roughly 60 day intervals. If this proves to be true then we may now have an idea of what the real naked short position consists of. Just take a rough count of how many shares were traded in each huge volume spike.

From up above:

Naked Short Position (Roughly)

Cluster 1: 83 billion
Clsuter 2: 117 billion

Don't forget there are a lot of days in between with significant volume which could, also, be added into the mix. We can look at these numbers in several ways. From Cluster 2 to Cluster 1 the MMs may have covered some shares, however, if you look on other days there are, also, boatloads of shares being traded. This is a continuous process that the market makers do so no trading day can really be left out. The best way to figure the numbers out would be to take a snapshot of several periods of 60 days and work with them. The only numbers available are on Stockwatch so I will work with that. If anyone has the volume beyond the past 64 or so days let me know so I can work with them. Here's is what I came up with and it's gonna get a little crazy, so you may want to just look at the final outcome...

(Math People Only)
____________________________________________________
Since, I only have 64 days available to work with I broke it up into trading periods of 20 days each. This is 1/3 of 60 days (which is the covering period). This will throw the number off significantly, but it should be reasonable within 25-50 billion, IMO. I added up every period of 20 days and multiplied each by 3 to adapt it to the 60 day interval [SUM(Day 1..Day 20), SUM(Day 2..Day 21), SUM(Day 3..Day 22),...].

Real Total Volume from 9/20/2004 - 12/17/2004: 353,604,013,090
Average Volume from 9/20/2004 - 12/17/2004: 5,525,062,705

Average of 45 trading intervals: 334,537,649,039
This means the average of all the trades taken in 45 intervals of 20 days each

Next, I took each one 20 day interval and subtracted another 20 day interval that came 20 days earlier (I honestly can't explain this well in a post). I then took the average of all the new numbers that I got...

Final average: 300,264,028,799

What this means is that very roughly 300 billion shares are being circulated in every interval of 60 days. Now, mess around with this number a little. Let's say 30 billion are real buys and sells from shareholders or former shareholders...

300,264,028,799 - 30 billion = 270,264,028,799

Now, figure that if MMs are churning shares that for every churn it takes 2 trades, so divide the number by 2...

270,264,028,799 / 2 = 135,132,014,399


Let, put in a margin of error of +- 30 billion. This means the market makers are churning in the range of the following number of shares...

105,132,014,399 - 165,132,014,399
_________________________________________________

(For everybody)

Naked Short Position based on Calculations: 105,132,014,399 - 165,132,014,399 shares of CMKX
Possible Real Naked Short from Clusters 1,2: 87 - 103 billion shares of CMKX

I now believe that when Urban stated there were a trillion naked shorted shares (if he did) he was basically implying that there was a huge amount of shares. IMO, the naked short position above is a huge amount of shares. Also, don't forget that the "big money" hasn't come into CMKX, yet, since it is an unreporting pink sheet stock, but soon enough it will be reporting and the money will be coming in.


Conclusion: The market makers have a huge amount of shares to cover. In order for them to cover the number above at .0002 they would have to dish out $21 - 33 million. At .01 they would have to pay $1 - $1.5 billion. Could you see now why the market makers are keeping the share price of CMKX in the cellar (.0001 - .0002)? Can you see that the more time the market makers have the better chance of them getting back their shares (if nothing happens with CMKX)? Could you see now why the market makers spiked the price and then dropped it, again? They needed funds to later cover CMKX shares as cheap as they could get them. Can you, also, see how much money the market makers would have made if CMKX went into the ground? Consider that they were shorting it way back when it was in the penny range. Can you see how the market makers are working together to try and save each other? Can you see how the O/S of CMKX is going to be quite reasonable and surprising?

Can you say SHORT SQUEEZE and really mean it? By the way, where have all the bashers gone to?

Bash this if you want, but somewhere I think there is some validity to all this!!! Your opinions?


:O)

-Pat-