FLD Short Squeeze Strategies to become stronger and reach targets quicker. This is a repost from brecciaboy over at theminingplay.com. I personally have not done any homework on it, but I thought it worthy to pass on to this board so some of you can do your research on it, as if it is as I read it, once this is in effect as a new rule halting or limiting Short Sellers when a company experiences a 10% loss is scheduled to kick in 1/1/2011.
BTW, I love what you do here and plan to join in on the fun sooner than later.
Re: Medinah Minerals and Cerro Dorado - The Main Discussion
« Reply #9819 on: April 15, 2010, 02:39:43 PM »Quote
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I just finished a chapter in Book #9 that deals with what appears to be happening in Medinah's market today. I call them "pulse-like" attacks. As you might have read due to the lobbyists for the abusive short sellers we no longer have an "Uptick Rule" in the U.S. after 74 years of it operating quite well. This means that abusive short selling market makers can "semi-legally" knock out bid after underlying bid in a serial fashion. Their purpose is to induce selling and dissuade buying. It's also referred to as "shaking the tree" to get the "weak-stemmed" shareholders to panic sell. Unfortunately this is often the older investors unable to risk a total meltdown in their investment. The pattern of the selling gives away the intent as the sellers don't seem to care what they get for their sales. A buyer will be gladly willing to pay a certain price yet the sellers just keep whacking away at bids. Legitimate "long" sellers don't act like this. If somebody puts in a "market sell order" then it's tough to tell what's going on unless the erratic selling is accompanied by an acceleration of the efforts of Internet bashers. If you see that then it's definetely a "pulse-like" attack. The most courageous one I've witnesseed was on "Dendreon" a biotech with a briliant prostate cancer cure. There was an announement on the Internet stating that at 11:30 CST we're attacking "Dendreon". Sure enough the share price went down 70% within minutes.
Part of the psychology is to induce existing shareholders to sell once the share price gets back to a certain pre-attack level. Mentally investors will decide that the next time the share price gets back to "X" level I'm out of here; this was too scary. Fear and geed are the two main emotions associated with investing and fear is much stronger than greed. These attacks are typically accompanied by Internet bashers accelerating their efforts and often stating "I told you it was a scam; next time you'll listen". These attacks can be very effective and they're often executed out of desperation prior to corporate breakthroughs. Let's hope so. These attacks can be a huge blessing in disguise for corporations with access to cash. What I do is have management teams with cash put on a big old catcher's mitt and keep large "stink bids" in at 10-15% below market. On 1/1/2011 a new "alternate uptick rule" with a 10% "circuit breaker" will kick in. What this means is that after a company has lost 10% of its share price on any given day the "uptick rule" will kick in barring any short selling unless it is on an "uptick" or "zero plus tick". This stays in effect for the rest of that day plus the next trading day. From 1/1/2011 management wants to set their "stink bid" at 9.9% below yesterday's closing price. A corporation with access to a fair amount of cash cannot be destroyed. With access to cash the psychology actually changes from being afraid of attacks to welcoming them especially if you're trading at ridiculously cheap share price levels wherein a little bit of cash can allow management to buy back and cancel a lot of shares. Picture a company able to buy back 90% of its shares with only 10% of its assets.
The delivery failures associated with these attacks are mandated to be covered by a "purchase" or a "borrow" by the opening of trading on T+6 if the selling was done by a bona fide MM otherwise it must be closed out by the morning of T+4..
GLTA
AI
