Good question and that is a good concept for longs to think about. To ponder that issue, one must not only look at the technical levels, daily volume, L2 and historic price chart but also get a feel for what is happening mechanically via the daily short sale versus total volume figures (FINRA). The crony manipulators of whom typically are the MM gamers themselves as well as the other shady market manipulators will tell you to ignore those FINRA daily short metrics and confuse the matter with their deceit and trickery. The fact is, those are very simple numbers, they are the number of daily short sale transactions versus total trades/transactions (volume) to a consolidated tape. The shares which are shorted must be covered, and if they are not covered within two weeks they appear on the biweekly short interest figures. We know for a fact that the biweekly short interest figures have always been low or next to nil. We also know for a fact that the daily short sale figures have consistently hovered from around a third of the total daily volume to about half, sometimes more, like yesterday wherein over half of the trading was short sale transactions. We can thus conclude that market participants are shorting heavily each and every day and then covering within days (before the shorts have a chance to be counted toward the biweekly report). This means that at least a third or even a half of the daily volume is fake. The volume also consists of wash trades, which allow a participant to make a trade with a friendly participant and then another trade is made either at the same price or another price such that other lots are closed such that each participants cost basis remains the same; effectively just shuffling shares back and forth among each other. Often the shuffle two-step is not even done using real shares but electronic share entitlements and IOUs (electronic markers). In this way, the manipulators are able to absorb whatever daily volume exists in the stock so that whatever PPS moves those other traders/investors make are irrelevant.
No one, not even the SRO's, can figure out exactly how much of the volume is phony and how much of it is legitmately real UNIQUE counter-parties exchanging real shares for cash. On a typical day with the stock trading under say 50M shares, its likely that most of the volume is phony; 75%+. Just my opinions. It is important to mention though that there indeed exists legitmate MM daily shorting in order to fill buy orders for which they cannot immediately find shares, then within the T+3 settlement window, the broker covers thereby delivering shares to the buyer's account. However, if a large part of the shorting was for this reason then the scarcity of shares would over time raise prices to naturally be in a balance, with sellers willing to part with their real shares at a certain price and buyers bidding the PPS up to those levels, but this is not what is happening when we see daily short figures at the levels they are at on a consistent basis, especially when the biweekly short interest remains nil. I am not claiming it is or is not happening, I am merely suggesting that it is widespread in the market and it does happen. I have explained the mechanics of these tactics in previous posts but suffice it to say that so long as the daily volume times the average PPS remains well under the monetary level for which the manipulators can afford to risk, a stock such as RFMK can rather easily be manipulated day in day out. Manipulation of sentiment is another story we witness on "other" boards. The convergence of both types of manipulation under the same roof, and as a collusion of market participants is a concern for long shareholders, especially when much of the PPS down moves are insinuated to be company insiders/management dumping (dilution) each and every time the stock performs poorly. You be the judge and come to your own conclusions. I would say the numbers don't lie, but investors cannot even count on the FINRA total short volume metrics because it is up to each firm, who may be legit short or naked short for years, to follow the law and properly report to FINRA their short book but it obviously does not always happen as we can easily see on the FINRA website in the compliance section how many firms per month are getting slaps on the wrist for remaining massively short in many stocks and not properly reporting their shorts to regulators. They even have the audacity to spin the DTC chill on RFMK stock negatively on the company but the real reason for the DTC chill is likely the SEC litigation against E-Lionheart of whom was engaged in criminal activities, toxic funding and dumping 504Ds on the open market with 100 penny stocks including RFMK (remember the 504D early 2012). So it indeed is a very shady scum swamp down here in the pinks, some will tell you all about how slimy it is because they know it for a fact, likely because they are in on such scams and they use the company and management as the scapegoats for their fraud. Stay sharp out there.
You must unlearn what you have learned. The dark side clouds everything.
$RFMK
