http://business.financialpost.com/2013/02/15/the-secret-trading-strategy-from-the-1930s-that-hedge-funders-dont-want-you-to-know-about/
I saw this on InvestorVillage (VHC board). I thought it extremely interesting - especially in light of all the gyrations with InterOil's stock price.
Some excerpts follow:
****
Wyckoff walks us through the process of how a big operator will manipulate a stock up or down — so that next time one sees it unfolding on the screen before his or her own eyes, he or she can react accordingly.
****
“The preparation of an important move in the market takes a considerable time. A large operator or investor acting singly cannot often, in a single day’s session, buy 25,000 to 100,000 shares of stock without putting the price up too much. Instead, he takes days, weeks or months in which to accumulate his line in one or many stocks.”
Source: Wyckoff (1937)
Instead, here’s how he sets it up: first, he’ll “shake out” the little guys by forcing the stock lower in order to get a better price.
“He prefers to do this while the market is weak, dull, inactive and depressed. To the extent that they are able, he, and the other interests with whom he works, bring about the very conditions which are most favorable for accumulation of stocks at low prices…
“When he wishes to accumulate a line, he raids the market for that stock, makes it look very weak, and gives it the appearance of heavy liquidation by sending in selling orders through a great number of brokers.“
****
My comment: I would argue that the "bigs" ran it up to the $90's last fall so that they could push it down for the next 3 months. IOC at $50/share was "Stupid Cheap". Then they have been over the last couple of months accumulating their long positions (having shaken out the 'retail' longs). They know InterOil has big news coming . . . IMHO . . .
