Go to Jeff Salisbury LWGate Home Page.From: "Rob Miller" <rmiller2@carolina.rr.com>
Subject: Re: [CANSLIM] Microcap Question
Date: Tue, 12 Mar 2002 13:24:20 -0500
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Ian,
Thanks for answering my question. I wasn't aware that a market maker =
could ignore the highest bid like that. If I understand you right, a =
market maker can drop the bid to a point where a number of stop orders =
will be executed, allowing him to accumulate shares, despite the =
prevailing bid remaining at the higher price. So if I had the =
prevailing bid, he can force sellers to take a lower price even though I =
was willing to pay a higher price. That sounds unethical as well as =
illegal.
Rob =20
- ----- Original Message -----=20
From: Ian=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, March 12, 2002 1:09 PM
Subject: Re: [CANSLIM] Microcap Question
Often times, you will see that activity in microcaps as the market =
maker takes out stops set at $6.99 and buys some shares. You will =
frequently see it right before a volume surge - they see some volume =
bids coming in, and quickly drop the price in order to accumulate some =
inventory by taking out stop-loss orders.
Last week, I was trying to buy shares in a penny stock (my first in =
years, but all the CANSLIM characteristics save the low price). The =
bid-ask was 0.96 x 0.99. I but in an offer to buy another 6000 shares at =
0.99. I was watching a streamer and noticed that 40000 shares traded at =
or below 0.99, so I assumed that my order was filled. At the end of the =
day the price was 1.10, so I looked at my account and saw that I was NOT =
filled! The moral is that you are subject to some nasty (unethical?) =
trading practices as liquidity and price get low. The stock is at 1.40 =
today, 4 trading days later :(
Ian
----- Original Message -----=20
From: Rob Miller=20
To: canslim@lists.xmission.com=20
Sent: Tuesday, March 12, 2002 7:20 AM
Subject: [CANSLIM] Microcap Question
Tom, I'm hoping you can answer this question for me since microcaps =
are your main interest. I've not dealt with them much in the past. =
I've been following a few microcaps (<$80 million market cap) and I'm =
confused about the movements in the bid/ask prices. Assume the spread =
is 7 X 7.15 with most trades, small lots, split evenly between those =
hitting the bid and those taking the ask. However, the action is slow. =
Then, the bid suddenly drops to 6.90, 6.85, 6.80, 6.75. Several trades =
go off at 6.75 over just a few seconds, then the bid jumps back up to =
7.00, at which point the trading becomes slow again. The ask never =
changes. In some cases, trades go off below the bid price. =20
I can understand when someone withdraws their bid causing the bid to =
drop, but it seems strange that several trades go off at what appears to =
be far below the prevailing market price. No trades, bid drops for a =
few seconds, a few quick trades, then bid goes back up. What causes =
this? It seems to scripted to be accidental. =20
Thanks,
Rob=20
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<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial size=3D2>Ian,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Thanks for answering my question. =
I wasn't=20
aware that a market maker could ignore the highest bid like that. =
If I=20
understand you right, a market maker can drop the bid to a point where a =
number=20
of stop orders will be executed, allowing him to accumulate shares, =
despite the=20
prevailing bid remaining at the higher price. So if =
I had the=20
prevailing bid, he can force sellers to take a lower price even though I =
was=20
willing to pay a higher price. That sounds unethical as well as=20
illegal.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Rob =
</FONT></DIV>
<DIV> </DIV>
<DIV>----- Original Message ----- </DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dianstm@shaw.ca href=3D"mailto:ianstm@shaw.ca">Ian</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Tuesday, March 12, 2002 =
1:09=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Microcap =
Question</DIV>
<DIV><BR></DIV>
<DIV><FONT size=3D2>Often times, you will see that activity in =
microcaps as the=20
market maker takes out stops set at $6.99 and buys some shares. You =
will=20
frequently see it right before a volume surge - they see some volume =
bids=20
coming in, and quickly drop the price in order to accumulate some =
inventory by=20
taking out stop-loss orders.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Last week, I was trying to buy shares in a penny =
stock (my=20
first in years, but all the CANSLIM characteristics save the low =
price). The=20
bid-ask was 0.96 x 0.99. I but in an offer to buy another 6000 shares =
at 0.99.=20
I was watching a streamer and noticed that 40000 shares traded at or =
below=20
0.99, so I assumed that my order was filled. At the end of the day the =
price=20
was 1.10, so I looked at my account and saw that I was NOT filled! The =
moral=20
is that you are subject to some nasty (unethical?) trading practices =
as=20
liquidity and price get low. The stock is at 1.40 today, 4 trading =
days later=20
:(</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3D2>Ian</FONT></DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Drmiller2@carolina.rr.com =
href=3D"mailto:rmiller2@carolina.rr.com">Rob=20
Miller</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Tuesday, March 12, 2002 =
7:20=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Microcap=20
Question</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>Tom, I'm hoping you can answer this =
question=20
for me since microcaps are your main interest. I've not dealt =
with=20
them much in the past. I've been following a few microcaps =
(<$80=20
million market cap) and I'm confused about the movements in the =
bid/ask=20
prices. Assume the spread is 7 X 7.15 with most trades, =
small=20
lots, split evenly between those hitting the bid and those taking =
the=20
ask. However, the action is slow. Then, the bid suddenly =
drops=20
to 6.90, 6.85, 6.80, 6.75. Several trades go off at 6.75 over =
just a=20
few seconds, then the bid jumps back up to 7.00, at which point the =
trading=20
becomes slow again. The ask never changes. In some =
cases, trades=20
go off below the bid price. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I can understand when someone =
withdraws their=20
bid causing the bid to drop, but it seems strange that several =
trades go=20
off at what appears to be far below the prevailing market=20
price. No trades, bid drops for a few seconds, a few =
quick=20
trades, then bid goes back up. What causes this? It =
seems=20
to scripted to be accidental. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Thanks,</FONT></DIV>
<DIV><FONT face=3DArial=20
size=3D2>Rob</FONT> </DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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Previous Article (by Date): Re: UOPX (was: [CANSLIM] VectorVest fundies) "Patrick Wahl"
Top of Thread: Re: [CANSLIM] Microcap Question Ian
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