Seen it so many times on so many good stories of late...of course I am talking about the likelihood for manipulation designed to get your stock.
Typically they...
1. Throw in a large sell order right from the start of pre-open...this makes the market think twice about placing any buy orders early, thereby limiting pre-open bid buildup.
2. Add a few more every half hour or so...mostly smaller sell orders below the larger capping order, but at least one more larger sell bid can be expected to appear during the pre-open period and perhaps more if the sting is having the desired results of flushing out other sellers early.
3. Pull a few of the buy orders, either the ones left over from the last session, or simply take back some of those bids placed this morning.
4. Generate a negative smear campaign...the forums are a good place to start, the media might also be engaged for the bigger plays. Need to create doubt in the markets mind...at least enough that the punters hold off buying until they see which way it might go.
If management are involved, or what to see temporaries out of the stock, they may decide to make a "negative" announcement, such as a token sale of directors shares, or some other generally less than positive announcement designed to help facilitate the exiting of ultra-temporary shareholders (lol...the Clark Kent, 2 minute hold types).
5. Once it opens, throw away some sacrificial shares, at market, designed to knock the price as low as possible, but do so using as few shares as possible.
6. Show discipline and do not buy as the stock initially falls...the longer they can hold off here the better.
7. Constantly load the sell side as the price moves lower...always a safe distance from the market however, to give the impression of growing selling pressure...once again, designed to get other participants to hold off; wait and see how low it gets first.
8. Finally, once the stock has reached attractive levels (which can be as quick as intra-day or as slow as weekly), or simply when other market participants are beginning to get in the way and buy THEIR stock, they move back in, all the while buying and selling to themselves to give the impression that many holders are still selling, in the hope that other participants might still hold off buying. (lol...with so much volume, why hurry back in?)
9. They continue to churn the stock, with algorithmic net buying targets...and do so for as long as they can. High volumes will typically trade as the stock slowly but surely reclaims lost ground.
10. By the time the next serious news event emerges, the "players", many of whom may have missed the intial run, are now well and truly on for the ride. Not only will they hold on to the majority of their stock from here, but they will also do as much as they can to pump the price higher in preparation for the next lot of news and repeat of the same manipulative cycle, only at much higher prices.
The idea here is to use quiet periods in the market, or no-news days to get you off-guard, make you question the stock, question your position and induce a sale from you. They rely on the impatience of short-term market to spook them out of stock before the next leg up.
We are already seeing evidence of this in the pre-open today...whether it snowballs and achieves the desired result however depends on the market's reaction.
By the way..."they" can be a small organised group with a specific "program" in mind, or simply the market collective; all working on the same technical and psychological data and kind of working in tandem for the same ultimate goal.
Interestingly, what initially starts out as a mutually beneficial "pack rape" of the temporary holders however, eventually becomes a free-for-all as initial cooperation shifts to competition at the first sign of a recovery.
Such are the dynamics affecting such combatants.
We need to remember however...such manipulation comes unstuck if we do not sell them our shares; because if we don't, they suddenly find themselves on the wrong side of their sting, forced to buy back their "sacrificial shares" in a now even more highly illiquid market...as such, they typically have to buy back in at higher prices, in the process pushing the stock further up, which attracts even more traders making their life that much harder.
Instead of get your stock for less, they have proliferated the tight situation even further. This is the key to why some stocks rise and some do not after and or during such runs...and central to this is the profile of the register and more importantly, the free float.
Of course, there will always be someone sucked in by such activity...and if you are a very quick trader playing with small volumes you can often beat them at their own game...but, anyone with serious volume will nearly always get caught on the wrong side of a trade should they decide to do so.
Such activity is designed this way.
With assay results due at any time on the Canadian front, also Zinc drilling results due back here in oz...and of course drilling in the guts of this potential monster in Canada to recommence in just over two weeks (with back to back holes), to follow on equally interesting targets.
All the while, corporate interest likely to be high from the "locals" over there...always nice to see in any illiquid stock, as they will care little for point-to-point trading, just accumulation "in case" this little Aussie upstart has hit the big time right under their noses?
So...trade it if you will, but be mindful of what will be going on in the background...I would hate to see a trading halt upset peoples plans.
In my view...as long as you outlook spans beyond 1 week...some stocks are really not worth trading.
Cheers!
MMB Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
