Go to Jeff Salisbury LWGate Home Page.From: Ian <ianstm@shaw.ca>
Subject: Re: [CANSLIM] Stop losses and DHI
Date: Mon, 09 Jun 2003 09:50:00 -0700
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Hi Jerome:
I think that your specific DHI example is just plain bad data.
As far as the market manipulation that you describe - it occurs =
regularly, although on a smaller scale, and with relatively illiquid =
stocks. I have never seen low-volume, stop-triggering moves from $28 to =
$20, but I have seen them from $8 to $6.50 and from $46 to $44 and from =
$14 to $12 etc... In these cases, it seems the market-maker or =
specialist is content to allow a market sell order to be filled at a =
fairly large gap, which in trun triggers stops, triggering more market =
sells, exacerbating the price gap.
Extreme swings on low volume are not meant to happen, as the mm or =
specialist is obligated to keep an "orderly market". Although, it seems =
to me that "order" is in the eye of the beholder in many cases.
At least 5 times in my life, I have had hard buy stops triggered (on =
stocks that I was short) at the highest tick of the day, at a price =
$0.50 - $1.00 higher than than the range where the shares traded almost =
all day. In all cases, it appeared to me that my particular stop was =
targeted and run ... although the market definitely is a fertile ground =
for breeding paranoia :)
Cheers,
Ian
----- Original Message -----=20
From: Jerome Buckmelter=20
To: 'CANSLIM LIST'=20
Sent: Sunday, June 08, 2003 9:12 AM
Subject: [CANSLIM] Stop losses and DHI
WON does not like stop losses, but says for those who cannot watch =
their stocks, it's okay. But is it? What are the real pitfalls with =
stop losses? I am concerned with what happened to DHI on Thursday. =
According to DGO, DHI plummeted from 28.58 to 20.22, about $9 or 41%, in =
about one minute apparently, then rebounded just as fast. I would think =
that everyone with a stop loss order between $28.58 and $20.22 got =
shaken out. How can this happen? Could some traders have conspired to =
sell a few stocks, i.e. place an ask, at an extremely low price just to =
convert the stop losses to market orders, and then swoop in to pick up =
the stock for cheap? Using DHI as an example, could a trader offer to =
sell one share at $20.22, sell that share, and immediately follow up =
with market order for 10,000 shares, which in turn would be purchased =
from anywhere between 20.22 and $28.58? Is this how the market works? =
Or is there some safe guards preventing this? How else could the sudden =
and dramatic price plunge have occurred with DHI? Thanks in advance for =
the education in this matter.=20
=20
Jerome Buckmelter =20
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<DIV><FONT size=2>Hi Jerome:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I think that your specific DHI example is just plain bad
data.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>As far as the market manipulation that you describe - it
occurs regularly, although on a smaller scale, and with relatively illiquid
stocks. I have never seen low-volume, stop-triggering moves from $28 to $20, but
I have seen them from $8 to $6.50 and from $46 to $44 and from $14 to $12 etc...
In these cases, it seems the market-maker or specialist is content to allow a
market sell order to be filled at a fairly large gap, which in trun triggers
stops, triggering more market sells, exacerbating the price
gap.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Extreme swings on low volume are not meant to happen, as the
mm or specialist is obligated to keep an "orderly market". Although, it seems to
me that "order" is in the eye of the beholder in many cases.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>At least 5 times in my life, I have had hard buy stops
triggered (on stocks that I was short) at the highest tick of the day, at a
price $0.50 - $1.00 higher than than the range where the shares traded almost
all day. In all cases, it appeared to me that my particular stop was targeted
and run ... although the market definitely is a fertile ground for breeding
paranoia :)</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Cheers,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Ian</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:jsjbuck@myexcel.com" title=jsjbuck@myexcel.com>Jerome
Buckmelter</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:canslim@lists.xmission.com"
title=canslim@lists.xmission.com>'CANSLIM LIST'</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Sunday, June 08, 2003 9:12 AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Stop losses and
DHI</DIV>
<DIV><BR></DIV>
<DIV class=Section1>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-FAMILY: Arial; FONT-SIZE: 10pt">WON does not like stop losses, but
says for those who cannot watch their stocks, <SPAN class=GramE>it’s</SPAN>
okay.<SPAN style="mso-spacerun: yes"> </SPAN>But is it?<SPAN
style="mso-spacerun: yes"> </SPAN>What are the real pitfalls with stop
losses? I am concerned with what happened to DHI on Thursday.<SPAN
style="mso-spacerun: yes"> </SPAN>According to DGO, DHI plummeted from
28.58 to 20.22, about $9 or 41%, in about one minute apparently, <SPAN
class=GramE>then</SPAN> rebounded just as fast.<SPAN
style="mso-spacerun: yes"> </SPAN>I would think that everyone with a
stop loss order between $28.58 and $20.22 got shaken out.<SPAN
style="mso-spacerun: yes"> </SPAN>How can this happen?<SPAN
style="mso-spacerun: yes"> </SPAN>Could some traders have conspired to
sell a few stocks, i.e. place an ask, at an extremely low price just to
convert the stop losses to market orders, and then swoop in to pick up the
stock for cheap? <SPAN style="mso-spacerun: yes"> </SPAN>Using DHI as an
example, could a trader offer to sell one share at $20.22, sell that share,
and immediately follow up with market order for 10,000 shares, which in turn
would be purchased from anywhere between 20.22 and $28.58?<SPAN
style="mso-spacerun: yes"> </SPAN>Is this how the market works?<SPAN
style="mso-spacerun: yes"> </SPAN>Or is there some safe guards
preventing this?<SPAN style="mso-spacerun: yes"> </SPAN>How else could
the sudden and dramatic price plunge have occurred with DHI?<SPAN
style="mso-spacerun: yes"> </SPAN>Thanks in advance for the education in
this matter. <o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-FAMILY: Arial; FONT-SIZE: 10pt"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-FAMILY: Arial; FONT-SIZE: 10pt">Jerome Buckmelter<SPAN
style="mso-spacerun: yes"> </SPAN><SPAN
style="mso-spacerun: yes"> </SPAN><SPAN
style="mso-spacerun: yes"> </SPAN><SPAN
style="mso-spacerun: yes"> </SPAN><o:p></o:p></SPAN></FONT></P></DIV></BLOCKQUOTE></BODY></HTML>
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Next Article (by Subject): Re: [CANSLIM] VRNT Chazmoore@aol.com
Previous Article (by Subject): RE: [CANSLIM] Stop losses and DHI "Katherine Malm"
Top of Thread: [CANSLIM] Stop losses and DHI "Jerome Buckmelter"
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