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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Voltaire who wrote (1383)	9/14/2000 10:14:18 PM
From: RocketMan	Read Replies (1) \| Respond to of 65232

You're right about the main point of exchange and the psychological spickets, as you call them. Take RMBS today, for instance. 3.3M shares traded. Let's say 55% were sell side and 45% buy side. That would correspond with the Naz average today. That means there was an imbalance of 330k shares on the sell side out of a float of 62.8M, or 0.5% of the float. That 0.5% was responsible for a 2.85% drop in the price, or a 6 to 1 leverage for the houses. It's actually much worse than that, since most of the drop was in the last couple of hours, on light volume. That is how MMs, Houses, Market, etc, can create a psychological setting ("spicket") that the market is running, or diving, etc, and start momentum either up or down. And that's not the worst of examples. Better yet are those dives, usually an hour after the open, when they blow through stops on light volume, stacking up the sells ahead of the buys. GMST was the worst for that, and it continues to be run up and down at the mercy of the MMs. Look at it today, down 4% on 4M shares, 1.7% of the float, for a 10 to 1 leverage, again assuming a 55-45 ratio. Remember a year or two ago when the Naz was running like mad, and the Naz called some top-level meetings with the houses about what to do about the situation? The answer, it seems, has been volatility. Run the stocks up or down, shake out the individual investor, and take advantage of the marginal volume to make profits. Me, I don't care what they do. I sympathize with them in many cases, especially when stocks with no fundamentals were/are getting bid up on nothing but momentum. However, the MMs have been given a little bit of liberty, and they have taken it to the extreme, where any stock can be run up or down at will. That is why, for me, I am using hedges, covering, using protective puts, doing whatever it takes on my trading stocks. Stops are equivalent to market sells any more. For the core of my holdings I am still either in cash or in LTB&H, just ignoring anything that does not impact the U.S. economy for the next 5-8 years. So far I have not heard of any.