RE:When does short selling become manipulation?Without going into the rest of your post, which has it's merits and truths, I will only address the title of your post.
Today is such a day. Market makers have long since abandoned their real role - to actually make and facilitate markets - rather, they are in it like you and I are.
Yes, they are supposed to make money, but in all honesty, they are supposed to make money, on thier commissions. As you and I know, that's hardly the case any more.
Today, witness the UNDERWATER positions of market makers. Barely a week ago, they shorted this puppy to the tune of 6,000,000 shares. or so. We have only made the same volume since that week, which means that they are competing with savvy buyers(and holders) .. thus, the are now forced to do ANYTHING to cover their remainder whilst all the while, making a market for actual buyers vs. short-sellers and covering entities.
THAT is why the bid quite handily grows quickly but does not move the pps as they MMs collude with chat rooms and phone calls to manage the ask and keep it low enough to get by this covering activity, and YOU CAN BET the farm that if oil moves down even a little, that re-newed shorting will ensue, as it willh help them with their underwater positions.
All in my opinion of course ..
Stay frosty :-)