Yes and the sell offs happening at EOD are exactly what happens when they are trying to get out but not be noticed they wait until end of day.Saw samw recently in the run that BMS- had from the 0002 area and also on VND- and STK- believ me it happens!An inexperience person thinks~oh more dilution~Nope only the opposite.The huge short positions are getting out and in doing so they try and create what appears to be dilution so only to breed uncertainty and fear before the huge run.There is an article call "The False Stock Drop" by Karl Kamen~Look it up and read it!It explains what the MM's do before a huge run.>>The False Stock Drop. Don’t Be Fooled!Posted by Karl Kamen on 05-10-2010
Category : Investing for Beginners, Stock Help, Stock Market, Stock Research, Stock Tips, Stocks
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If you want to make it big, especially if you are trading penny stocks, you have to understand some of the tactics used to create false selling signals. Often times MM’s (Market Makers) will place trades to bring down the price of a stock to try and create a false sense of urgency to traders that the stock is dipping and that they should get out. In all reality the stock is strong and this usually happens before a big surge.
There are many reasons MM’s do this. One reason is because the float might be thin and they are wanting to pick up more shares quickly. Another reason they do this is the more obvious reason and that is to bring down the price, causing people to sell, then turning around and buying up more shares at the lower price. Look at this chart to see a classic example of a dip before a big gain.
As you can see there was a steady gain and MM’s anticipated a large surge, therefore selling small blocks of shares to lower the price. Also note that the volume during this time was very low. It is obvious by this that the stock is undervalued and people were holding onto their shares even though the price was dropping.
If you have been following a stock and notice a steady price increase, volume increase, and then see a drop you might be experiencing a false stock drop so that MM’s can buy more shares before a surge. Be patient and aware. Take note of any news releases that could be lowering the stock or other reasons, but chances are, a lot of times this is why a stock will drop right before a big gain.
Good luck out there and thank you for reading! Please share on twitter and Facebook. Please leave comments too! I love hearing your success stories and comments
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