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Security National Financial Corp. Message Board

  • livermore1929 livermore1929 Feb 23, 2013 2:46 PM Flag

    Anatomy of a short attack - tactics used

    I sold at 15 from 8 because it stalled; also it had risen too fat too fast. Three hours later a huge 160,000 share sale went through all at once. That was institutional.

    The stock recovered quickly and then continued to fall, that recovery was the point at which to go short (the first attempt at a rally after a sever break) however I didn't do so. Take a look at any variety of charts for that, although MCP in May 2011 is a great example.

    This seems like far more of a coordinated move to bring the price down rather than retail profit taking, the key variable being there have not been any meaningful spikes since the selling began. The derivation of that is that whoever is controlling the attack meets every buy with a sale (often under the bid) and thereby prevents the rise.

    The key is to hit the stop loss orders which are (thanks to the SEC) available for the MM's to see. Then the retail crowd starts to think that something is really wrong with the stock because "the market is telling them something" and they sell, then further stop losses are taken out as the avalanche has now gathered a life of its own.

    Often what is found is that MM's are part of the selling group, how they bribed the SEC to let them see open stop loss orders is simply a matter of corruption.

    If you want to see Jim Cramer explain this when he didn't think he was being taped go to Youtube and look up "Jim Cramer Explains How The Stock Market Is Manipulated" His use of the words "scaring the moron longs into thinking there is something wrong with the company" should shed light onto the aforementioned short tactics.

    I've seen it many, many times, although rarely to this extent, it is almost always done in microcap stocks, see QCOR and GMCR - both oddly to 17.

    Often what shorts will do is start rumors or blog a fraud post or send out a guy like Bill Ackman (HLF). The DOJ should bring charges against Ackman; a blind Monkey could see it was a scam. However I'm not holding my breath for them to act.
    As small investors we take advantage of these fire sale prices by buying in after the panic has subsided and waiting for the stock to catch up to the fundamentals and the shorts proceed to cover. At least that's what I've done in the past, and it seems to work, provided of course that the firm is diversified, solid, growing, and inexpensive.

 
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