Replies to post #260553 on Monk's Den

[timmyjames]

pretty much...usually, they can induce that panic selling, and they just cover the NSS at a much lower price, settle their books, and make some $


but if people actually buy, buy, buy, the MMs cannot get the shares they need to cover, and instead end up having more of a short position, instead of covering it


that is my understanding at least

[Ex Blockman]

Good Morning Ryanmnly and Den,

In regards to your post, you stated it perfectly. No matter where the MMs set the PPS on a Den's lockdown play, they are still short. As to the recent declines we've seen over the last 8-12 weeks, I would add that there wasn't just a concerted effort by the MMs to walk down CDIV, EIGH, PNTV, and GRNO. They were also assisted by some profits takers which is normal. They were, in fact though, enormously assisted by a few here in the Den that chose to leave the team effort in a self centered flipping practice that very much assisted the declines and helping other investors play directly into the hands of the MMs who are in a very precarious NSS position. Unfortunately, this selling within the Den team, brought the advances to a halt when a few million shares came to market just as in the case of CDIV when we were close to a squeeze. As the true team members were adding aggressively, the flippers were bid whacking us. Eventually the supply surpassed the demand and the price advance began to reverse. As the buying dried up, the PPS fell and eventually those that became impatient sold further assisting the MMs and the decline. Eventually the nervous investors also decided which typically happens at a bottom, or as is also referred to capitulation.

It's extremely important to understand that those who understand the concept simply hold their shares during these declines whether the declines are orchestrated solely by the MMs or given a huge boost by our internal flippers. As frustrating as it is to see once trusted Den members flipping for their own while stabbing the real longs in the back, there is nothing that can be done about it. Let's just call greed what it is. It certainly can not be viewed as a team effort when the rest hold long for each other. But for those that have ridden the four Monk calls down during the last 2-3 months, GRNO would be a very good example of what will happen again to all the calls. Up 100% over the last three days just after most all of the whiners, crybabies, impatient and nervous sold. GRNO's boost has obviously given a boost to the other calls as witnessed on Friday.

People! Hold you shares, add when you can, focus on what Monk and some strong Den leaders say, don't worry about the past few weeks and the flippers actions who helped put us into a prolonged decline, and keep an eye on the Big Picture. No matter where they set the price, they are still short if we don't have a mass exit. All the flippers did was prolong the inevitable. If you didn't sell, you're still very much in the game!

Have a great weekend!

[iheartmoney]

Volume speaks volumes. All one needs to look at is the volume over the last 12+ months and what you said is spot on

[Ninja7]

Hey Ryan, you already got some great responses to the questions about the finra numbers (I think ExB's response kind of sums up all the important stuff).

I think you either believe in the FLD concept or you don't, and I believe in it. Unfortunately, the finra numbers are never really going to tell you anything useful about what is going on. For one, naked shorts will often not show up in the numbers. Market makers have many ways to hide what they are doing and manipulate the finra numbers. Clearing outside of the DTCC is one example. Another is the fact that where and how a share is counted in the numbers varies. For example, both buys and sells can show up as shorts in the count depending on where they are counted.

Consider someone selling a share through their broker, there are two legs to the transaction, the MM selling the shares into the market and the MM taking ownership of the shares from the broker. There is also a third case in which the MM just buys the shares from the broker to complete the sale and holds them (MM's can take both short and long positions in a pinkie stock and often do). In this sell case, if the leg of the sell transaction from MM to eventual buyer is counted, the sell will (somewhat surprisingly) appear as a short. If the buy from the broker to MM leg (or the buy to hold by the MM) is counter, the sale will not appear as short. Only one leg of the transaction will appear in the daily numbers.

Buy transactions are equally confusing as they also have two legs. The leg from the market to MM and the leg from MM to broker. If the leg from market to MM is counted, the buy not will show up as short (as the MM bought shares). If the leg from MM to broker is counter, it will show up as short (as the MM sold shares to the broker). There is also a third case in which the MM sells its own inventory to complete the buy (which will probably not show up as short) and a fourth case in which the MM sells shares it doesn't have (naked shorts) to complete the sale. This last case is what makes the FLD possible (and also why MM's are legally allowed to naked short to make a market).

In other words, the daily numbers really tell you nothing useful (longer trends can be a bit interesting but are often still very misleading). This is also without even considering clearing transactions outside the DTCC (often used to hide naked shorts from the FTD numbers).

As I said, you either agree with the FLD concept and act on it or you don't. The finra numbers unfortunately won't necessarily give you much assurance whether it is working or not.

Hope this helps more than causes additional confusion.