Another very interesting post from an ex-Market Maker...
Many of us have seen what we call a head fakes. The following post is validation to those of us that have witnessed this for years, but had no proof. Of course, this manipulation has become more "in your face" and blatant over recent years.
Message 13231587
Now over the past year or so, a brand new game is afoot on Level II. As more and more individual investors have gained access to it and have begun to use it in their trading strategy, manipulation of this data is out of control. Market Makers and ECN users posting phantom bid/ask offers. This is often done in collusion and so obvious it is "in your face" on Level II. It is done to deceive.
Message 13231779
I have also seen Market Makers do the following to induce buying...several Market Makers bid at the same price many revealing a high share amount. On the ask side one or maybe two at a 100 share count. This shows up on Level II like buying pressure. One would think the price should move up. Then, after thousand of shares click off at the best ask offered by only one or two Market Makers showing only 100 shares, suddenly in the blink of an eye, all the Market Makers on the best bid drop their thousands or hundreds of share best bids all at once. At the same time several Market Makes offering thousands and or hundreds of shares suddenly appear on the best ask side. Next thing you know, after thousand of shares have been bought based on what looks like an up move to come, the stock is heading down and quickly as Market Makers do not support the decline even inducing it by dropping bids and ask fairly rapidly in some occurrences. Of course, just the opposite occurs as well.
Back in the mid-eighties Richard Ney use to appear on the LA Financial channel KWHY and point this out on a daily basis by doing a time/sales ticker analysis of individual stocks. He mainly focussed on the manipulation by NYSE specialist, but the same thing happens on NASDAQ. Of course, he was ridiculed by many of his pears at the time and since. I remember when I first started posting on SI, every time I would bring this subject up I would get challenged by other members of SI one in particular was a Market Maker from Canada. Of course, there was no way for me to prove this went on, but like I said since...one can see the tracks, note the hair around the liar, see the droppings and feeding remains. One does not always have to actually see the beast to know it is around...<ng>
It is finally nice to see a Market Maker break the code of silence and admit to what many of us have already known was and still is occurring on a daily basis. However, beware and make no mistake about it, manipulation and collusion does not stop at this level!
Regards,
LG |
