acpme said:
Example: Panic sets in...people start selling, big players start flooding the market with a ton of small sell orders to get a mass panic ball rolling. Then they start scooping up shares once the momentum started. That my friend, can almost never be proven and that might not even be illegal? But you betcha it happens everyday...
before you keep calling others clueless, you might want to get an understanding that this is NOT market manipulation. it's simply momentum, like you said. a sell-off occurs and everyone follows suit. no one, even large funds, want to be on the wrong side of momentum. what you may be witnessing could be margin calls and quantitative models all trying to exit the same positions at the same time -- in fact thats exactly what their models would tell them to do.
when it can't be easily explained from outside observation, the assumption is foul afoot. most observers just notice the sell-off and the buyback, then assume something malicious occurred. on avg the stock would need to recover not only to the original price, but beyond that in order for the trade to be profitable. also, the wash sale rule makes that trade much less profitable than it sounds.
