A Short Seller Manipulation Technique Used by OTC

New Post Public Reply Private Reply Replies (1) Message Board
Couch tangerine #1429

A Short Seller Manipulation Technique Used by OTC Market Makers

johnlux — November 10, 2012 —  9 Comments
Short seller stock manipulation

:Nothing up my sleeve . . . .”

In the stock market, price is the best advertising.

A stock that is going up tends to create the belief that it will continue to go up, and thus demand is created.

Price gets attention. We see the change in price and the price chart as a guides for action.

Short squeezes – buying panics – are created by rapid upward price movement and so feed on themselves.

Now, if I told you that I, as a market maker, could drop the stock price in the face of consistent buying and so go short and create panic selling, you might find this to be new and rather electrifying information would you not? That’s why you are reading.

Making buys look like sales

Market Maker Magic

Here is the simple and little known trick of market makers.

We start with the inside bid ask of the stock, let’s give a hypothetical market, $0.20 bid offered at $0.26, with the last sale being at $0.26.

Now of course this is not a real stock and I am not going to give you real history. Any close similarity between this delusional and fictional narrative and exactly what happened to a certain stock – yesterday – is simply a matter of total coincidence despite your swinish suspicions to the contrary.

A buy order for 10,000 is entered and instead of being executed at 0.26, the market makers made the sale at 0.259, so that the buy order actually dropped the price compared with the last sale of 0.26 – so the stock shows 10,000 shares traded on a down move – making the buy look like a sale.

About 10 minutes passes, and another buy order, this time for 20,000 shares is entered and that is executed at 0.258 – another down tick on another buy order!

So now the stock is down on 30,000 shares of buying only – no selling.

Folks, that is not normal supply and demand, is it? You would expect that on buy orders the stock would go up or at least stay the same, would you not?

Market Maker Secrets

The Market Maker at Work

Silly you.

If the market maker now goes and hits the bid of his competition, even for a small amount of stock, let us say 1,000 shares, the last sale is showing is now 0.20 and the stock is down 23% on heavy buying of 30,000 shares, but it looks like the stock is being dumped in a panic.

What is the effect of this false appearance on the market?

First, they buyers apparently have an immediate loss of 23%. Second, anyone with a buy order may hold off on buying to see where the stock stabilizes. If the company is trying to get people to buy the stock, as it has a right to do, it is going to be much harder to whip up enthusiasm as the stock looks like it is crashing.

Sellers, if they panic, will now come in and sell. In fact, the stock could be so demoralized that, hypothetically speaking, it could close at 0.14, down 46%, but again, this is only fictional, right?

Now if we were to check OTCShorteport.com to see what the volume of trading vs short selling looked like, we might find that half of the volume was short selling, theoretically speaking, of course. Presumably this would be by the market makers going short at 0.259 and 0.258 and elsewhere to push the price down. We would also find that half of the selling might be from long sellers who went into a panic, perhaps maybe.

Now again, all this is a merely fictional example, and I would never accuse my fellow market makers of doing anything this destructive just to make a fast buck. But it is the type of thing that I now get paid the big bucks to discover and combat.

Why? Consider what this means to the company. If the company had a $100 million market capitalization, reducing the price by 46% is a $46 million loss for the shareholders on a day when there was really nothing but buying in the stock.

If the company is selling stock to raise money, say $10 million, it means that it has to now pay stock with a value of $14.6 million to get the same money – a loss of $4.6 million.

And if the shorts are short ten million shares, they made 0.26 minus 0.14 or 0.12 per share or only $1,200,000 while the shareholders had a $46 million paper loss.

Elite Pharmaceuticals Inc (ELTP) Stock Research Links

ELTP Board Company Profile Buy Rating Time & Sales News Filings Financials
Scroll down for more posts ▼

Top 10 Most Recent News Articles

Leidos Gears Up for Major U.S. Cruise Missile Push

Updated Category News Views 113

Leidos Sets Sights on Boosting U.S. Missile Production There's big news out of Reston, Virginia, that should make investors sit up and take notice. Leidos (NYSE: LDOS) is revving up the supply chain engines to churn out thousands of long-range cruise missiles, specifically the new Low-Cost Containerized Missile (LCCM) and the combat-time-tested AGM-190A Havoc Spear...

Continue Reading
Platinum Equity's Bold Move on Warren Valve: An Analysis

Updated Category News Views 127

A Big Play in the Valve Game Straight out of the industrial playbook, Platinum Equity swoops in with its latest acquisition of Warren Valve, yanking it from the clutches of Allied Group. It's not every day you see a move like this in the flow control world. Yeah, you heard that right—flow control. The kind of business that’s all about ensuring the right stuff gets to...

Continue Reading
Class Action Targets Coastal Financial Over Missteps

Updated Category News Views 0

New Crosshairs on Coastal Financial Corporation Man, it's another day and yet another fiasco in the corporate world. Late-breaking news from the trenches alerts us that Coastal Financial Corporation is in the legal spotlight. Yeah, you heard me right. We're talking about NASDAQ:CCB, the darlings turned defendants courtesy of recent allegations that could rock their stock....

Continue Reading
Canton Fair Showcases Cutting-Edge Healthcare Tech 2026

Updated Category News Views 21

Innovation Steals the Show in Guangzhou In a world where tech evolution rarely takes a breather, the 140th Canton Fair's Intelligent Healthcare Zone is like a breath of fresh air. Picture it: a whole arena pulsing with futuristic healthcare gizmos from October 31 to November 4, 2026—it's as if tomorrow swung by for a sneak peek. The event brings together everything from...

Continue Reading
Chicken Salad Chick's Utah Expansion: The Next Course

Updated Category News Views 236

A New Serving in Spanish Fork Chicken Salad Chick is taking another bite out of the Utah market with the opening of its second location in Spanish Fork. On deck for a November 17 debut, this fast-casual chain is serving up not just chicken salad, but a hefty dose of Southern hospitality and promotional giveaways to boot. The big hook? Be among the first 100 patrons and...

Continue Reading
Sirolimus Balloons Show Edge in Long-Term Revascularization

Updated Category News Views 0

Breaking Down the Results The SIRONA trial has thrown some revealing numbers our way about treating femoropopliteal artery disease. MagicTouch PTA, a sirolimus-coated balloon developed by Concept Medical, seems to be giving paclitaxel-coated balloons a run for their money, thanks to new data from Research Tokyo 2026. What the Numbers Show After three years, the data shows...

Continue Reading
Jon Gregoire Leads Parkview's Next Growth Phase

Updated Category News Views 0

Steering Parkview into New Waters Every now and then, a company gets a leader who feels like a tailor-made fit for its ambitions. Parkview Dental Partners just scored big with Jon Gregoire taking the helm as CEO. Gregoire, a seasoned DSO bigwig with a knack for M&A, is set to power up the gears for Parkview’s next growth spurt. We're talking about a guy who knows the...

Continue Reading
Anthropic's IPO Spurs Leverage Shares' New ETFs

Updated Category News Views 65

Taking a Gamble on AI's New Kid on the Block Here we stand on the edge of another potential AI stock bonanza. Anthropic’s got its sights set on going public, and folks are lining up to bite into what could be the next big generative AI feast. But it's Leverage Shares by Themes that's setting the scene for something a bit wilder—introducing some juicy leveraged and...

Continue Reading
Wincomm & Portwell Unveil Medical AI Tech at MEDICA 2026

Updated Category News Views 27

MEDICA 2026: Wincomm and Portwell Join Forces November's got one heck of an event lined up with MEDICA 2026, where Wincomm and Portwell are teaming up to showcase what they've got up their sleeves in medical AI computing. This whole shebang runs from November 16 to 19, with their setup in Hall 12, Stand C76, Düsseldorf, Germany. But why should investors care? Because...

Continue Reading
Beyon Expands Green Data Centres to Three Facilities

Updated Category News Views 57

Blazing Solar Trails in the Digital Landscape Lend an ear, folks, because Beyon's latest leap in the world of renewable energy isn't just another 'look how green we are' maneuver. Announced during Gateway Gulf 2026, this venture is all about serious numbers and even more serious energy chops. Beyon's on course to power a third data center entirely through solar energy,...

Continue Reading

Top 5 Most Recently Viewed Articles

Delta Dental's Recognition as a Leading Workplace for Women

Updated Category News Views 316

Delta Dental of California Acknowledged for Workplace Excellence Delta Dental of California has recently been recognized as one of the top workplaces for women by Newsweek. This esteemed acknowledgment highlights the organization’s enduring dedication to fostering an inclusive environment, supporting employee wellbeing, and driving innovation in the healthcare sector. A...

Continue Reading
Recent Changes in Shareholding Notifications at Umicore

Updated Category News Views 153

Recent Shareholding Changes at Umicore Umicore, a prominent player in materials technology, has recently received important notifications regarding changes in shareholding from two major financial institutions: BlackRock, Inc. and Bank of America Corp. These notifications play a crucial role in ensuring transparency and offer insights into how shifts in ownership can...

Continue Reading
Gran Tierra Energy Implements Normal Course Issuer Bid Strategy

Updated Category News Views 144

Gran Tierra Energy Inc. Announces Strategic Share Buyback Plan Gran Tierra Energy Inc. (NYSE: GTE) has unveiled its strategy regarding a normal course issuer bid (the "Bid") aimed at buying back its common stock. The Toronto Stock Exchange (TSX) has given its approval for this initiative, allowing the company to purchase shares for cancellation or to satisfy long-term...

Continue Reading
Colgate-Palmolive's Upcoming Earnings: Investor Insights and Analysis

Updated Category News Views 45

Understanding Colgate-Palmolive's Quarterly Earnings Release Colgate-Palmolive (NYSE: CL) is preparing for its quarterly earnings announcement, which many investors are keenly anticipating. With expectations set for the company to report an earnings per share (EPS) of $0.88, this release could carry significant implications for the stock's short-term direction. Investors...

Continue Reading
Revolutionizing Talent Acquisition Technology for 2024

Updated Category News Views 88

Transforming Talent Acquisition Technology in 2024 The talent acquisition technology landscape is undergoing a significant transformation as organizations seek to streamline their hiring processes and enhance candidate experiences. Leaders in standalone talent acquisition include prominent companies such as Cegid, Dayforce, Infor, Oracle, and Paycor. These players are at...

Continue Reading