by bbof99 "Market Makers" are simply securities firms that buy and sell stocks for customers and for their own accounts.
My Nasdaq level II screen shows the following market makers for BCRX: ARCA, BRUT, CYCY, GAIN, HRZG, ISLD, MASH, NAIB, NEED, NITE, SALI, SBSH, SHWD, SLKC, USCT. Many of these are familiar names, e.g., Herzog, Island, Knight-Ridder, etc.
If one has followed the action on level II, you have noted that the stock trades extremely thinly, with 100-500 share blocks on each side. Rarely, 2000-5000 share blocks appear on the offer, but they are snatched away immediately WITHOUT KNOCKING UP THE PRICE. I observed this phenomenon at least 5 times today. The only way that a moderately large block on the offer of a thinly traded stock is taken off without knocking up the price is if the market makers take it off with an intent to redistribute it in smaller increments. Why would they do this? Because that is how they accumulate a large short position without affecting the price. By parceling out shares in blocks of a few hundred at a time, they can keep the price up in the fact of low volume. And every share they sell at a higher price is one more short share for them.
That's how the game is played. A recent example of this is SAFS. For weeks, short shares of SAFS were impossible to obtain, and the desk at Stock Loan confirmed that it was 'one of the hottest shorts on the street'. Yet the price remained elevated, and has only recently began its anticipated correction.
BCRX is so thinly traded that the total sum of bids between the prices of 20 and 30 3/4 on the level II screen near the close of the day was 2400 shares. Theoretically, a couple of large sell orders could topple the price of the stock -- unless the market makers intervene. Which they have been. |
