Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 169.27

-4.8%

Jan 12 3:59 PM EST

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To: Zeke who wrote (53138)	12/8/1999 8:12:00 PM
From: ahhaha	Read Replies (3) of 152472

I wouldn't have posted such an item unless I felt it was significant. I did it also because it might be of value to Greg Mullineaux. This trade was worth 688,300 x 398 = about $270 million. Just before it hit the stock was being run from 395 by small orders. When it breached 398 it briefly traded a few 1/8's above, a run of 398's and then an uptick print at 398 1/16 with the big block next. On the NYSE this almost always indicates a specialist short sale. What happens is the book becomes thin above and small market orders are increasing in flow intensity. The specialist must short to supply stock. Then an institution comes in to buy market order and the trader walks up to the specialist and indicates a lot is coming, so the specialist then lets marginal demand raise price and bunches the big and small orders in one large short. You can bet your bippy that the rally is over. The reason is that the next bunch of orders show how price sensitive marginal demand is because there's little selling supply booked above and few want to sell. To buy you have to force the specialist to sell to you at a premium. The players see this and decide we gotta get out, so now price explores the other side of the book. Price can't advance unless there is selling supply booked above. We refer to this as "price moves in the direction of the book". The NAZ is not maintained by a specialist, but by a functional equivalent, the MMs. It is likely that this big block was a pension fund buy which needed an arrangement of participating MMs to supply. If that's the case, the stock will sell down just as part of market mechanics. Apparently it has done so already. The market makers can then go in and cover their shorts at a profit which also helps to support the stock on the downside by squaring their books from absorbing supply from selling longs. Why this interpretation has significance is that price action has exhausted fundamental expectations and the illiquidity above is indicative of that attitude. It suggests the stock has internally peaked, but often price will go to a nominal new high over coming months, but won't make any further substantial advance until a significant correction has taken place or an unexpected improvement in fundamentals occurs. This means one starts looking at the stock for an exit. Another interpretation is that it was MM arranged between institutions, but usually that kind of transaction is done off-board and is printed as a wash. This was a downtick. That 1/16 was quite profound. 1/16! on a stock at 398. The whole way the trade was setup is suspicious. It has to be one of the largest transactions in history to so innocently occur. I suggest anyone reading this take my comments under advisement. Look for this feature in other stocks. If this starts recurring in various high flyers, you know the rally is internally over and the big boys are using the public enthusiasm to distribute shares.

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