Re: [CANSLIM] Stop losses and DHI

From: Tomas <tomas986@yahoo.com>
Subject: Re: [CANSLIM] Stop losses and DHI
Date: Mon, 9 Jun 2003 10:40:59 -0700 (PDT)
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So, the question is does it happens often enough to
warrent not using stop orders?  I guess this is all
dependent on the investor, if he/she have time to
monitor intraday action and the risk tolerance level.


tomas


- --- michael_niemotka@baxter.com wrote:
> 
> I have also been stopped out in similar instances,
> and I can only assume
> that the specialists see large blocks at certain
> price levels, because I
> cannot believe that they would manipulate the market
> unless it was really
> worth the while.   My $1000 worth of stock would be
> in the noise level if
> considered on its own.
> 
> Mike
> 
> 
> Mike Niemotka , PE
> Sr. Principal Engineer
> Baxter Healthcare Corporation
> Route 120 & Wilson Road
> Round Lake, IL 60073
> Tel (847) 270-4075
> Fax (847) 270-4525
> michael_niemotka@baxter.com
> 
> 
>                                                     
>                                                     
>                   
>                     Ian <ianstm@shaw.ca>            
>                                                     
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>                     Sent by:                     To:
>     canslim@lists.xmission.com                      
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>                     owner-canslim@lists.xm       cc:
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>                     ission.com                  
> Subject:     Re: [CANSLIM] Stop losses and DHI      
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>                     06/09/2003 11:50 AM             
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>                     Please respond to               
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>                     canslim                         
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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 -----
>  From: Jerome Buckmelter
>  To: 'CANSLIM LIST'
>  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.
> 
>  Jerome Buckmelter
> 
> 
> 
> 
> 
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