This is from a former MM who posts over on RB OMOG board. Pretty interesting about NSS.
Sorry about the delay in getting a “Sunday Morning” post up. Actually I have been recuperating from a long night of too much Tequila. Only just got on the board about an hour ago and have been reviewing the posts since yesterday morning.
Not much new to add that hasn’t already been discussed re. OMOG specifically. As I said in my post yesterday, we seem to be seeing a continuance of the pattern to “slam on any announcement” that has been going on in this stock for quite some time. Percentage wise, so far, it is not much different than it was on prior announcements. Perhaps it may be a bit more violent this time, due to a lot of clueless “newbies” that came here by way of those several “hot stock” websites that invariably catch “momentum” plays after they have already gone up a few hundred percent. As I mentioned yesterday, I think we may have another day, possibly two, of attempted slamming, but while it might be nice to be able to have it down another 20 or 30% to accumulate more, at those levels, with the fact that in just the past three weeks we have turned over 770 million shares, or almost 100% of the total outstanding, above a penny, I don’t see it very likely to decline much more on this move. The last leg up saw the stock go from around .015 to .037. Normal T/A would suggest, on that violent a move up, a 50% retracement of that move could be expected. So that would put us right at .026.
Now normally, one would expect that type of pattern to happen over a longer period of time. Not two days like we have seen here, so perhaps a little extra downside momentum due to the violence of the move, might be expected. But also, it could bode well for a more rapid move back up from the correction as well.
Since, as I mentioned above, there is not much to add specifically about OMOG, let me touch on two other areas that have come up on the board in the past two days.
Re. AMTX, IMO, mouse has it just about right with his moneyflow comparisons. But let me bring up an observation that shows a major distinction between the way the two stock have been trading in the past few months.
If you notice, AMTX has only recently started trading. And you will also notice that its stock actually did go up on recent PR’s. My assessment as to the difference in trading patterns has to do with the timing of the building of a short position in both stocks. Re. AMTX, since it was just a dormant shell as recently as six months ago, I doubt there was any short at that time. As the stock started moving up, I would think some MM shorting was starting to appear. Then when the PR’s and spams started hitting, most MM’s and some of their hedge fund buddies took them for what they appear to be, insignificant and heavy with hyperbole. So, since there was not much of a short in place at the time, the MM’s/Hedgies, probably shorted a little, but pretty much “got out of the way” or maybe even helped the move up, letting the “mullets” who were buying it on this “pissant” news and spams get “all excited” and “run it up”. After all, when one shorts a new stock, the object is to start getting aggressive at as high a price as possible. So I am sure that they were just “smacking their lips” as it ran past .75 and still had good volume in it. Probably around the .80 level they started getting a little more aggressive on the shorting, just in case it might start dropping. But once it passed the dollar level, just one day later, and did it on heavy volume, you can bet they “loaded their boat” on the short side. Then, I am sure after they got short a couple of million or more that morning, an number of them got together and decided it was time to slam it.
How did they “slam it”? Pretty easy in the pinks. They just started banging bids “showing” with 100,000 share sell orders, and pretty much ignored the buy orders that were coming in. Which took it down 50% that afternoon, to close at .051. The next morning, they started it down just before the opening. Now I must admit, I don’t normally short term trade any stock, but just for the hell of it, and expecting some type of “dead cat bounce”, I actually did decide to try a day trade of 10,000 shares, as I disclosed to some of my friends, several who post here can confirm this. So through Ameritrade, I put in a 10k limit at .46. The stock was tanking fast. The next thing I know it was already down to .44 on the offer and I had not been filled. So I cancelled and re-entered at .41. It still was dropping past my limit and I canceled and re-entered at .39. Still no fill, and now it was offered at .037 and slowing down some on the drop. So I canceled again and re-entered at .37. All the time amazed that they were ignoring my buy orders and letting me cancel and re-enter at lower prices. The decline finally stopped at .35 bid, .36 offered. A lot of stock hit the .35, and to my further amazement, I actually did get a fill at .36 on my .37 limit buy. Shortly after that it turned around and at first slowly and then accelerated to the upside to close the day up at .55. The next morning it opened strong and I ended up selling my stock at .67. I suspect that all of the MM’s/Hedgies that probably shorted it with an average above .90, got pretty much covered at an average below .50 and after the bounce, they have probably started re-loading their short again.
PART 2:
So you see the difference between OMOG and AMTX is that OMOG has had its short for a very long time, IMO anticipating the 504 that never came. So they could not afford to let it go up without a battle. That is why it always gets hit on news. Whereas AMTX didn’t have a short until recently, so the shorts wanted it to get as high as possible before they got serious about the short, and not only let it go up on news, but probably even helped it a bit.
Just a further comment about the OMOG short that IMO is in place and very large, considerably more than what the baron thinks. I know that “conventional wisdom” is that shorts “never have to cover and can and will hold a stock down forever” unless enough certs are pulled to exceed what is in DTC. Don’t bet on it alone. It is certainly possible to “fundamental” a short to “ease up on the offers” and let the stock rise. In an active stock, a short CANNOT dodge forever, without ultimately having to risk getting “bought in”. Five or six months, maybe, but a year? Very unlikely. Plus, there comes a point in time that they buying is overwhelming their ability to hold it back. IMO, that is what we have seen happen in the past few weeks. One of the ways a short can extend the inevitable is by effectively swapping the short back and forth between multiple accounts. “B” will short to “A” and “A” will short back to “B” a few days later. That pretty much starts their holding period over.
One other area to touch on regarding the “DTC lawsuit” that was mentioned here yesterday. As some of you may know, there has been a major lawsuit, independent of the Nano one. It is the major suite that has been mentioned on this board that O’Quinn & Pirtle have been leading the charge on, suing not only DTC, but some 75 brokerage firms.
A couple of weeks ago, I got a call from one of the large shareholders of Jag Media JAGH, one of the several dozen plaintiffs in that case, as to all the problems they were having with their stock due to naked shorts. I have been following that situation with almost amusement for the past few years that their fight has been going on. Not amusement as to the “illegality” of naked short selling. No question, it is illegal. But to the amusement of the other tactics JAGH, WHIS, and most of the other plaintiffs have tried to use to “force the shorts to cover”. Everything from taking the stock out of DTC and go certificate trading only, to attaching a restricted stock dividend to actually suing the brokerage firms. I had an initial discussion with that JAGH shareholder, after which he asked me if I would do a Conference Call with several other large holders of that stock. I explained to them that there was only two ways to force a short to ultimately cover. Either rapidly grow the fundamentals, or pull ALL of the certs in DTC.
Now the immediate comment I got from them was that they were “pulling all the certs in DTC”, one way by the company putting out a PR to shareholders pull certs. (As I told them that will never happen as most shareholders who use on-line trading don’t like losing the ability to sell their shares, even for the short while it takes to get the shares back into an account.) The other way by “Taking the stock out of DTC”. They couldn’t understand why the stock really got slammed when they came up with that “good idea”. I explained to them that it didn’t surprise me. The shorts probably LTAO on that one, because for one, 98% of brokerage firms that hold stock for IRA and other retirement accounts cannot hold a stock that is not in DTC, so they would have to immediately liquidate the shares.
But here was something that I learned from them that caught me by surprise. The brokerage firms that they were suing, “restricted” each of the company’s stock that was suing them to “liquidating orders only”! The brokerage firms have a legal right to do this, but can you imagine. All of the shareholders that might “love” the stock, now cannot even average down and give some support to the stock. A real disaster that I haven’t a clue how any of these companies are going to get out of.
So, don’t expect to see any public announcements silliness like lawsuits, of pulling stock or taking the company out of DTC here. IMO, we will just “fundamental” them to oblivion, and if they want to keep trying to fight that, so be it. We will just keep getting more cheap shares.
BTW, a couple of the JAGH shareholders I spoke with on the CC, started buying OMOG in the .015 level and are still buying now.
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