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To: SJS who wrote (3324)	11/20/1997 11:59:00 AM
From: XOsDaWAY2GO	Respond to of 95453

Steve--How do I find the bid and ask with the amount offered? Oops, nevermind, I see that you answered my question. Sorry 'bout that. Barbara

To: SJS who wrote (3324)	11/21/1997 1:37:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 95453

Are we talking about composite quotes, or a quote on a specific MM from a Level II machine? As a composite quote, the bid and ask sizes do not necissarily come from the same MM. Also, do not confuse the bid/aks sizes on a NASDAQ stock displayed from a quote service. This is the tier sizes for that stock which relate to SOES trading. To get the bid/ask quote sizes, you need a Level III or Level II service. Think of market making as a poker game. The MM reveals their position only if it is to their advantage. For instance, if the MM has alot of stock to unload, they will likely call a large customer, perhaps an institutional buyer, to unload the stock. They also use both Selectnet and Instinet to help them transact business. Or they may keep their "cards" close to them by not adjusting the ask size and seeing if they can unload their surplus in pieces in their normal market making operations. Or they can keep the stock as inventory which is to be sold at a later time. The bid/ask sizes are there as one tool that is used to facilitate the market making process and reveal what a MM is willing to commit to on a single purchase or sale of stock. This does not normally reveal the number of shares they actaully have to sell. This would be foolish and unworkable, because the bid/ask sizes are limits that pertain to each transaction, and not the total they have on hand to sell. The following is my personal analysis and deductions from what I understand about market making operations on NASDAQ. If the bid/ask sizes are from the same market maker, then ONE market maker has allot of stock to sell. The MM would not be revealing their position like this unless the stock is trading well (strong market) and liquid enough for them to do this and still get the "best price" for their stock without their display of the large ask size forcing the price of the stock down. This means there must be allot of buying interest in the stock for them to do this. Otherwise, it is a soft or down market and they had no choice but to reveal their position to get what they can now before the price falls further. The public is the last place they will look to sell large blocks of stock. For that matter, very large blocks are usually crossed. You can tell which case it is by looking at the tape: the price and volume action on the stock. This will tell you if there is strong buying interest, or if it is a soft market. If it is a soft market, and you see a very out-of-ballance quote on the bid/ask sizes, then it qould be prudent to wait it out and look closely at the transactions that are recorded on the tape. If the MM finds a large customer for the stock, their comparatively large ask size will disappear. The tape rules. The bid/ask sizes displayed by the MMs are perhaps useful but secondary information. Remember, without understanding both the buying and selling interest in the stock, you really do not have a clue as to where the price is likely to go. The bid/ask sizes are rather meaningless without this context. I have seen many cases where a good MM can unload stock and manage to help keep the ask price relatively firm. Once the block off shares was sold off, they adjusted their ask size, and the stock a period of time later started to move up. So much for the large ask size posted by one MM at one point in time during the day. The MM is very, very good. Any comments or feedback welcome. Bob Graham