Re: [CANSLIM] Stop losses and DHI

From: michael_niemotka@baxter.com
Subject: Re: [CANSLIM] Stop losses and DHI
Date: Mon, 9 Jun 2003 12:26:07 -0500

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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>
Sent by: To: canslim@lists.xmission.com
owner-canslim@lists.xm cc:
ission.com Subject: Re: [CANSLIM] Stop losses and DHI

06/09/2003 11:50 AM
Please respond to
canslim

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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