I must state that your characterization of the 34,600 shares of stock as a dump is misguided. Remember that there are two sides to every transaction. For every seller, there is a corresponding buyer. In this case, I believe you were trying to say that the someone unloaded the 34,600 shares. In fact, the print of that piece was at 11 7/8, the offer, so it would be more correct to say that in fact someone bought a large piece. As well, someone would have been willing to sell that piece at that price to the buyer. How it works is the following: A large buyer, in this case, gives an order to a market maker to acquire xxx thousands of shares. The market makers pays the offer from other market makers and may even up the bid, bidding themselves at higher levels, acquiring stock throughout the day. Depending on how aggressive the buyer is, the more aggressive the market maker will be. If a market makers gets too agressive, it can "give away" its intentions and the stock may run before the market maker fills the client. In the case of Siii, if a market makers were to do this with this pressured stock, it would lose the client quickly. While we would love to see the stock go higher, a true buyer of siii would want the stock low to acquire the company and then, once done, issue the upgrades to begin the upward movement. Once the market maker has acquired the stock, they sell it to the buyer, at the current offer. In this case, the market maker would probably have been buying stock at 11 3/4, 11 5/8 throughout the day and then printed it, sold it, to the end buyer at 11 7/8. Nonetheless, big prints on the offer are positive. Still, you have to ask who feels comfortable selling that size but do remember the stock traded many millions at 9 and 10. Thats a very nice annualized return.
It is important to understand the craft and skill market makers have in guiding a stock in a particular direction. While I still feel that net buying and net selling pressure direct a stocks price, there are skills utilized as in any betting game. Understanding how market makers operate is critical to success in trading Nasdaq stocks. As always, as head trader at my firm, I would be glad to field any questions in this area.
Regards,
Steve |
