Jim Sinclair: How to spot manipulative late and after-hours trading


By Jim Sinclair
Sunday, August 5, 2007


I have already explained to you how the price of precious metal shares is manipulated via after-hours, off-market transactions of small to no volume at the extreme price levels of the day. In most cases this is done to push prices down. This type of manipulation totally skews candlestick charts but is used to paint other methods of charting as well.

Sometimes the transaction may be significantly below the low price made for the day. As a result, computer systems report the close of trading significantly below the bottom of the day's trading range.

This benefits illegal short sellers.

There is another method of manipulation used by the illegal shorts, an "end of day markdown." This occurs when traders sell viciously in small volumes in the last few minutes of trading. This is common both with paper gold and mining shares.

Computer platforms show you the bids and offers that are in the marketplace along with volume and price. On Friday a situation was trading near its high of the day on the American and Toronto exchanges when, in the last 90 seconds, a seller entered the marketplace by hitting all the bids down below the range of the day.

This type of manipulation can succeed, because how many investors are glued to their screens in the last 90 seconds of the trading day or can type fast enough to get buy orders in?

This is more clearly manipulation when it forms a pattern.

All trades have paper trails, so at discovery in a civil lawsuit, who was doing what -- both in gold and gold shares -- is knowable.

This illegal shorting can be identified in the same way as the strategy of manipulation by trading off-market and after trading hours by small volume.

Review the share volume at price and time of sales using a one-day one-minute chart, line and bar, and volume-at-price chart for the same day. The misdeed screams off the page and shows that the market is being manipulated by a penny-ante trader.

When both tactics are used on low volume, it says the manipulators are frantic to transmit fear into stockholders in order to profit.

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