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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: David Smith who wrote (2044)	12/16/1997 12:16:00 AM
From: Joe C.	Read Replies (1) \| Respond to of 4969

Christopher: I see a lot of quotes regarding Momentum Traders and the effect they may have on a stock. I also hear a lot about the Nasdaq volatility and your comment about quicker executions on Nasdaq was revealing. However, I wonder if you could help me with some questions that relate to the day ORCL tanked the way it did and stock volatility in general. I don't know if you make a market in the stock but I think your comments would be helpful. What role did momentum traders play that day? Obviuosly people were buying all the stock that was being sold - lot's of money changed hands. I assume some large institutions were dumping as well. However, given that most individual investors follow their stocks by reading the newspapers (although I guess more and more are surfing the net), it seems to me that most of the movement was caused by the profesionals - day traders, market makers, institutional traders and other agency traders. Of this group, who would fall into the "momentum trader" category? I suspect that the individual day traders are not alone when it comes to momentum trading. It seems to me that this market is always overreacting to news - is this caused by momentum trading? If ORCL were listed on the NYSE, do you think it would have moved as much as it did? By the way, I also came into this thread from somewhere else. I tend to buy and hold although I'm quick to sell when I'm up 10-20% or down 5-10%. Actually I've been upping these percenatages lately because it seems that most all stocks have trading ranges of 20-30% nowadays. I used to (10 years ago) buy a stock and watch the price mostly weekly and mostly when reading Barrons. Now I find I have to keep up on them very closely. It seems that the same stocks I bought then - such as GE or Disney - go up or down in a month as much as they did in a year. I bought MERCK a few weeks ago expecting a very nice to me 15% per year. I sold it three weeks later when it hit my target. My wife asked me if I ever planned on holding on to anything "long term" and I told her that long term seems to be measured in weeks nowadays. Joe C.

To: David Smith who wrote (2044)	12/16/1997 11:13:00 AM
From: steve goldman	Read Replies (3) \| Respond to of 4969

Chris...I really do appreciate your responses. I think you contributions here will help broaden our discussions of the markets, very nicely.I present these questions as I think they raises some issues that many have not heard answers for before. You stated that when you get an order to buy 10k or 1k of stock at the market and it is 25 to 25 1/2...you try to get stock at 25 or as cheap as possible andfill the client at 25.....Do you print the 25 1/2 print for the client first and take the risk on gettingit cheaper or do you try inbetween first?What happens if the stock runs higher whileyou are trying to make a profit for the firm? Do you make the client good on his order as though you had represented them agency? basically, do you consider your transactions riskless, where the customer is taking the risks and you take no risks for trying to make 1/2 point on 10000 shares? After all if you are trying to get stock at 25 1/8 and the stockgets hot and runs higher, partyly from your buying pressure, what doyou do, keep putting buying pressure on the stock? Take the offer for yourself and fill the customer higher? or Take the offer forthe client? I find it unique to learn the phsyche of a trader at a firm. From a psychological standpoint, do you think that 1/2 point on 10000 shares or $5000 is an appropriate "commission', sales charge for 10000 shares? Do your think most of your institutional accounts understand the $5000 they are paying for the trade and 1) like your services so much or 2) don't care because somone else, mutual fund shareholders etc. are paying the bill? I am just trying to get a sense of the type of client you deal with who wouldbe willing to pay the 1/2 point sales charge when you might not protect them from the order running. Clearly these are not the clients I deal with. I work an order on 2000 shares of Dell, the client wonders why they didn't buy it at the low of the day, and how can I charge them $55 for the trade when e-something will do it for $19. Maybe the client should consider what you would have made on his 2000. Hope you had a good day in a strong market! Regards, Steve@yamner.com

To: David Smith who wrote (2044)	12/16/1997 2:08:00 PM
From: The Perfect Hedge	Respond to of 4969

Christopher- Is there any truth to mm's holding back a stock at or near expiration? Do the mm's look at the corresponding options and vice versa?I have the same question for the NYSE which is different I hear.Do you know about the NYSE guys?GD