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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: Linda Kaplan who wrote (4140)	2/11/1998 3:51:00 AM
From: Bruce A. Bowman	of 18928

Hi Linda- In note #4003 I made some remark about a TA study projecting that BOBJY would hit 16 (should have been 18) in 18 trading days (around 3/2/98) and that I had as much confidence in that as I did figuring out what the Iraqis were up to. The next day BOBJY gapped and I asked if anyone wanted to know what I thought the Iraqis were going to do, but I got no takers. Which is good because I have no idea what I'd have said!! :-) I think Steve and I were both rolled up in the same trade. Somebody placed a market order and maybe they shouldn't have. The move was big enough they probably don't care. Don't forget that your broker can try to fill orders from what he has in his own customers accounts. Nothing says that on Nasdaq they have to buy from anyone in particular, only that they get the order filled at their present market if they can. If they can't, then they look at the other MMs and if that doesn't provide a fill, they can move the market. Your broker probably had fewer buy orders pending than Schwab did. One of the frustrations of Nasdaq is the inconsistency of pricing among the MMs. That's why the SOES bandits flourished. They watch the Level II screen and look for arbitrage opportunities, trying to scalp a 1/4 pt. by grabbing inconsistently priced orders. Each trader is limited to 5,000 shares max in any 15 minutes and no single order may be larger than 1,000 shares. They have good equipment, they know what they're looking for and they're FAST! I've watched the rt feed from BMI when I had that service and there were times the orders would come so fast the tick noise sounded like a brief whistle. I'd look at the tick display and see as many as 50 1,000-share orders had just blown thru. Since they often work in teams, that meant that 10 SOES traders had simultaneously hit probably the same broker for 50,000 shares of inventory that he had inaccurately priced. It was all over in a few hundred milliseconds. I grew to hate those guys because they could screw up a trending market in a heartbeat. And it's all perfectly legal. And it's also the reason I try to avoid thinly traded issues... so why am I in HAVT?! :-) I'll get the s/s off to you tonight. Bruce

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