Trading Tips 3,
May 22, 2016
Some time ago FINRA tried to make market makers show their true size.
Market Makers of course found a loophole.
They now sometimes show a 10K size.......and keep reloading it whenever that gets taken out.
SO, if you ever see a 10K size, that is called an Ice Berg. Only the 10K shows, and no matter
how many shares get sold, it stays there at 10K.
There is no way to tell how many shares they REALLY have there.
These are the market makers that usually are part of dilution and sell a LOT of shares:
VFIN, VNDM, BKRT, VERT, PUMA.
If you see those market makers on the ask/offer, you can be pretty sure there is dilution going on.
Now, you can also tell if dilution (Milking the Cow) is happening by watching the trading. If you see
Large bid wacks going through, compared to the regular trade size, then they are selling big time,
and it will be hard for the price to go up. i.e., you see buys like 20K, 37K, 10K.......and then see a bid
hit for 220K....the stock is being diluted, and you may want to avoid that stock.
When a stock is being diluted, one misconception is that the company is selling shares.
But that is not usually true. The company will sell shares to a toxic lender (Convertible Shares)
at a HUGE discount (70+%). Those lenders will then sell those shares into the market.
They don't really care at what price, because their shares were bought 70%+ less than the current share price.
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