Posted by Richard on September 21, 1999 at 15:10:43:
In Reply to: Richard, posted by Mary on September 14, 1999 at 18:03:54:
Today is the perfect day to examine the spread.
(My previous posts were assuming a zero or minimal spread)
Today was the first day in a while that I checked in on this dog stock
during the day. It is a perfect day to determine the spread because there was only
one trade(most likely).
http://finance.yahoo.com/q?s=sgtn&d;=5d
It appears that a trade went through for 3000 shares.
A couple of things might have happened:
1)A seller sold at .25 and a buyer bought at .50
or
2)A seller sold at .25 and the MM just gave it to him
from the pot without a matching buy
or
Some other combination. . .
It looks like the spread was moved from bid 1/4 and ask 1/2 to
3/16 and 7/16 to create an incentive to the buyer to get in under .50
Which would then balance the book for the MM for the day(if in fact the
above trade was a sell from the MM's reserve.
This spread may be a big reason why the volume is so low for this stock.
If you look at other penny stocks they will have a spread of a penny or up to a nickel.
This creates "action" on the stock and attracts "traders".
While I am no expert (and I am sure thier are some mistakes in my hypothesis'),
I believe that I am in the ballpark.
What will make this stock go up?
IMHO- Profit, announced contracts,buyback stock, change in managment, etc.
What will make the volume go up?
IMHO- Increased interest in the buying public, buyback stock, or a decrease in the spread.
One of the things Yehoram might want to do is to talk with the MM's or other
pennystock companies to find out how they keep thier volume up.
The only thing for sure with low volume and huge spreads is that
people who want to get in this company pay a premium and people who want
to get out are being ripped off.
This is not ideal for the shareholders OR the company. This is also why
I am concerned about the lack of concern about stock price by company management.
Making a company stock attractive to buyers IS NOT manipulation(as one of the previous posters alluded to).
Goodluck all!