all very good points, however, given that Silver prices were strong in the face of oil prices plunging and the fact that, as you said, nothing fundementally has changed with respect to SLW; then the pullback in ONE DAY from 12.05 to 10.95 on a purely technical basis suggests an overdone situation that should attentuate any further decline. We go back up 3% tommorrow.
maybe they are-for every seller today there was a buyer whether it be a short covering or an option player or a MM or a hedge fund. You don't get in the way of a tsunami but wait till it clears out. We will know by Monday but remember how much fast money was here. The fast money show on cnbc had been pumping this stock and tons of folks had profits and unloaded. The sheer weight and the subsequent fall in pm prices added momentum. Some may even still think this is dilution and a secondary for slw having not really read or understood. IMHO BBBud
Understanding, perhaps the most fundemental tenant of markets; 'the law of arbitrage', you would realize that markets operate to eliminate explotative conditions. If in other words the situation was as you claim, substantial profit with essentially no risk would be realized by those buying slw when it was manipulated below its true value. Again, markets operate with this as a bedrock principle and if they didn't, markets would cease to function. That is economic fact. To offer some esoteric comparison between the sun and oil to explain the failing of this quitessential concept of free markets provides very little value to your rebuttal. Thus, I am afraid that I would tend to continue to embrace these authoratative and universally embarced market principles than your unsupportable 'theory'.
>>> "Why are there not other hedge funds with no such loyality or interest in helping these 'priviliged clients' who, realizing this distorted price as a profit opportunity, buy at these distortedly lower prices to make a profit? <<<<
Why are we not using Solar energy more since it is free ? I don't know why other hedge funds are not jumping in. May be they trade in the commodities directly instead of a derivative that is SLW. Who knows....
Why did I not buy GOOGLE when it IPOd at 80 ? Why is Yahoo not held by all mutual funds ? Who knows....
yes i understood your point, however you failed to respond to mine, which was: if the price is being manipulated down by some hedge funds whom are shorting (to create a distorted and lower price of slw to benefit these 'privileged clients'), then :
"Why are there not other hedge funds with no such loyality or interest in helping these 'priviliged clients' who, realizing this distorted price as a profit opportunity, buy at these distortedly lower prices to make a profit?
now you got it. The market articicially can create a panic and often does. Notice the sell on the good news phenom we see even when earnings are great. The hard money waits and buys at a good price knowing they will win and the retail money buys and chases "hoping" they will win. Biotechs are a great example. Drug approval can bring a nice rush but it is usally met with selling at some point and then a drop while real money loads up. Then the big move comes. In imcl after approval of erbitux the stock sat 6 weeks with no real movement before it then went from 30 to 87(and then back down again). Markets are famous for that kind of stuff. IMHO BBB
>>>> if this is understood by you, then why is it not understood by a few hedge funds who would then, logically, be buyers of slw as it's price is distorted downward for easy profit? <<<<
Who do you think is shorting, from borrowed stock from GMP ? The hedge funds. When GMP says preferred investors, they are not talking about Joe Sixpack. They use hedge funds to help their preferred institutional clients.
any profits that accrue to this special clients are then at the expense of the buying group. in other words, lets say I am the buying group; i pay $11.15 for a share of slw. i loan it to peter who uses it to short slw. slw goes to $10.15; peter makes $10 when he cover; the special clients get in at $10, when the stock should be valued at $11.15, and I don't make any profit or loss? is that your scenerio? Question then? if this is understood by you, then why is it not understood by a few hedge funds who would then, logically, be buyers of slw as it's price is distorted downward for easy profit?
Most of what is being posted here is incorrect. Sure options can have an effect on expiration and in a low vol. market larege fluctuations can occur. News also can surrepticiously sandbag an in the money position. For slw the options positions(calls and puts at a 10 strike price have a differential of only 3000 contracts) are really not going to cause a full dollar drop. What can cause a drop is action like today wherein the stock is dropping and folks who have profits from 3 on up start to get nervous and pile on the sell. The shorts and hedges are not stupid and pile in as well. On the otherhand the news was good not bad so you have to assume at some point those mm's that took in the stock today can cause the reverse action(deadcat bounce sometimes or real short covering squeeze). My guess is tomorrow you see an early follow through and then a very hard bounce. If you guys are want to sell(which IMHO is stupid) then you will get a chance on the bounce and should not do it on the downdraft. I on the otherhand plan to buy as soon as I see the bottom fishers bounce. Silver is in an up move and so is gold. Dec. is a great month for metals so if I sell it won't be until then and probably at 12,13,14 not 10. Good luck. IMHO BBBud