Conspiracy Theorists Unite!!!!!!<g>
When you are talking trends, it's definately not the brokerage houses or market makers or daytraders(although all three are blamed a lot). It's the operators, including pension funds, mutual funds, and institutional investors. The buy siders drive it, whether they are buying or selling. The others three are temporary blips on the radar screen.
Didn't someone just post that story from The Street.Com about the manipulation in PMCS? Something like "call up Goldman, Morgan, Merrill, Knight, and Cantor and have them all sell me 10K shares of PMCS, knowing they'll all have to short shares to me, and that their covering will drive up the price, which will make my 300k shares worth much more"(something like that, anyway).
>>>>Watching MTSN drop over 20% this morning on about 40K volume is a prime example. They can decide to support a stock or not, it's all up to them. If they don't have the stock in their coffers to support it, they can decide to let it drop until there are enough sellers to refill their stash at substantially lower prices....<<<<
If a market maker does not have an order, and the semi equipment makers are getting crushed, why should/would they support MTSN or any other maker? Unless someone makes a call on a desk to take a position either way, market makers (order takers) fill orders and want no risk. No desks were making calls to go long semi equipment makers yesterday, not with the action in KLIC and KLAC, hence, why should I as the market maker for XYZ Brokerage be long a single share of MTSN? That might make me lose money, which in turn might get me fired.
It feeds on itself, because no market makers in their right mind would want to be long with the dearth of buyers, plus, shorters sell more (small amounts) on days like yesterday. Shorters that take large positions take them selling on the way down(the trend), not on the way up. If I were short 100,000 shares or more of MTSN, I'll test the waters on a day like yesterday to see if I should cover, which when I see all the market makers getting out of the way of my selling, I quickly realize that I should not. So, I sell another 10,000 shares, which depresses the price...
An excellent read "Reminiscences of a Stock Operator", the true life story of Jesee Livermore. It's 80 years old, quite amazing how little has changed. Reads like a novel too. |
