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written by reader Market manipulation- how to identify it?

By shaya4, June 2, 2015

$ATNM has been on quite the roller coaster the last few days, and I’ve been reading up on market manipulation as a result. I am a newby to investing, but work in the field of databases and dashboards, so I recognize screwy data when I see it, but have no idea how to interpret in the context of stocks. I think the main Dr KSS comment thread is tired of the topic, but I hope a few of you will join me.

I found a fascinating article on short attacks:
http://seekingalpha.com/instablog/2918951-g-hudson/1026551-how-the-big-players-manipulate-the-stock-market

NASDAQ just published historical short data for ATNM ending on 5/15
http://www.nasdaq.com/symbol/atnm/short-interest

The really big $1,000,000 shorts started with settlement dates at the end of Feb, and the big price drop was intrasession Feb 5th & 6th. The shorts kept growing by 500,000 shares every 2 weeks after that- On the last date they were up to 2,526,000+. Granted, the price dropped $2.79 during that period which invites shorts, but is this normal behavior for a low volume stock?

Now there is one relatively big call left with expiration date of June 19 and strike of $2.5. It’s not a put, which is what I would expect with short attack, but I have very little visibility into very recent past options- say the last 6 days.

There is a graph on Schwab’s options tab that shows the call/put ratio and on April 22 or so there was a huge spike- like 7.40- where all other dates were flat low values. What does that mean?

The big shifts in price keep happening right on the boundaries between normal sessions and pre/post sessions with a huge transaction that doesn’t show up on 1 day graphs, you have to look at 5 day graphs to catch them.

So what do you think- is the last few days of dropping like a rock on fairly good news a result of manipulation, short attack or otherwise?
What kinds of manipulation have you seen in other stocks?

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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👍 109
Anamorph
7 years ago

There is also ‘Edge Media Interactive,’ out of Fort Lauderdale, which looks small but more legit than the Phoenix company; they offer SEO, web development, ‘click based marketing,’ and so on. Interesting hypothesis about shorting, though apparently ATNM had used some kind of promotion company last year. Completely agree it’s backwards if the company is really doing it. It is as if the company’s scientists are working hard on getting products ready to test but there’s a marketing dept of bros who think the thing to do is take hookers and blow to potential investors!
Please follow up with what you find out about short interest. Herbalife is obviously not the only target of aggressive shorting! (Though they deserve it IMHO.)

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Travis Johnson, Stock Gumshoe
Admin
Reply to  shaya4

That’s a pump and dump disclosure from Microcap Research. Companies have legitimate reasons to hire IR firms like RedChip, even firms that look kind of sleazy, because generating investor interest is a core business activity of public companies that require ongoing capital infusions… it’s not that different from what large firms do with visits to CNBC and presentations at investor conferences and having in-house IR staff who sweet-talk the mutual fund managers who call for info, though for small firms it’s often even more important because if they need to raise money by selling stock every couple years they can’t afford to have the stock price drop too much — but the only reason an unrelated third party hires a stock promoter is so they can drive the stock up to sell it in short order. Doesn’t always work, of course, but from what you’ve said it sounds like ATNM over the past year or so has probably both hired IR/promotional firms and has been targeted for pump-and-dump promotion.

And to reiterate, I know nothing at all about ATNM.

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modernrock
7 years ago

It is done to provide liquidity to sellers, not necessarily drive the price up. They usually own it much lower and/or have lower converts.

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Travis Johnson, Stock Gumshoe
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Reply to  modernrock

True, that could be a squishier kind of “pump and dump” — has there been insider or fund selling?

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