11140. Transactions in Securities "Ex-Dividend," "Ex-Rights" or "Ex-Warrants" (a) Designation of Ex-Date All transactions in securities, except "cash" transactions, shall be "ex-dividend," "ex-rights" or "ex-warrants": (1) on the day specifically designated by the Committee after definitive information concerning the declaration and payment of a dividend or the issuance of rights or warrants has been received at the office of the Committee; or (2) on the day specified as such by the appropriate national securities exchange which has received definitive information in accordance with the provisions of SEC Rule 10b-17 concerning the declaration and payment of a dividend or the issuance of rights or warrants. (b) Normal Ex-Dividend, Ex-Warrants Dates
(1) In respect to cash dividends or distributions, or stock dividends, and the issuance or distribution of warrants, which are less than 25% of the value of the subject security, if the definitive information is received sufficiently in advance of the record date, the date designated as the "ex-dividend date" shall be the second business day preceding the record date if the record date falls on a business day, or the third business day preceding the record date if the record date falls on a day designated by the Committee as a non-delivery date.
(2) In respect to cash dividends or distributions, stock dividends and/or splits, and the distribution of warrants, which are 25% or greater of the value of the subject security, the ex-dividend date shall be the first business day following the payable date.
(3) In respect to stock dividends and/or splits relating to American Depository Receipts (ADRs) and foreign securities, the ex-dividend or ex-warrants date shall be designated by the Committee.
(c) Late Information Re: Ex-Dividend, Ex-Warrants Dates If definitive information is not received sufficiently in advance of the record date to permit designation of an ex-dividend or ex-warrants date in accordance with paragraph (b)(1) hereof, the date designated shall be the first business day which, in the opinion of the Committee, shall be practical having regard to the circumstances pertaining. (d) Normal Ex-Rights Dates In respect to transferable rights subscription offerings, if definitive information is received sufficiently in advance of the effective date of the registration statement, the date designated as the ex-rights date shall be the first business day after the effective date of the registration statement. (e) Late Information Re: Ex-Rights If definitive information is not received sufficiently in advance of the effective date of the registration statement to permit designation of an ex-rights date in accordance with the paragraph (d) hereof, the date designated shall be the first business day which in the opinion of the Committee shall be practical having regard to the circumstances pertaining.
highlights: changes from previous tax year; says its downloads of IRS forms are quicker than IRS' site; "tax planning"; "Capital Loss Carryover Calculator; allocates a tab to "capital gains" ( http://www.fairmark.com/capgain/index.htm ); more...
Member Rated: posted February 16, 2006 03:34 PM -------------------------------------------------------------------------------- thought i should share the knowledge for those who ask.
Good read
***** From another board *****
Market Millionaires Stock Market Investment Forum > Stock Market Chat > Market Discussion > Some MM explaining please
Ax - one market maker that seems to control the supply/demand of a security or stock
Convertible Debenture (CD) - Debenture which can be converted into stock at the option of the holder and/or the issuer at a specified date in the future. Because the buyer has the ability to convert the debenture into stock under certain circumstances, the seller is able to borrow at a lower cost than if the convertibility feature was not present.
ECN (Electronic Communication Network) - an electronic system that brings buyers and sellers together for the electronic execution of trades. It disseminates information to interested parties about the orders entered into the network and allows these orders to be executed.
MM – market maker
S-8 - are paid out for services
SB-2 - are sold by company (Optional form for the registration of securities to be sold to the public by small business issuers)
TOP 5 IMPORTANT MMs or wholesalers/retail (typically out of dilution): NITE, GVRC SCHB, TDCM, GNET
Examples of wholesalers: HRZG, MASH, NITE, SHWD
Examples of ECNs: ARCA, BRUT, BTRD, INCA, ISLD, REDI
Monthly share volume report is indicating the MMs and how many shares they bought/sold (it is a month delayed) Important (on Level II) 1. to see who the players are 2. and who to watch for
Axes basically is main MM that is either supporting the bid or opposite (hitting the ask).It is the party who seems to be controlling the action in the stock. Also when a stock is dumping S-8 shares he will be consistent on the ask. Once he jumps and starts supporting bid => S-8 close to being over => MM movement is big.The ax isn't always trading the stock in one direction or another. Sometime he is keeping it in a tight range. And sometime he is not there at all. Another ax may step forward, but there are times where there is no ax present doing anything of note.The point is the ax is the one to watch, closer than all other parties or MM’s. When you learn to trade with the ax your odds greatly increase.
So how do we find the ax???????? The best way to find the ax is through familiarity of the stock. By taking the time to watch the stock trade via Level II the ax will usually become quite apparent. But since we want info now and not wait days to find out there’s a shortcut. It's no substitute for watching the action, but it can at least give you a lead on a few parties to watch closer than others or MMs. Key = Monthly Share Report! Generally look at the top 3-6 spots on the report. I tend not to count wholesalers at all as market makers. I also don't count ECNs as any number of players can use an ECN (TRAC, DATA). I will also throw out retail ECNs like GVRC for similar reasons as just mentioned, and also since most of the traffic is retail. We are getting rid of unnecessary MMs. Plainly it just doesn't happen where a little guy is going to control a stock. So that’s why we narrow selection.
One, the ax is not static. On any given day any party can be an ax. Heck, there may be one ax in the morning and another in the afternoon and neither of them could be listed in the top ten of the monthly share volume report. If a big order comes onto the trading desk of a firm that doesn't do big volume in a certain name the firm will need to work that order. And if no one else is doing anything of consequence in the stock this new party will command the action. An ax can easily use an ECN to hide much of their action. They can and will use fake outs. IMPORTANT: Keeping a keen eye on Level II will reveal these things. Monthly Share Reports and Level II patters are the key. Watch the Level II and they use monthly share volume for confirmation.
Example of an ax who is selling: When the market is rallying, the stock has a hard time moving higher, seemingly hitting a wall every time. And every time the wall seems to have the same initials and yet, when the strength subsides, the stock has no trouble falling. And funny enough, the ax seems to be following the stock down. That’s where Level II comes into play. You have now found the missing link per se. You can see around the corner and start to see patterns. MM AX is on ask - it means he is driving price down - not good for us because we are buying and not shorting the stock (can’t short OTCBB).
Example of MM supporting PPS stock northward: Let’s say that a stock (shell) has been lying quietly at $.25 bid $.50 offered. A limit order comes into one of the MMs to buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long nor short any shares). He fills the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .625. The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision. Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few but instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to lose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever". Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is). Finally the market closes for the day and on paper he may look all right in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them.
IMPORTANT Some ways MM's entice sellers: 1. Run the stock up with a "tight spread" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below the last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread. Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread.
2. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon. Hopefully, after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over. Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular. These techniques work about 9 times out of 10 particularly in a BB market. However, that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped.
Example: The ax seems to be following the stock down. Ax is killing stock on ask. Question: If this behavior is recognized what would be the appropriate course of action? Going long the declines or selling the rallies?
Answer: selling the rallies. Since we can’t on OTCBB and Upside is limited every time the stock tries to advance. Instead of trading against the ax and hoping that the buyers will overwhelm him, it is much smarter to sell with the ax and watch the stock fall as buyers pull away. Hence you would short it. The only kind of buying which should be going on is the covering of short positions as necessary. Work with the ax to your advantage.
Example: RWNT (trying to find dilutor): Input RWNT into monthly share report. Remember focus on top 3 -6 spots. Don’t count wholesalers. VERT is the dilutor. Explanation: Look at April. Then look at May. Nothing in April. Then he dumped 57mil shares in May. You can even go back to March and he wasn’t even a listed MM. So he came on in April and then he started his selling. Keep in mind that RWNT is extreme and you’re not always going to see that.
S-8: S-8’s - you need to read filings and see exactly what they are for some s-8's actually aren't bad some are employee stock options etc. MM can remain on the ask for months, however long it takes to fulfill S-8 shares. They don't care what price they get. S-8's are great tools to watch and learn how an ax works once that seller steps off ask and starts supporting bid = boom. Usually want to buy a little before s-8 is complete because then you can accumulate more shares. When S-8 is over - the seller you have been spotting for weeks, days, months will leave the ask and start supporting the bid. You will see a lot of market maker shifting as well as MM's need to get ready for stock to reverse into opposite direction.
Example of dilution: On some dilution is smart like ONEV. For example BMIC was diluting ONEV big time, but he did it right and it still ran hard with him selling the whole way up check out BMIC monthly share report on ONEV. April – BMIC wasn’t there, same with PERT and UCAP.
Example: WNMI (finding an ax): Apply process of elimination. You will see in Feb. CHIG and UCAP weren’t there. The run started late march. Remember this is month behind (delayed) => reason we go back a month also another good idea to get more DD out of who is diluting check s-8’s, sb2's fillings, then look at chart before the stock broke out notice who was soaking more shares than others this. Remember little MMs don’t worry about, they won’t control stock and that’s the reason why we eliminate them (volume will blow them away) There was also CD's (convertible debentures) out on WNMI before that u want to look for these also.
Miscellaneous Notes
NITE - doesn’t dilute usually, unless someone is selling through him. MM’s know people are intimated by NITE so they use that to their advantage. That’s why NITE is the shaker he scares folks out. So don’t get discouraged if you see NITE on ask all the time. he could be leading a dip or something. he is scaring sellers to his buddies TDCM, and SCHB on bids a lot of times.
Retailers you want bidding like TDCM
Big Shorters JIMK - he seems like he is always short. Usually on those low vol. stocks POND - is big shorter also
GNET is ARCA - anyone can use him, even other MMs because it’s an ECN.
TRAC & DATA - biggest OTCBB ECNs, you love them on bids also
Member Rated: posted February 16, 2006 11:03 AM -------------------------------------------------------------------------------- You can find their state of incorportaion right here:
quote:Posted by: SSP In reply to: bagheera who wrote msg# 37785 Date:1/27/2005 9:17:52 AM Post #of 81540
The workings of warrants and options May 28, 2004
By Laura du Preez
Warrants and options, like futures, are derivatives that derive their value from an underlying product, such as a share. This article is Part 49 in our Scrapbook Series.
Last week’s Scrapbook article explained that futures are agreements to sell a specified quantity of a particular item or asset on or before a fixed date at an agreed price. Options and warrants offer a slightly less risky alternative to futures.
Options and warrants give an investor the right, but not the obligation, to buy or sell a specified quantity of an asset at an agreed price, on a fixed date. In other words, they differ from futures in that the investor does not have to carry out the transaction or “exercise the option”.
For example, you may buy an option to buy 100 Anglo American shares for R130 on a particular day. If on that day the shares are trading for R120, you are unlikely to exercise your option.
However, if on that day they are trading for R140, you are likely to exercise you option, because you will be able to buy the Anglo shares at R130 and sell them on the market for R140, thereby making a profit of R10 on every share.
In order to buy the right to buy or sell the underlying asset, you pay a price, called a premium, to the seller of the warrant.
Options and warrants are less risky than futures, because if the price of the underlying asset moves the wrong way, you can walk away – you do not have to buy or sell. However, if you do not exercise your option, you will lose the entire premium you paid to get the warrant or the option.
The advantage of warrants and options is that they give you an opportunity to profit from price movements in the underlying asset or share – whether up or down – for a lot less money than it would cost you to buy the asset or share.
However, you should remember that although warrants, in particular, offer you a relatively cheap way to get exposure to shares, you do not become a shareholder of the underlying share by holding a warrant, and therefore you do not receive the dividends paid to shareholders.
The difference between options and warrants Warrants are options to buy or sell shares that are listed on a stock exchange. The warrants themselves are listed on that stock exchange, rather than on the futures market.
The underlying asset of a warrant is always a share or a basket of shares, while the underlying product of an option could be anything from wheat to gold to shares.
Warrants are usually more accessible to the small investor, because the size of the contract, called the cover ratio, is smaller.
The cover ratio of an option or warrant is the number of options or warrants you need to buy one unit of the underlying asset. Warrants may, for example, only entitle you to buy a quarter or a half of a share, rather than one share or even 100 shares.
Warrants have no set time to maturity as this depends on the warrant issuer, but typically they are issued with an expiry date of four to 18 months. Options on the futures exchange usually have expiry terms – generally three months – that are set by the futures exchange.
Terms you should know The price at which you have the right to buy or to sell the underlying asset is called the “exercise” or “strike” price, and the date by which you must buy or sell it is called the expiry or exercise date of the warrant.
You pay a price, called a premium, to the seller of the warrant in exchange for the right to buy or sell the underlying asset.
When the price of the underlying asset on the open market is the same as the strike price of the option or warrant, it is said to be “at the money”. If the share price moves up or down such that you would make a profit by exercising your option, the option or warrant is said to be “in the money”. If, however, the share price or price of any other underlying asset moves such that you would lose money by exercising it, it is said to be “out of the money”.
Types of warrants and options There are two main types of options and warrants:
# A call option or warrant, which gives you the right to buy the underlying asset; and # A put option or warrant, which gives you the right to sell the underlying asset.
If you think the price of a particular share is likely to rise, you should choose a call warrant giving you the right to buy the shares at a price close to their current price.
As the price of the share rises, your warrant becomes more and more valuable, because its price (or premium) also rises.
Once the share price rises above the strike price of your warrant, your warrant is said to be “in the money”, because you could make money by exercising it and then selling the shares at the market price.
For example, say you bought a three-month warrant on shares worth R100 000. Say the premium is R2 000. If the price of the shares on the market goes above R100 000 – your “strike” or “exercise” price – you are “in the money” because it will be worth your while to exercise your option, buy the shares and sell them on the market. If the price on the market falls below R100 000, you do not have to exercise the warrant and all you have lost is your initial investment of R2 000. If, on the other hand, you think the price of the shares is likely to fall, you could buy a put warrant, giving you the right to sell shares at a specific strike price.
As the price of the shares on the market falls, your warrant becomes more and more valuable. If the price drops below the strike price, you are in the money because you could sell the shares at the exercise price and simultaneously buy them on the market at a lower price.
Warrants may also be American-style or European-style. If they are American-style, they can be exercised any time up to the expiry date. European-style warrants can only be exercised on the expiry date, although the warrant can be bought or sold at any time before that date. Typically, call warrants issued in South Africa are American-style and put warrants are European-style.
The price of warrants and options The price of a warrant and an option varies according to the price of the underlying share, or the “intrinsic” value, and the length of time the warrant or option has left to run. The “intrinsic” value of the warrant is the difference between the strike price and the price of the share or other asset on the market.
For instance, if you buy a call option on a share with a strike price of R160 and the price on the market is R200, you can make an immediate profit of R40, so the price of the warrant must be at least R40. This is the “intrinsic” value of the warrant and it drops to zero when the price on the market drops to R160.
But even if a warrant no longer has an intrinsic value, it can still have a “time” value. This is the value to you of holding the warrant for the rest of the specified period, during which time the price of the share on the market may rise above R160 again. You are paying for the possibility of future profit. The longer the time until expiry, the more expensive the warrant will be.
How to trade them Warrants, like shares, can be traded through stockbrokers. Prices are quoted daily in the JSE Securities Exchange lists in your daily newspaper and in Personal Finance on Saturdays.
At present about 260 warrants are available, some on individual shares such as Anglo American, Billiton, Nedcor, Sappi and Standard Bank, and others on indices. Warrants are issued by Deutsche Bank, Investec Bank, Standard Bank, Nedbank, Absa and Rand Merchant Bank.
The price or premium of warrants that have traded on the previous day are usually quoted in the financial section of daily newspapers.
When you buy a warrant, you not only pay the price of the warrant, but also brokerage fees, which vary but are usually about one percent or less of the value of your purchase, and Uncertificated Securities Tax, which is 0.25 percent of the value of the transaction, and a Strate charge, which also depends on the size of your transaction.
Options are traded on the futures market or over the counter in private deals between buyers and sellers.
To: From: nobody*sec.gov [mailto:nobody*sec.gov] Sent: Friday, December 30, 2005 2:36 AM To: ENFORCEMENT Subject: enforcement complaint
ENFORCEMENT COMPLAINT FORM 12-30-2005 2:36:21 - - - - - - - - - - - - - - - - - - Information About You: Name: greg hogberg
Information About the Complaint Type: all Entity Name: STOCKS Names, Addresses, Telephone number etc:
To: Jonathan G. Katz, Secretary, Securities and Exchange Commission Subject: NASD-2005-112 Re: Release No. 34-52679
Dear Sir,
I thank you for this opportunity to comment on the proposed changes to NASD Rule 3360 in order to expand the short interest reporting requirements to all OTC securities. In a nutshell, I highly recommend this proposal and its implementation as soon as possible. I have been fortunate enough to devote the last 24 and one half years of my life to a very thorough study of the phenomenon known as naked short selling. During that timeframe I have written 2 unpublished textbooks on the subject, the most recent being an approximately 800-page analysis of naked short selling and the role of unethical DTCC participating market makers and clearing firms and their interrelationships with primarily unregulated hedge funds.
As you at the SEC have no doubt realized by now, the wording used in Reg SHO has left a glaring loophole that any DTCC participants wishing to circumvent the spirit of this new Federal Law can easily access. Although the “Forced” federally-mandated buy-ins for certain threshold securities are clearly outlined, somebody at the SEC unfortunately inserted the verbiage, “If the participant does not take action to close out the open fail to deliver position AS MANDATED BY THIS NEW FEDERAL LAW, the participant is prohibited from making further short sales in that security without first borrowing or arranging to borrow the security”. Unfortunately, no clarification of what constitutes a legitimate reason for being unable to execute a mandated buy-in was included except that the reason cannot be of a financial nature. In other words, if you refuse to obey this new Federal Law mandating “Forced” buy-ins which is now part of the 1934 Securities Exchange Act, your punishment is nonexistent but you’re reminded to obey the law in the future. I don’t know if this was inadvertent or just more “Deterrence-SEC style”.
In a recent “self-interview” published by the DTCC, the DTCC made it crystal clear that they intend to utilize this loophole graciously provided by the SEC. In this interview, the interviewer asks the Deputy General Counsel of the DTCC the following: * DTCC the interviewer: “So Reg SHO doesn’t force them to close out the position, even market makers are not exempt from this requirement, but if they don’t, they are prohibited from making any additional short sales without borrowing the shares first” Thompson the DTCC Deputy General Counsel: “That’s right.”
What’s interesting is that in the answer to the previous question this same Deputy General Counsel states: “The “Close-out” requirement FORCES emphasis added a participant of a registered clearing agency to close out any “fail to deliver” position in a threshold security that has remained for 13 consecutive days by purchasing securities of like kind and quality”. This verbiage is consistent with the exact phrasing of the law.
My question to you at the SEC is, “Which is it” Are these DTCC participants “FORCED” to do these “Mandated” buy-ins as outlined in the text of the law or not My second question would be can the DTCC’s actions be interpreted as recommending to its participants the breaking of the new Federal Law Reg SHO because the punishment, irresponsibly advertised by somebody at the SEC as being nonexistent, really is nonexistent People can and do break Federal Laws all the time. My third question is why advertise the loopholes accessible for breaking these new Federal Laws with no recourse within the text of these new Federal Laws unless, of course, somebody at the SEC’s heart wasn’t quite in the right place all along but wanted the SEC to be PERCEIVED anyways as acting as a shareholder advocate that is following its mission statement of providing “Investor protection and market integrity” I think that you at the SEC can now get a pretty good idea of why the shareholder advocacy groups are critiquing the effectiveness of the new Reg SHO “Threshold Lists”.
One fact that “pre-doomed” the bulk of Reg SHO’s honorable intentions is the rule on the books of the DTC and the NSCC that states that mandated buy-ins need not be executed if their effect might be “Disruptive” to the markets. In layman’s terms this means that mandated buy-ins in the shares of an issuer that fell victim to a “Bear raid” that resulted in its share price falling from 5 to 2-cents need not be done because these buy-ins might result in a “Market Disruption” involving the share price skyrocketing to 4-cents, an enormous 100 gain. As you at the SEC are painfully aware, Section 19 C of the ’34 Exchange Act disallows the SEC from amending the rules and regulations of any “Registered Clearing Agency” like the DTCC. A quick review of some facts regarding naked short selling might help you to coordinate your battle plan against naked short selling IF THIS IS TRULY A HIGH PRIORITY OF THE SEC.
SOME FACTS RELATED TO THE NAKED SHORT SELLING OF U.S MICRO CAP SECURITIES
1 There are currently approximately 8,200 hedge funds managing approximately 1.05 trillion. About half of these fly under the regulatory radar due to some loopholes in the 1940 Investment Company Act.
2 In the post-decimalization era, market maker “Spreads” are now razor thin and many securities scholars contend that ethical market making firms cannot make an honest living in this environment. The downside of that notion is the resultant “Survival of the corruptest” form of natural selection we are now witnessing in regards to the naked short selling pandemic.
3 Unethical market makers will bend or break any rule to attract the business of these hedge funds. They have to in order to survive. The money from primarily unregulated hedge funds drives this entire naked short selling “Industry within an industry”.
4 In-house proprietary trading activity has skyrocketed recently among market making firms.
5 Our OTC markets are trying to “Evolve” and eliminate human intermediaries market makers subject to human greed and in possession of a vastly superior “KAV” factor Knowledge of, Access to and Visibility of the clearing and settlement system run by the DTCC and replace them with unbiased computers ECNs to match up buyers and sellers. The current Wall Street power and influence structure will not allow this evolution to occur.
6 Unethical hedge funds will feed their massive order and commission flow generating abilities to any market making and clearing firm that prove to be the most “Accommodative” to these behemoths and their desires. They expect rules to be bent and broken on their behalf. Access to illegally working out of a MM’s “in-house proprietary account” is especially deserving of certain “Concessions” as we have seen in several recent cases involving certain hedge funds and certain market makers.
7 Hedge fund managers are under a lot of pressure to perform or their wealthy clients will move their money elsewhere. These clients expect their hedge fund managers to seek out “Accommodative” market making and clearing firms even if there is criminal risk incurred by the hedge fund manager.
8 Bona fide market makers are legally allowed to naked short sell securities but only while acting in the capacity of a “Bona fide” market maker.
9 A bona fide market maker is expected to naked short sell nonexistent “shares” at the 5 level when an imbalance of buy orders over sell orders is present at that level and he has no inventory at the time.
10 Should the share price drop to perhaps 4.80 then a bona fide market maker uses the proceeds from the sale of the nonexistent shares he legally naked short sold at 5 to buy back these shares and pocket this 20-cent “Spread”. A bona fide MM is happy making “The spread”.
11 A bona fide market maker injects liquidity by buying shares when sell orders outnumber buy orders with the same zeal that he shows while selling shares when buy orders outnumber sell orders. The problem is that buying shares consumes money while selling shares, even if you don’t own nor intend to ever purchase shares, makes money because of how the DTCC is “Wired”.
12 A bona fide market maker does not direct or restrict share price movement he buffers the intensity of the swings in share price. The two main roles for short selling in general are to inject liquidity and to create “Pricing efficiency”. To create “Pricing efficiency” all negative votes short sales as well as positive votes buy orders need to be tallied as long as the short sales were preceded by a legitimate “borrow” i.e. not a “Borrow” from a “Self-replenishing” source like the DTCC’s “Automated Stock Borrow Program” or “SBP”. Legal short selling is a very good thing that is crucial to the markets. Abusive naked short selling is a form of market manipulation which is a 10b-5 securities fraud usually involving criminal enterprises.
13 A bona fide MM, when faced with a large amount of buy-side activity, will allow the share price to find an equilibrium level above the current price after selling a MODERATE amount of shares at the lower price.
14 A bona fide MM would rather sell nonexistent shares at a higher level than at a lower level UNLESS HIS CURRENT NAKED SHORT POSITION HAS GOTTEN OUT OF HAND TO THE POINT THAT COLLATERALIZING AN ASTRONOMICALLY HIGH NAKED SHORT POSITION AT HIGHER LEVELS MIGHT BE COST PROHIBITIVE. SHOULD THIS SITUATION PRESENT ITSELF THEN FRAUDULENT NAKED SHORT SELLING IS OFTEN SEEN AS THE ONLY ESCAPE ROUTE AND A “BLANKET” OF FRAUDULENT NAKED SHORT SELLING IS OFTEN PROVIDED BY THE TROUBLED MM AND ANY WILLING CO-CONSPIRATORS THAT HE CAN “RECRUIT”.
15 Bona fide market makers don’t get caught in this trap as they are more than willing to increase the price level of their offers if the buy-side pressure remains. This is referred to as “Averaging up”. Not so bona fide market makers don’t have this luxury if they were guilty of greedily selling nonexistent shares in a non-stop fashion just to get their hands on the buyer’s money before a competing MM was able to.
16 The ability TO APPEAR to be legally naked short selling securities while acting in a bona fide market making capacity is something the unethical hedge funds desire very badly but cannot legally attain.
17 There are many unethical market makers that have been so decimated by decimalization that they allow unethical hedge funds space under their “Umbrella of immunity” from borrowing before short selling which is supposed to be only accorded to bona fide MMs acting in a bona fide market making capacity at the time. The rental fees for this “Space” is paid in fees and commissions via order flow.
18 There are very few regulatory policemen monitoring market making activity in regards to whether naked short selling is truly “bona fide” or not.
19 When presented with trading evidence in a court of law, it would be extremely difficult for an unethical MM to claim that he was indeed acting in a bona fide market making capacity while constantly naked short selling into buy orders that dwarfed sell orders as a stock’s share price plummets from 5 to 2-cents. When buy orders overwhelm sell orders for prolonged periods of time share prices go up not down. Naked short selling by theoretically bona fide MMs is only legal when buy orders overwhelm sell orders.
20 The supporting bids of unethical MMs taking part in “Predatory trading strategies” are conspicuously absent as share prices fall despite their having the money from investors buying at higher levels in their coffers. THE SEC, NASD, AND DTCC CAN EASILY DETECT THESE PREDATORY TRADING STRATEGIES BY UNETHICAL MMs WHILE STUDYING TRADING DATA. THE EVIDENCE JUMPS OFF THE PAGE AT YOU.
21 The “Continuous Net Settlement” system CNS in use at the DTCC “Nets out” on a daily basis buy and sell orders which is extremely efficient BUT has a “Masking” effect on delivery failures which is an unwanted side-effect UNLESS YOU WANT TO HIDE THE EXISTENCE OF A PLETHORA OF UNDADDRESSED DELIVERY FAILURES. THEN IT’S JUST WHAT THE DR. ORDERED. DR. LESLIE BONI RECENTLY PUBLISHED AN EXCELLENT RESEARCH PAPER OUTLINING THE “PERVASIVENESS” OF DELIVERY FAILURES RESULTING FROM NOT SO BONA FIDE MARKET MAKING ACTIVITY.
22 At the DTCC, it is extremely easy for fraudsters to illegally sell nonexistent shares and actually get their hands on the proceeds without ever covering. PARDON US IF WE INVESTORS FIND THIS CONCEPT TO BE NOT ONLY HEINOUS BUT UNCONSCIONABLE. All these fraudsters need to do is to collateralize the naked short position in a “Marked to market” manner on a daily basis such that the depressant effect on the share price from yet further naked short selling allows the proceeds from previous naked short sales to fall into the lap of the perpetrators of these frauds. The key is to never stop naked short selling which might have the untoward effect of allowing the share price to increase to find its own unmanipulated equilibrium level. The current clearance and settlement system in use at the DTCC allows naked short positions to be run up so rapidly that if the victimized issuer fails to die on cue then the perpetrators of this fraud cannot only not cover these positions without financial collapse but they can’t even stop the daily onslaught without risking the share price going up. The allure of free investor money is so overwhelming that prudent short selling practices fall by the wayside.
23 For the most part, naked short sellers don’t ever cover they don’t have to. They can always fall back on their ace in the hole as a “Participant” of the DTCC by refusing to execute even buy-ins mandated by the old NASD Rule 11830 as well as the new Reg SHO because of possible market “Disruptions”. The financial critical mass of these hedge funds and co-conspiring Wall Street behemoths will outmuscle even the most formidable preyed upon targets. If they meet resistance then there are available “Internet bashers” to employ and financial “Journalists” for hire to produce “Hatchet jobs” to propagate any negative stories whether of merit or not. First Amendment freedom of speech issues as well as Internet anonymity are utilized to delivery any unfavorable opinions.
24 The key to naked short selling fraudsters is to get these trades involving the sale of nonexistent shares to “Clear” even though “Settlement” Which involves the “delivery” of that which was thought to be being bought i.e. genuine “shares” or “packages of rights” attached to a specific U.S. Corporation may never occur. The “Automated Stock Borrow Program” at the DTCC allows shares held in “Street name” at the DTCC to be borrowed from an anonymous “Lending Pool” of shares. This allows the firm of the buyer of these nonexistent shares to receive delivery of “something” that at least resembles a legitimate share at first glance. The problem is that the buying firm is allowed to immediately place these “Shares or share facsimiles” right back into this same anonymous “Lending pool” of shares AS IF THEY NEVER LEFT IN THE FIRST PLACE. THE BUYING FIRM IS THEN HANDSOMELY REWARDED BY THE DTCC WITH THE CASH EQUIVALENT OF THE SHARES DEPOSITED INTO THE POOL AND CHOSEN TO CLEAR THE NEXT FAILED DELIVERY. THIS WONDERFUL ABILITY TO CONVERT A CLIENT’S PURCHASES OF REAL SHARES OR “PSEUDOSHARES” INTO CASH FOR THE USE OF THE BROKERDEALER PROVIDES PLENTY OF INCENTIVE TO KEEP THE “LENDING POOL” FULL TO CAPACITY. THE SELF-REPLENISHING ASPECT ALSO HELPS KEEP IT FULL TO ADDRESS AS MANY “FAILED DELIVERIES” AS THE SYSTEM WILL GENERATE WHICH IS AN INFINITE AMOUNT IF NO REGULATOR MONITORS FOR THE APPROPRIATENESS OF THE USE OF THE “BONA FIDE” MM EXEMPTION FROM BORROWING BEFORE SHORT SELLING.
25 The “Counterfeit Electronic Book Entries” “CEBEs”-electronic book entries at the DTCC without a certificated share in a DTCC vault to justify its existence that result from the lack of buying-in these failed deliveries then appear on investors’ monthly statements as readily-sellable “Pseudo-shares” despite the fact that there is no paper certificate in a DTCC vault to justify its existence. Keep in mind that the DTCC at all times has full visibility of the number of “CEBEs” as well as genuine shares held in their vaults.
26 The “Supply” variable that interacts with the “Demand” variable to determine share price then becomes the arithmetic sum of all genuine paper-backed electronic book entries at the DTCC plus the number of “Counterfeit Electronic Book Entries”. This greatly enhanced “Supply of readily-sellable shares” then interacts with a greatly diminished “Effective Demand” for shares due to buy orders for shares being effectively neutralized by the sale of nonexistent shares into these buy orders resulting in the typical precipitous drop in the share price of the preyed upon U.S. Corporation. This allows the unknowing investors’ funds to flow into the lap of those that sold nonexistent “Entities” but still refuse to cover.
27 The 2 main repositories for these unaddressed delivery failures are the DTCC “D” sub accounts and the “Non-CNS delivery arrangements” shunted to “Exclearing” hiding places. The “Ex-clearing” hiding places involve DTCC participants “Pairing off” and allegedly informally agreeing to not buy-in each other’s failed deliveries. Bd “A” agrees to not demand delivery of the 5 billion worth of securities owed to it by Bd “B” in exchange for Bd “B” doing likewise with the 5 billion worth of failed deliveries owed to it. The DTCC holds that these are “Contractual” arrangements between its participants and that it has no business in monitoring. Victimized issuers and investors might beg to differ as any “Self-Regulatory Organization” might be expected to do a little “Selfregulating” of the activity of its participants which unfortunately at the DTCC own the DTCC. The DTCC management aggressively regulating the behavior of those that sign their paychecks is a bit of a design flaw creating yet another conflict of interest.
28 Section 17 A of the ’34 Act set up the DTC which later merged with the NSCC to form the DTCC. It mandated “The prompt and accurate clearance AND SETTLEMENT of transactions involving the transference of ownership”. Even in the Reg SHO environment the trades done by naked short selling fraudsters still aren’t “settling”. “Settlement” mandates “Good form delivery” of that which was intended to be purchased by the buyer-a “Package of rights” attached to a specific U.S. corporation domiciled in a specific U.S. state. You cannot have “Good form delivery” if that which is being “Delivered” comes from a self-replenishing “Lending pool” of shares provided by the DTCC’s “Automated Stock Borrow Program” the SBP especially when that which is delivered to the new buyers brokerdealer can immediately be replaced right back into the same “Lending pool” from whence it just came as if it never left at all. In order for a system like this to have one scintilla of integrity, the “Sharespseudo-shares” delivered to the new buyer’s brokerage firm would be sequestered or escrowed off to the side and not allowed to be replaced into the “Lending pool” UNTIL the original loan was repaid.
29 What our current system does is to allow trades to “Clear” at warp speed without legally “Settling”. Dr. Boni’s research clearly showed the “Pervasiveness” and extreme age of the failed deliveries stacking up at the DTCC. This vastly dilutes the “Readily-sellable” share structure of targeted corporations causing their share price to plummet which allows the proceeds from the sale of bogus shares to actually flow into the laps of the fraudsters despite their having absolutely no intent of ever buying or replacing that which they have already sold. Recall that all the fraudsters have to do is to collateralize this ever-diminishing debt on a daily “Market-to-market” basis.
30 If the SEC is sincere about addressing this problem, I would suggest they start with legislation to rescind Section 19 C of the ’34 Act which currently forbids the SEC from altering the rules and regulations of the DTCC. The combined 800-pages of rules and regulations of the DTC and NSCC, in my humble opinion, is the most conflict of interest-ridden set of rules on the planet. The lack of necessity to execute buy-ins mandated by the old NASD Rule 11830 and the new Federally mandated Reg SHO threshold securities buy-ins due to the pretense of avoiding “Market disruptions” is in the opinion of most securities scholars nothing short of criminal as by definition there has to be a “Market disruption” involved when leveling the playing field of a victimized issuer that has lost 99 of its market capitalization due to abusive naked short selling by DTCC participants hiding behind their rulebook that is untouchable by the SEC.
In summary, this NASD Rule 3360 proposed rule change represents a step in the right direction especially if made a part of a more comprehensive plan that addresses the loopholes inadvertently left in Reg SHO. The systemic risk levels currently being incurred by all U.S. citizens due to the greed of abusive DTCC participants and coconspiring hedge funds and naked short selling cartels is intolerable. The inability for Reg SHO to address the preexisting delivery failure problem hints at just how serious and pandemic this problem is. The voluntary “Grandfathering in” of previous acts of securities fraud sets a very scary precedent. As I see it, you at the SEC have run out of comfortable middle ground to occupy in this dilemma. You now see the absolute numbers of delivery failures of a given issuer on a daily basis. You either have to warn prospective buyers, as per the ’33 “Disclosure Act”, of these levels of “Readily sellable share facsimiles” unaddressed delivery failures being held at the DTCC or in “Exclearing arrangements” IN ALL OTC SECURITIES or order their being bought-in.
There is no third choice. These prospective investors need to be warned that they’re buying shares of corporations with astronomic levels of unaddressed delivery failures which have basically pre-ordained their investment to an early death as statistics will readily bear out. The 1933 Securities Act mandates that investors be made aware of all information pertinent to the “Character” of the securities being sold in our markets. In a prospectus you at the SEC appropriately make a new issuer reveal every possible tiny grain of sand of risk to the investing public yet you at the SEC, the NASD, and the DTCC possess information about a gigantic “Boulder of risk” present in investing in especially nonreporting issuers with a plethora of unaddressed delivery failures, yet you keep silent.
Note that the Reg SHO “Threshold lists” don’t even discriminate between a corporation with a 0.6 delivery failure rate from a corporation with a 66 delivery failure rate. There really is no middle ground left on this landscape strewn with corporate carcasses for the SEC to safely stand on any longer. Either tell us about these positions as the amended 3360 would partially address or buy-in the failed deliveries. If mandated buyins result in the weeding out of the most abusive market making and clearing firms then so be it. This might allow our markets to evolve into more efficient computerized markets not subject to human greed and massive conflicts of interest between DTCC participants and the investors they owe a fiduciary duty of care to. Thank you for your interest in this subject.
Member Rated: posted February 27, 2006 01:58 PM I have gotten some PM's from some great new newbies.....(you know who you are)....Asking lots of questions. I will continue to help as much as I can but, wanted to post this to get out some info. Posting it here as this seems to be where they are looking.
This is going to be very long but the best read you'll find on this board!
These are Post's on how to make money in this market by three of the greatest people I have had the pleasure of trading with!
Learn ALL(LOL) of the tips and you'll do fine. And.........Yes, I do make money.
Make money and sell....If it goes up more, Good for the other guy holding it, You've made money. MOVE ON!
First great info from Ric...(((HUGS)))
I updated my dd for all so here it is. I am writing a more detailed things you need to know section and will post when I finish.
Things you need to know
Best two pieces of advice for pennies. 1) Don't let people convince you that a penny is a long hold. You will get burnt. Buy low, sell high, and never look back. 2) Due Diligence.
There is two ways to lose money in the penny market that a lot refuse to listen to.
1) Never hold a penny stock after a run. Sell it and if it does run again you can still buy it back but 90% of the time it will fall back to where it was and sometimes lower. Penny's are manipulated on too many levels and holding long will only lose you money and give you a ulcer. Take profits and walk away. If anyone tells you to hold a penny long they are holding that stock at a lose.
2) Don't play group plays and if you can't help yourself take profit as quickly as possible. When the group leaves the stock will drop faster then you can leave.
Worry about a stock that people refuse to hear negative comment on. They are hiding valuable information from you. You can't make a honest choice without all the facts. And all penny's have bad news or they wouldn't be here. If a stock is being pumped to hard then there is a reason for that. Its losing them money.
There is some excitement in runs too that may conflict with what I just said but it's still risky. Because of the manipulation in this market either through groups, boards, MM's or the company a uptrend can turn on you quickly. Find your risk level and move on when it is met. Never look back on profit and wonder if I stayed longer that I could have made more because the next one will burn you if you don't obey your own rules. If you really think it can move further, sell enough to get your money back and ride the rest. A whole lot less risk.
Two things that you must learn about charts immediately is RSI and Bollinger Bands. They are so important. Now there is so much you can learn in charts that will help you make choices but I consider the above the most important things to learn for any investors. RSI will let you know if there is buying pressure or selling pressure. It will also confirm a run. Bollinger Bands also show price pressures and are used to support other indicators. There are links below under TA for education on understanding charts.
Relative Strength Index
Definition:
Relative Strength Index (RSI), an oscillator introduced by J. Welles Wilder, Jr., could be more appropriately called the internal strength index, for it compares the price of a security relative to itself. The RSI is based upon the difference between the average of the closing price on up days vs. the average closing price on the down days over a given period, and is plotted on a vertical scale of 0 to 100. An oscillator refers to a momentum or rate-of-change indicator that is usually valued from -1 to +1 or 0% to %100.
Wilder advocated a 14-day RSI, although shorter and longer periods have gained popularity when the market exhibits certain characteristics. Generally, RSI is measured in a period between 5 and 25.
Interpretation:
There are several possible interpretations for the Relative Strength Index, any of which can be very powerful depending on the market conditions and trading/investment approach: One interpretation is that buy signals are triggered when RSI is in oversold (20-30) area, potentially meaning that the stock is about to reach its low for this trend, and sell signals are triggered when RSI is in overbought (70-80) area, potentially signaling a market top.
A second mode of interpretation is to look for support and resistance lines or common chart formations such as head and shoulders in the RSI itself, indicating potential reversals that the stock chart may not.
A third mode of interpretation is to recognize divergences in the RSI, such as when the price is moving up when the RSI is moving down or vice versa. This can mean that the price is going to "correct" and move in the direction of the RSI.
A fourth mode of interpretation for the RSI is to view it as a bullish or bearish signal when it crosses 50. When the RSI crosses above 50 it can be considered bullish, and when it crosses below 50 it can be considered bearish.
Bollinger Bands
Definition:
Investors use trading bands, lines drawn above and below the moving average, to isolate a range of prices for a given security, based on the concept that a stock generally trades within a predictable range on either side of the moving average. When a stock is near the upper or lower limits of the trading bands is when an investor should pay closest attention, according to conventional wisdom.
Bollinger Bands are considered some of the most useful bands in technical analysis, for they vary in distance from the moving average of a security's price based on the security's volatility. During periods of increased fluctuation, the bands widen to take this into account, and when the fluctuation decreases, the bands are tapered for a narrower focus to the price range. The upper band is the standard deviation multiplied by a given factor above the simple moving average, and the lower band is the standard deviation multiplied by the same given factor below the simple moving average.
Interpretation:
The standard interpretation is that Bollinger Bands do not give absolute buy and sell signals, but instead indicate whether the price is relatively high or low, allowing for more informed confirmation with other technical indicators.
Bollinger Bands are typically drawn two standard deviations from a twenty day simple moving average for intermediate-term analysis, ten day for short term with 1.5 standard deviations, and fifty for long-term studies with 2.5 standard deviations. According to John Bollinger, for the most accurate average "choose one that provides support to the correction of the first move up off a bottom. If the average is penetrated by the correction, then the average is too short. If, in turn, the correction falls short of the average, then the average is too long. An average that is correctly chosen will provide support far more often than it is broken."
Mr. Bollinger also contends that:
Sharp moves tend to occur after the bands tighten to the average, when a stock is less volatile. The greater the period of less volatility, the higher the propensity for a price breakout.
When the price hits the upper or lower bands, it is suggested to confirm with other indicators whether that price movement shows strength or weakness, respectively, which could indicate a continuation. If indicators do not confirm this movement, it can suggest a reversal.
Tops or bottoms made outside the bands, followed by the same inside the bands, indicate a trend reversal.
A move originating at one band tends to go to the other band.
"Resource from IQCharts"
DD for otcbb and pinksheets
Try these two DD tools to be quick and good with your facts. At pinksheets in a matter of seconds under Company Info I can give you o/s, any r/s, company name changes, or planned changes and more. Quotetracker is a program you install on your computer. I wouldn't survive without it in a quick paced market. Tons of TA and FA with dd. Shoot pinksheets is my homepage on Firefox browser for quick reference. This is the first two places I go for fast due diligence.
www.pinksheets.com {Company Info tab is loaded with information} {SEC Filing Tab - wow} {News Tab - Pr's at your finger tips}
www.quotetracker.com - after you set it up add a symbol quickly then charts, news, research, and raw data at your finger tips. Great charts.
DD is mainly knowing where to go.
FA – Fundamental Analysis
www.pinksheets.com - first place to look!!!! Go to Company info for o/s. r/s, name changes, and many other facts. Go to SEC tab to look for filings. News tabs for latest news that may not show up through normal wire service.
www2.barchart.com - after you enter stock symbol select opinion to see trend spotter
www.otcbbtrader.com – otcbb loser/winner by volume, price, shares, transaction, and more
Timing your entry and exit from the market is critical to making money and controlling losses.
These are MM signals. 100 > I need shares 200 > I need shares badly but dont take it down to get them. 300 > Take the price down to get shares.... 400 > Trade it sideways based on Supply and Demand 500 > Gap one way or the other, usually to the direction of the 500 trade. Sometimes -if in the middle -keep the price right where it is.
Pennies are all about volatility and trends. The only reason to look at a 6 month chart or longer is to see the overall trend of the stock. Is it going up, down, or staying the same with little bumps in the road. Look for peaks and valleys and do they happen on a regular basis. If so then look for a bottom and buy then sell at the top and wait for the next valley.
Never let people tell you after a run that it will run again. That rarely happens. Usually after a run it slowly drops back down. Never average down. Sell and buy back at bottom. Holding until bottom never makes you money, it only makes your loses harder to bare.
Longs in a penny stock want you in so they give you the pretty picture. They hope they can get enough new investors to make their stock move and it won't until the stock is ready. Learn to follow trends and how to find the bottom plays. Usually if a stock has more then a couple pages then the stocks has already done something and hope is what keeps the thread going of it moving again.
Be smart, think, learn, and research.
Next our wonderful and lovely Queen of daytrading...Diana! I miss you girl!!!!!and Hello Sunny, If you are still reading!
Realityinc21.
IT'S CONTROLED BY THE PSYCHOLOGICAL TRAPPINGS OF THE MARKET.
Stage 1 - Accumulation. Stock is quiet, trading sideways and without a lot of volatility. Most everyone ignores the stock because it has no sizzle. Insiders hold large blocks of stock and quietly gear up for the distribution. Stage 2 - Breakout. Volume jumps up, psychological barriers are broken. Insiders begin to tell their friends of upcoming significant fundamental change. Pros take notice and buy the stock on the coat tails of the well informed. The public ignores it because they have not read about the company in the paper yet. It must be a scam. Stage 3 - Uptrend. As a larger audience learns of the company and its promise, more buying comes in to the stock and it begins to climb. Pros begin to sell, but slowly. Average investor begins to buy. Stage 4 - Pullback. The stock has gone up too fast, and some profit taking arrives. The jumpy investor who got the entry timing right but lacks confidence in his or her decision sells the stock with a small profit, and smiles in the mirror. The Pro holds on, Average Investor looks through the newspaper to find justification for ownership of the shares. Stage 5 - Resumption of the Uptrend. The pull back is short lived, and the stock bounces and continues higher. The wannabe regrets the sell, but provides self counsel on the merit of making a profit, albeit a small one. The Pro might sell a little bit more, but still holds the majority of the original position. The Average Investor is getting excited now, and thinks about what could have been if only he had bought when he first noticed the stock. Stage 6 - Exhaustion of the Uptrend. The media takes notice, and communicates the company's merits to the masses. The masses buy the stock, and it goes up sharply with strong volume. The Pros sell with enthusiasm. The Average Investor owns it now, and is telling everyone who will listen. The wannabe Pro jumps back on, after all, he was smart enough to buy it when the trend started, so he knows the stock well. Will hope make it go higher? Stage 7 - Gravity Works. Pro selling begins to weigh on the uptrend, and the stock fails to go higher despite high volumes. The stock starts to go down instead of up, and the Pro is almost sold out. The Average Investor continues to cheer lead, hoping to rally support. The wannabe ignores what the market is telling him, taking a loss is too painful to consider. The company is featured on the cover of a magazine. Stage 8 - The Second Guess. The stock bounces and starts to go back up. The wannabe Pro averages down while the Average Investor gets back to advising friends of his stock picking acumen. Pros sell their remaining holdings and begin to look for another deal to play, or perhaps start short selling the stock. Stage 9 - Out of Gas. The bounce is a fake out, and the stock moves lower again. The public own this stock, and they have no more power to buy. The Pro are making money on the short sales now, but are despised by the masses. Calls for short selling to be made illegal are made by the Average Investor, after all, the short sellers are the demons causing the sell off. Stage 10 - Dead Cat Bounce. The Average Investor and the wannabe Pro have no pain tolerance left, and finally sell for a big loss. The short selling Pros are the only buyers to take the share off their hands, and provide the needed liquidity. The stock bounces, and some short term traders make a quick profit. The Average Investor either swears to never buy a stock again, or tells lively stories over drinks about the one that could have been. Stage 11 - Post Mortem. Pros have forgot about the stock and are considering carpet samples for their new home in Florida. Average Investor continues to follow the company and buys loads of cheap stock to try and overcome the regrettable loss.
The stock market is mean. You can be a good analyst, but if you can't overcome the psychological traps of trading, you will do what the crowd does. To be successful, you have be one step ahead of the crowd, and trade with unemotional discipline. There are strategies to take advantage of each stage of the market cycle that can be applied just by looking at a stock chart. They just require a bit of knowledge.
EVERYDAY FOR THE 30 DAYS READ THIS 10 TIMES A DAY. ASK YOURSELF 10 TIMES A DAY "WHAT KIND OF TRADER AM I GOING TO BE??" AM I GOING TO BE A CRYING WHINNING LITTLE BITCH OR AM I GOING TO SHAKE IT OFF?? AM I GOING TO BUY TO HIGH BECAUSE I DO NOT KNOW HOW TO READ A CHART OR AM I GOING TO F-ING LEARN HOW TO READ A CHART?? AM I GOING TO BE THE ENTERTAINMENT FOR THIS BOARD OR AM I GOING TO GO THE LIBRARY AND CHECK OUT ALL THE BOOKS THAT I CAN READ ON DAY TRADING AND INVESTING AND STOCK CHARTING. AM I GOING TO LEARN HOW TO DO MY OWN DUE DILLIGENCE OR AM I GOING TO BUY ON THE RECOMENDATION OF PEOPLE FROM THIS BOARD??(IT IS PRETTY OBVIOUS THAT IS WHAT HAPPENED )THEY WERE GREAT RECOMENDATIONS BUT YOU WERE ABOUT 5 STEPS BEHIND. IT LOOKS LIKE BY THE TIME YOU WERE BUYING EVERYONE ELSE WAS SELLING. AM I GOING TO TAKE THIS LAYING DOWN OR AM I GOING TO GET MY G--D D--M MONEY BACK. NO ONE HERE CAN MAKE THOSE CHOICES FOR YOU!! MAY SEEM LIKE I AM BEING A COLD HEARTED BITCH BUT THIS THE REAL WORLD BABY. THE QUESTION YOU HAVE TO ADDRESS RIGHT THIS MINUTE IS..AM I GOING LEARN ON THE FLY OR AM I GOING TO BACK IT UP AND LEARN ABOUT WHAT THE F--K I AM DOING?? YOU DOVE IN HEAD FIRST NOW YOU HAVE TO LEARN HOW TO SWIM. IF YOU ARE NOT WILLING TO LEARN HOW TO SWIM--BAIL AND TAKE YOUR LOSS. DAY TRADING IS TIME CONSUMING. I WOULD VENTURE TO SAY THAT MOST OF THE PEOPLE ON THIS BOARD SPEND 5 TO 10 HOURS A DAY RESEARCHING-CHARTING-READING SEC FILINGS-GOING OVER FINANCIALS--READING NEWS RELEASES--COMMUNICATING WITH OTHER TRADERS ON STRATAGIES--THEN FINALLY BUYING--THEN THE SAME PROCESS BEGINS FOR THE EXIT. IT MAY NOT SEEM LIKE IT RIGHT NOW BUT I AM TRYING TO HELP YOU. AS WILL OTHERS ON THE BOARD. SUGAR COATING THE FACTS WILL NOT HELP YOU. YOU NEED A GOOD DOSE OF REALITY AND I JUST GAVE IT TO YOU!! IE REALITY INCORPORATED.... THE ONLY CONSOLATION THAT I CAN GIVE YOU IS: I HAVE BEEN IN YOUR SHOES. AFTER OVER 20 YEARS OF DEALING WITH THE MARKET I STILL WAS NOT PREPARED FOR THE DEPTH OF DAY TRADING. I LEARN NEW THINGS EVERYDAY AND MAKE MISTAKES EVERYDAY. AFTER 4 YEARS OF MAKING AT LEAST 5 TRADES A DAY I AM A NEWBIE JUST LIKE YOU. IT IS A PROCESS. WELCOME TO DAY TRADING AND GOOD LUCK WITH YOUR CHOICES.
REALITY INCORPORATED
ESTABLISH A SET OF TRADING RULES THAT WORK FOR YOU. THESE ARE MY RULES. YOU HAVE A ADAPT YOUR OWN. MAYBE THIS WILL GIVE YOU SOME GUIDELINES TO GO BY.
MY PENNY STOCK RULES:
1. I never buy on impulse or get emotionally attached to a penny stock--think LOGIC--I buy it, I sell it, I make money and I rarely look back. 2. I never buy a stock JUST because I like it or worse someone else likes it. 3. I rarely buy a micro penny stock trading under a volume of 50,000 mil--80 to 100 mil is better (always remember there has to be buyer for every stock you buy).. 4. I rarely hold a micro penny stock over night...My definition of micro penny is under .10 cents ..Rarely over a weekend..NOTICE I SAID RARELY. THERE ARE SOME STOCKS THAT HAVE A BUILD UP AND IF THE VOLUME IS GOOD AND I FEEL CONFIDENT ABOUT MY DD I WILL HOLD IT FOR THE RUN. At $7.00 to $10.00 a trade I can buy and sell it every day on news or hype or earning whatever. .(THAT'S WHY IT'S CALLED DAYTRADING) 5. I never buy a penny stock on the way up. IE CHASING I watch the pre market trading and set a buy price and a sell price and stick to it (missed out on NEOM by sticking to my rules--I noticed it at .11 and refused to buy to high) UPSIDE IS I DO NOT HOLD 500,000 SHARES OF NEOM AT.43 CENTS---DOWNSIDE I DID NOT MAKE 50,000 DOLLARS. I DID MAKE A COUPLE OF GRAND BY PLAYING THE GAP AFTER THE RUN. IF YOU MISS THE RUN PLAY THE GAP. LIKE THE MAN SAID--THERE IS ANOTHER STOCK JUST WAITING TO BE BOUGHT. 6. I never think about GETTING RICH OR RETIRING on penny stocks..My goal is to make $200.00 a day and not lose my original investment. Most often I exceed my goal. (When I lose money it is usually because I have not followed my own rules) 7. I never ride a stock down--I will sell it and re-buy it. EXAMPLE: BOUGHT CTKH AT .002 AND .0022. SOLD HALF AT .0046. SOLD HALF OF THAT HALF AT .0069. IT STARTED GOING DOWN AND I BAILED OUT AT .006. BOUGHT AGAIN TODAY AT .0032. LOGIC-DO YOU ACTUALLY BELIEVE MUTUAL FUND MANAGERS WOULD HAVE HELD ONTO IBM IF IT DROPPED 50%?????--(WELL SOME WOULD) LOL I THINK NOT..RIDING A STOCK DOWN IS LIKE THROWING 50% OF YOUR MONEY OUT OF A CAR WINDOW AT 75 MILES AN HOUR AND HOPING IT FLIES BACK TO YOU. OR BETTER YET "IF YOU LOVE IT LET IT GO--IF IT LOVES YOU IT WILL COME BACK TO YOU". THATS BULL****--IF IT LOVED YOU IN THE FIRST PLACE IT NEVER WOULD HAVE LEFT.....I have actually bought and sold the same stock 3 times in one day. ATNG WAS A RECENT 3 TIME BUY AND SELL. BOUGHT AND SOLD IBZT 3 TIMES ONE DAY. (not usually but it does happen). 8. I never insult or bash another fellow trader..I respect other people's trading methods. I LEARN FROM THEM. What the hell--It's not my money.....( It's not like they are setting on third base at a black jack table and take a hit on 15 and the dealer has a 6 showing and I have $500.00 dollars riding on that hand). I DO LISTEN AND LEARN AND BENIFIT FROM THEM. 9. I never trade with MONEY that I am not willing to lose. 10. I follow the market and market trends (not just the stocks) 11. I never buy a stock without reviewing, analyzing and understanding the charts. I learned how to read charts and believe in them...They do not lie..I MAY NOT KNOW WHAT THEY MAKE OR PRODUCE OR SELL WHEN I BUY IT BUT I DO REVIEW THE CHARTS ON THE FLY AND PUT IN A BUY ORDER FOR SMALL AMOUNT TO GET IN THE DOOR. MOST TRADERS KNOW WHEN A RUN IS COMING AND HAVE ALREADY DONE THE DUE. 12. I never get gambling and investing confused. I INVEST IN REAL ESTATE...MY BUSINESS...SMALL,MEDIUM AND LARGE CAP STOCKS WITH A HISTORY-MANAGEMENT TEAM-FINANCIALS--ASSETS--CASH--ETC..30YEARS+ GROWTH AND INCOME MUTUAL FUNDS WITH 12% OVERALL GAIN IN GOOD AND BAD TIMES (THEY ARE PROFESSIONALS AND THAT IS THEIR JOB). I GAMBLE WITH PENNIES.. MY DEFINITION OF PENNIES IS ANYTHING UNDER $5.00. 13. I always take 50% of earning from each week and e-transfer into INTEREST BEARING TAX account. THEN I LEARNED HOW TO INVEST THAT MONEY IN REAL ESTATE TO MINIMIZE TAXES. INCORPORATE, PROTECT AND SHELTER. 14. I ALWAYS TAKE MY ORIGINAL INVESTMENT OUT OF THE EQUATION WHEN IT IS FEASIBLE TO MAKE ENOUGH MONEY ON THE TRADE TO MAKE IT WORTHWHILE .IE..WHEN THE STOCK IS ON A RUN UP SELL PORTIONS AT AT TIME TO RECOUP ORIGINAL INVESTMENT. IF IT IS A STOCK I PLAN TO KEEP LIKE TFSM--I BOUGHT AT 1.06. AT 2.12 I WILL SELL HALF AND RECOUP INVESTMENT AND KEEP 5000 SHARES FOR FREE. HOPEFULLY THAT WILL BE THIS WEEK. 15. I ALWAYS HAVE FUN......ACTUALLY I HAVE A BLAST.... 16. I LEARN SOMETHING NEW EVERYDAY... 17. I CAN'T SPELL, TYPE WELL OR USE PROPER GRAMMAR--AND I SWEAR LIKE A SAILOR..BUT IF YOU PUT A DOLLAR SIGN IN FRONT OF IT---I WILL FIGURE IT OUT.......THAT CERTAINLY DOES NOT MAKE ME STUPID..IT MAKES ME SMART BY RECOGNIZING MY LIMITATIONS. LEARN YOURS. 18. I ALWAYS MAKE MY OWN DECISIONS AND TAKE ALL RESPONSIBILITY FOR MY ACTIONS. 19. I LAUGH EVERYDAY..MOSTLY AT MYSELF AND SOMETIMES AT OTHERS... 20. LAST AND MOST IMPORTANT--THE MARKET HAS A RHYTHM--EACH STOCK HAS A RHYTHM--LIKE GREAT SEX--A RHYTHM..FIGURE OUT YOUR OWN RHYTHM WITH THE MARKET AND DUE YOUR OWN D.D.. LEARN THE RYTHEM OF THE CHARTS. IT IS CALLED "HARD WORK". THE REST WILL FOLLOW. TAKE THE TIME TO PASS ON YOUR GOOD FORTUNE TO OTHERS. WHAT GOES AROUND COMES AROUND AND YOU CAN TAKE THAT TO THE BANK.
And From dardadog! The master of getting it done FAST! WOOF dog!
There seems to be a large amount of "newer" inexperienced traders here on Allstocks these days. Glad to see so many new, and what appears to be, younger traders out there. I wish I had been smart enough in my late teens and early twenties to invest in my future. I don't consider myself "old" at 43, but when I was that age I considered my future to be next week rather than next decade. On to the point here. Many of the investors here follow my "flyin fast" leads and do in deed make good quick returns on their investments. But I want to bring attention to a very important rule that I'm afraid many may be overlooking. Particularly in the case of "QBID". The rule I am refering to is "Cover Thy Ass". It's fun (and profitable) to latch onto a microcap that takes off like a rocket. But gains on "paper" don't impress the finance officer, and they don't pay off or save for college tuitions. Microcaps are just that for a reason. Something in the companies past has dictated that they are worthless. When they stir, everyone aware becomes excited and begins accumulating shares with the "Beverly Hillbilly's" theme song stuck in their head. Dreamin' and making extravagant shopping lists, walking around with a stupid grin on their face, thinkin' EZ street is the next block up from here. "Danger Will Robinson - Danger"!!!!! Guys.....if it were really this easy, nobody on the planet would work!!! I make this point, and hope many take to heart, because paper gains are just that..."paper". You see how fast the portfolio can increase on one of these wild rides, but believe me, it can shrink faster. The smart investor always, and I mean ALWAYS, keeps this first and foremost in mind. Front And Center. While these microcaps are great to play, a smart investor will always "Play Free". Pick a price at which the stock reaches where you can sell partial holdings and keep a block of shares for free. You then have your initial capital back to re-invest in "new" up and comers, and if the free gem you are riding tanks, you can still get some use out of the shares you own for free. .0001 Certs can be used in place of Charmin next time you are at the grocery store. Chafes a bit, but not as much as it does if your ass is raw from the ol' back door screwin' you just took by having your whole wallet tied up on the dream. I want all to really think about this. More people in the penny game have had this experience become a realization, than have had the "Beverly Hillbilly's" dream come true, I assure you. Just remember, although this seems like a game, the only real game in life belongs to Milton Bradley. Good Luck out there. ------------------ DaDog
-------------------- Lil,
Dont LOSE more than you can afford to invest....LOL
-------------------- A million seconds is 13 days. A billion seconds is 31 years. Posts: 4893 | From: Burbank IL USA | Registered: Feb 2004
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from purlie re company fighting for SEC to enforce reporting requirements:
quote:Blue, Dustoff, unrelated to this thread and a rather lengthy article. This is a good article for learning about little known SEC rules. This is fascinating.
From PGLD stock, sorry about the length but certainly worth reading; good learning.
**
Wynnefield Demands SEC Action against Phoenix Gold International
April 24, 2006 07:00:08 (ET)
NEW YORK, Apr 24, 2006 (BUSINESS WIRE) -- Wynnefield Capital, Inc. today announced that it has filed a formal complaint with the Enforcement Division of the Securities and Exchange Commission (SEC) and an application with the SEC under the Administrative Procedure Act demanding that the SEC commence enforcement action against Phoenix Gold International, Inc. (OTC: PGLD.PK).
According to Wynnefield's complaint, for nearly two years Phoenix Gold has flagrantly disregarded its obligation to file public reports under Sections 13 and 15(d) of the Securities Exchange Act of 1934. Wynnefield first advised the SEC of Phoenix Gold's reporting duties in September 2004. Since then, Wynnefield has repeatedly asked the SEC to intervene, but to date the SEC has taken no action to enforce its own reporting requirements. Nelson Obus, a general partner of Wynnefield, observed that SEC action is necessary to protect the interests of Wynnefield and other outside shareholders because shareholders cannot privately enforce the SEC's reporting requirements.
Phoenix Gold made a Form 15 deregistration filing, an extremely detrimental action against outside shareholders (those who are not part of management or the Board of Directors), on February 6, 2004. As a result of the filing, the share price has fallen substantially and the stock has lost liquidity. When Phoenix Gold refused to reconsider the deregistration decision, Wynnefield transferred shares of stock directly to its partners and other interested third parties to ensure that the number of record holders was above the level necessary to require the Company to fulfill its reporting obligations. This distribution was necessary because the archaic Exchange Act definition of record holder does not count individual beneficial owners who hold stock in a brokerage account for purposes of determining an issuer's reporting obligations. The Company therefore became obligated to resume Exchange Act filings because it had more than 300 shareholders of record at the beginning of its next fiscal year. Companies that deregister ordinarily are no longer required to provide annual, quarterly or periodic reports to investors, known as 10Ks, 10Qs and 8Ks. However, section 15(d) of the Exchange Act requires any company that has made a registered securities offering (in the case of Phoenix Gold, an IPO) to resume reporting whenever it has 300 or more shareholders of record at the beginning of its fiscal year. Wynnefield's limited partners and other interested parties alone account for more than the minimum number required for filing. According to Wynnefield's complaint, in addition to previous shareholder lists, Phoenix Gold's most recent shareholder list, dated December 31, 2005, showed 473 shareholders of record, which would continue to subject it to SEC reporting requirements.
Wynnefield General Partner Nelson Obus stated, "Phoenix Gold has repeatedly ignored the SEC's reporting requirements and violated its own promises to provide shareholders with the financial information they need to make informed investment decisions. Shareholders have received no financial or other information for 2005, seven months after the end of Phoenix Gold's fiscal year, and the deadline has passed for the annual shareholders' meeting for 2006. For the last two years, Wynnefield has expended considerable effort and resources communicating with Phoenix Gold and working through appropriate channels at the SEC's Division of Corporation Finance to get this company to comply with its legal obligations to shareholders. We have discussed this matter on numerous occasions with officials from the SEC's Division of Corporation Finance, but have received no indication that they are going to recommend action against this flagrant example of non-compliance or are even particularly sympathetic with the plight of this Company's outside shareholders. We have no choice but to take our cause directly to Enforcement and the Commission. The SEC is supposed to be the investors' advocate, and we believe that the SEC's investor protection efforts should start with enforcement of its own reporting rules. SEC action against this issuer is long overdue."
Mr. Obus continued, "The SEC's reporting rules are the primary instrument of investor protection under our securities laws. Self-interested corporate managers will always look for some excuse to hide the ball from shareholders, but if the SEC's rules are enforced, investors should get the information they need to make informed investment decisions.
"We call upon the SEC to enforce its own rules and insist that companies comply with the law. It is bad enough that the SEC continues to allow companies the unilateral ability to deregister when they may in reality have thousands of shareholders holding stock through brokerage firm accounts. In this case, however, we know as an absolute fact that Phoenix Gold has more than the required 300 shareholders of record, and the SEC still is not requiring it to satisfy the reporting rules. Unless the SEC enforces reporting obligations, investors may be at the mercy of self-interested managements," Mr. Obus concluded.
Wynnefield has been a leader in the effort to change the deregistration rules to count the number of shareholders holding in "street names" or through brokerage firm accounts. This common sense rule change would align investors' true economic interests with an issuer's reporting obligations. A petition by institutional investors to change the rule was filed with the SEC in July 2003 (Rule-Making Petition No. 483) and is still under consideration by the SEC.
About Wynnefield Capital
Wynnefield Capital, Inc. is a value investor, specializing in U.S. small cap situations that have company- or industry-specific catalysts. Established in 1992, Wynnefield's founding partners, Nelson Obus and Joshua Landes, held senior research and institutional equity positions at Lazard Freres & Co. during the 1980s, and its initial investors included many of their colleagues at Lazard. Wynnefield has over $400 million under management.
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TEX this is alot of good info. alot of the question all new member have? you already have the anwser posted. I guest I got alot old postings to read.
go xkem
Thanks for sharing your penny stock rules.
Posts: 29 | Registered: Jun 2006
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Tex, One last piece of info from me on this: TDAMERITRADE did allow short selling on pink sheets = Their MM's do short sell them. This IS the PROBLEM.They started this almost a year ago. Lucky
Posts: 188 | From: MISSOURI | Registered: Jul 2005
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had heard/seen that...at least that it was proposed...since then (months ago), have never seen nor heard of anyone actually doing it... by that I mean, Joe Retail with Ameritrade account
Short Selling Strategies: Two Dozen Types of Short Sales
By William Cate
There are dozens of ways to sell short a stock.
1. Traditional Short Sale: Borrow the stock against a fifty percent margin.
This is the only type of short sale that can be squeezed when the share price moves up because the short seller must add money to their margin account.
2. A Market Maker Short Sale: U. S. Market Makers are not required to make physical delivery of stock certificates when they sell it. They are assumed to be a repository of the company's shares.
3. A Brokerage House Short Sale: This is a decision not to execute a buy order from a client, but show the stock as owned by the client on their monthly brokerage firm account statement.
4. A Clearing House Short Sale: The Clearing House doesn't execute the buy order, but credits it to the brokerage firm client's account.
5. A Naked Short Sale: This is where two brokerage firms agree to trade stock in a company with neither brokerage firm requesting physical delivery of the share certificates.
6. An Insider Short Sale: This is when insiders with restricted stock use it to sell short their company. It's illegal. It was a common practice when the Regulation S Hold Period was 40 days.
7. A Ferrari Short Sale: This is where a bloc of stock is purchased. The stock is converted to derivatives, thus factoring the stock one hundred fold or more. The short sale doesn't occur in the Stock Market, but the derivative owners are holding a short position.
8. The DTC Short Sale: This is when Depository Trust Companies use the stock they hold to sell short that stock.
9. The International Short Sale: Stock's created offshore. The company is listed to trade outside the United States (usually Canada). However the company is trading in the States. The shares are sold into the States. The Short Sale is moved to the Primary Country, where the local brokers can ensure that the short position will be covered by the listed company, if there is ever a successful short squeeze.
10. The Arbitrage Short Sale: LTV - Scattered Securities is an example of this short play. The Court in the LTV reorganization determined the exchange rate for new shares for old shares at three cents. The Market didn't read the Court decision. The old shares traded far higher than the Court Ordered exchange rate. The short sale was done by selling old shares and buying new shares before the Court mandated exchange of share certificates.
11. The Street Stock Short Sale: Sellers who are insiders or who allege to be insiders sell counterfeit stock to buyers outside regular market channels.
12. The MIDI Short Sale: Brokers sell stock at prices well above the actual trading price of the stock. This has been popular with German OTC stocks sold into the Middle East. The gap between the sale price and the trading price is an effective short sale.
13. The Depository Receipt Short Sale: Using counterfeit stock, the seller deposits it into an overseas bank. They then sell Depository Receipts against the counterfeit shares held by the bank. I've seen this done in Asia.
14. The Rockford Short Sale: An investment firm buys shares and takes physical delivery of the stock certificates. They replace the real share certificates with counterfeit share certificates. Next they sell the real shares back into the Market and repeat the process. This practice does wonders for their balance sheet. The tactic was popularized in the Rockford TV Series. It's been done in Asia with NYSE shares.
15. The Tax Haven Bank Short Sale: Small (usually Caribbean) banks act as agents for their clients unwilling to reveal their identity. The client wants to buy stock. The bank doesn't buy the stock on behalf of the client. They simply show the sale within the bank's accounting system. This practice extends to gold etc.
16. The Lost Certificate Short Sale: Client requests share certificate.
Broker sends it certified to the slightly wrong address. It's returned to broker. Using the certified receipt broker claims the client has the share certificate. A year is spent in proving it never arrived. Meanwhile the broker has the share certificate and can use it to cover other short sales. This happened to me in Vancouver.
17. The Margined Short Sale: Buyer buys stock on margin. They can't take physical delivery of their share certificates. The broker sells the margined account non-existent stock (a short sale).
18. The Takeover Short Sale: Brokers add non-existent stock into a takeover with stock transaction. The buyer pays for the non-existent shares. The short seller gets cash or stock in the buyers company.
19. The Attrition Short Sale: For OTC stocks about 3% of the beneficial owners of the stock disappear each year. They die, forget they own the stock, etc. Brokers can safely sell short 3% of the float each year relying on the fact that the beneficial owners will never claim their stock.
20. Counterfeit Stock: Professionals regularly send counterfeit share certificates to Transfer Agents. A surprising percentage are accepted as real share certificates. The result is the professional effectively has sold short the shares involved in the certificate.
21. Issue Depository Receipts without holding the stock and sell the Depository Receipts.
22. The Warrant or Option Short Sale. Buyer holds the right to exercise warrants or options, but doesn't do so. Instead, they sell short the stock and use the options or warrants as insurance. This was popular among VSE underwriters in the 1980s-1990s
23. Reg S Short Sale. Same format as the Warrant or Option Short sale, but using cheap Reg S stock. The short seller is exposed for one year.
24. The Lending Short Sale. This was used by the guy who introduced me to the business. You offer to lend 90% of the face value of the stock to the borrower for a long period of time. Your interest rate is better than that of a bank. You take in the stock and sell it. You lend 90% of the proceeds from the sale. You are now short the stock. You collect your interest payments until the borrower defaults on the loan.
About the Author
William Cate has been the Managing Director of Beowulf Investments since 1981 and is the Executive Director of the Global Village Investment Club.
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