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Non-Tech : Meet Gene, a NASDAQ Market Maker -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (768)	8/25/2000 8:28:53 AM
From: LPS5	Respond to of 1426

Dan, What a terrific message. The only part I'd have changed is (and that by description): "The only thing left is to pull out the bottom and stimulate a panic sell by the public[; s]uddenly the bids start evaporating and the fearful begin to bail out." I would specifically characterize this action as the result of and reaction to order flow stagnation in the issue, (especially after all the buying went on that you indicated) the lull following several days of positive momentum. When such activity stops, dealers try to find price points and stimulate activity while rebalancing their own inventories. LPS5

To: Dan Duchardt who wrote (768)	8/25/2000 8:33:56 AM
From: pezz	Read Replies (2) \| Respond to of 1426

Dan I have often seen the scenario you describe but have a different take. After seeing your stock's run up stalled there is a long suffering large player [who perhaps in this case bought the IPO ] that wants out. Volume has dried up and he/she has missed the opportunity. What to do? Begin selling at market small amounts [ not to show your self thus not to frighten potential buyers ] to delibertly drive the price down to a point where liquidity comes in to absorb your stock. [ the real buyers you speak of ].The mm's do not step in to support the price as they are aware of the sellers strategy and of course have no intent of stepping in front. If the scenario you speak of now shows large volume at these lower prices this would be the successful conclusion to the sellers strategy. Of course this might be all wrong but if I held a large position in a thin stock and wanted out it's what I would do.

To: Dan Duchardt who wrote (768)	8/25/2000 5:18:04 PM
From: Apakhabar	Read Replies (1) \| Respond to of 1426

Hello Dan, I always enjoy your posts; this is the first one with which I strongly disagree. The first flaw I find in your theory is that the MMs are just stupidly selling LARGE amounts of stock short, thereby taking on a huge risk. My belief is that if there is so much demand the MMs will just let the stock go up. What do they care if it gets bid up from 15 to 25 in a day? You didn't see the MMs get upset that AMZN went up to 600 after Blodget targeted 400, right? However, assuming a MM was fooled by the demand and he did sell too much short at too low a price, how do you get the idea that other MMs want to help this guy out? When did a "We're all in this together" type of socialism become part of the trading world? I believe that if other MMs suspected that one of "their own" was too short for his own good, they would much rather squeeze the poor devil into submission and make some money for their own coffers. I believe it helps to simply imagine that you were the MM in your example. Would you have sold all that stock short at 15? Or would you have sold a a few hundred at 15, a little more at 16, and in fact, "walked the price up" to a level where you felt you were NOT taking such a big risk? Similarly, in my own experience, I will often be trading a stock during the day, taking several long positions at, say, $35-36 share and selling them at $36-37. Then toward the end of the day, something happens, maybe it's just a feeling I get, but all of a sudden, I sense that somebody wants to sell a lot of stock, and now I don't even want to buy the stock at $33, and neither does anyone else. It just happens; it's an aspect of trading. Certainly I am not colluding with anyone (I trade at home). I have no "understanding" aside from an aversion to risk. When you say the prints from 15 to 13 were only for a few hundred shares, you describe that as "not real selling pressure". A more accurate description would be that buyers disappeared, that there was no buying support. The prints weren't for more shares because nobody wanted the stock anymore. As you said, the stock went from 13 to 15 on four million shares. Dan, perhaps you could rethink your idea about "true sellers" in this example. IMO the MMs just aren't going to take on a big short position until they have a good idea at what level the "true sellers" are willing to sell. I just can't imagine other MMs would sit by and do nothing while a stupid MM got into a bad position. Even harder to imagine is that all the MMs together got into the stupid position at the same time. These people are by and large GOOD traders, not a bunch of chumps. I think it more likely that when a MM proves to be a chump, he gets fired, not bailed out by his or her contemporaries.

To: Dan Duchardt who wrote (768)	8/27/2000 9:00:55 PM
From: gene_the_mm	Read Replies (2) \| Respond to of 1426

DAN... I skimmed your post. Mostly pure hypotheticals, and IMHO, not even close to reality. It does not matter how nicely you try to put it, you in essence propose that MM's on the OTC BB are colluding (be it spoken or unspoken) to control prices. Trading is a cutthroat business and you make the assumption that if one firm is selling large quantities, ALL firms are selling large quantities. This is where your theory falls flat. The bottom line is OTC BB's are generally risky 'dogs' that simply can't get out of their own way because the size of some of these floats are huge. What if the MM's who you purport to be selling were not selling short but OWNED HUGE amounts of inventory at ridiculously cheap prices because it cost them practically nothing to buy them 6 months or a year ago? Now what if when the buying is done the MM's are STILL long and do not desire to buy any more? Do you think this could be the reason they get out of the way? Just my opinion but your post appeared to me to be a nice way of trying to propose price fixing and collusion. I apologize in advance if this was not your intention but that was the way the last few paragraphs read. All the best, -- Gene