Wednesday, October 27, 2010 1:15:36 AM
As outlined in another post, the use of a loophole by the MMs allows them to essentially create shares out of thin air. MMs don't have to account for bought shares until a couple days later, and if they short a stock its nakedness isn't revealed until 2 weeks later. Today's volume was in part an aniticipation that the buy/sell would balance out near 1 to 1 in a couple days and no one would know any better. Right now, the true buy to sell is 2 to 1 if you take out short selling.
Most of the time this gamble of theirs works because traders/flippers are quite happy to quickly return what they never really had to begin with. But that would change significantly if traders/flippers shifted their mindset from a 1 day mode to a 2 week mode.(I think this mindset change would work especially well with these cellar stocks since shorting is the most profitable game for MMs here.) If enough people can cultivate some patience and buy back in after a couple good flip sessions, those "locked" buys would force the PPS up substantially. The MMs would be forced to raise the bid in order to get a selling dump to balance the buys in the short term. At the end of two weeks the bid would have to be raised even more to entice people to drop shares so their shorts would be covered. If we all adhered to .02 sell order, it would burn the MMs quite badly. But in reality most would be happy with a .001 return for a 2 week wait. You have to be very adept at finding stocks that you could turn over enough for a 1000% return in two weeks.
IMO
Best to all
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