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

To: pezz who wrote (770)	8/27/2000 5:31:04 PM
From: Tai Jin	Respond to of 1426

When I have seen the quick selloff (sometimes referred to as running the stops) it is usually after the stock has stalled in its upward climb on heavy buying. That is, the buying dries up and there are no big bidders. Then some of the bidding MMs start backing off and one or more MMs start lowering their offers and may even initiate the selling by hitting the bid. But it's not important how the selling starts, because the idea is to get the ball rolling which will inevitably attract other sellers and trigger stop orders. Once the price reaches a certain level (e.g., technical support) or larger or more bids start appearing then the MMs on the selling side quickly back off on the offer. Of course, all the while that the price was going down the MMs are also buying from the sellers. The price almost as quickly gets back to where it was when the selling began, and there may be less volume on the way down than on the way up. This type of move is also not characterized by having large volume at the bottom since the reversal is very quick and no one is selling very much. In this scenario it is clear that MMs are trying to replenish their inventory. Your scenario of a large seller dumping stock is different. First of all, a large seller is likely to be selling into strong buying (perhaps at resistance, or this seller may be the one creating the resistance). They rarely try to sell when the buying dries up, because they know what their selling will do to the price. But if this big seller is to sell when there is no buying interest then the price will drop, perhaps in a similar fashion to the running the stops scenario. However, volume would be increasing as the price fell until it reached "support" where there is the greatest volume and is an indication of the bottom. At this point the price is likely to go up again, at least for a bounce, and if the seller has more to sell then the cycle starts all over again. So the major differences between the scenarios from my observations are in the volume of the selling and how quickly it reverses on low volume. And in the running the stops scenario the price usually continues higher in the previously established uptrend. ...tai

To: pezz who wrote (770)	8/27/2000 9:08:45 PM
From: gene_the_mm	Respond to of 1426

PEZZ... This theory supposes that all MM's have the same 'trading strategies' and know what everybody else is doing. IMHO, again, not close to reality. There could be a million reasons... read just ONE that I responded to DAN with. BTW people... I am not angry and I really don't care what happens to the OTC BB one way or another... What I do care about is truth and facts. That is why I will always note that my comments COULD be wrong. However, I do not try to speculate on what is currently happening in the markets because there is NO WAY OF KNOWING. You don't know the exact reasons for intraday moves in stocks, no matter how much information or how smart you think you are... That is why I respond this way to these theories... Also, many of these theories propose that the MM is at the crux of the problem (by colluding, price fixing, gouging, extorting, yelling obscenities, etc..). Let's try to look at OTHER theories in the SAME post if we are going to visit any those ok? Otherwise it sounds like masked whining in need of a scapegoat... All the best, -- Gene