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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: tom ablett who wrote (1308)2/14/2001 6:38:20 AM
From: Apakhabar  Read Replies (1) of 1426
 
Hi Tom,

Trying to figure out the motivations of a MM will probably do nothing to help you and only add to your apparent frustration. The important thing is to recognize what you saw. JPHQ's trader was selling and did not raise his price. You claim that there were "willing buyers all day long." From just this you can infer that JPHQ's trader had a lot of stock to sell because had he raised the offer, then other sellers might have come into play and JPHQ didn't want that competition for the buyers. On the other hand, if there are a lot of buyers as you say, then the stock is testing support.

I don't follow WIND so take this FWIW. I'm assuming that what you say you saw is accurate. Given that you are seeing a battle between the bulls (all those buyers) and the bears (JPHQ, who could be representing anybody), it stands to reason that the easiest thing for you to do as a trader is to have no position until you can determine which side gains control of the price direction.

Clearly if the supply outlasts the demand then not only will the price drop but a lot of those willing buyers might decide to cut their losses, accelerating the decline. On the other hand if JPHQ is just dumping a large position held by a single entity that wants to get out immediately, then as soon as this supply is exhausted, it is likely that the a rally will ensue since it may be the case that there are few other sellers at the current price.

Trying to determine too far in advance who will win battles like this is a vainglorious pursuit. Think about it. If you watch closely and without prejudice, you might, depending on your intuition (based on your question I wouldn't guess your store of this is very high), sense when the tide has finally turned a little sooner than the crowd. That is the goal of a good trader.
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