I have no doubt that there are slick traders at work who will play games behind the scenes to shave a few extra pennies of profit on a trade. But I also think a lot of what people write off as manipulation is really just dumb traders doing dumb things.

For example, the frequent 100 share lots that change hands are not all that effective for manipulation. If the spread today was 4000 shares on the bid @ $2.22 and 300 shares on the offer @ $2.29, then one could run several 100 share sell orders in and not make any difference whatsoever to the market. The small orders are probably small traders who are scared and selling their little gamble because the rent is due. You can dump all kinds of small orders as market sell transactions and not move the price a penny if there are buyers lined up. Its not manipulation in other words.

A thin market means that any big order that shows up on level II will encourage other sellers to put in prices above or below in order to get a quick fill. So perhaps there is a game at hand if someone puts up a huge block at say $2.30 and then staggers a bunch of small buy orders below that. They hope they are going to force small sellers to dump their stock below the big sell block, and then the small buy orders get filled cheaply. If the volume is thin, any big block is probably not going to be taken out so its just there to herd the little guys into making trades at lower prices.

The whole idea of hidden signals for traders to communicate is a bit over the top. I know lots of traders and they are never more than 2 minutes between phone calls. Why bother moving small orders? Anyone with level II can see who is active buying or selling. You do not need to interpret a code, just watch the tape. And if it is posted on a public forum, it aint a secret...

Anyway, the bottom line is that if KXL has the goods, then all of this nonsense does not matter much. People will always try to buy or sell at the best price they can get, and sometimes thin trading will allow big swings on small trades. That is why it makes sense to buy now, and not when the market is hot.

cheers!

mike