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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: William W. Dwyer, Jr. who wrote (908)	4/7/1998 11:49:00 AM
From: Lino	Read Replies (2) \| Respond to of 2120

What I mean by "watching the spreads": If there is definitely a MM continously bidding or asking on the inside market he is a true maker of the market and has a very large interest in the stock for that day. He probably is buying and selling inside of a range. He will maintain a spread between his bid and offer. Say GSCO is bidding Dell at 67 and offering at 67 1/4. The spread is 1/4. If the action on the stock is on the ask for 67 1/4 and if GSCO continues to sell and stay on the inside ask for a prolonged period of time, it is very likely that the upward momentum will slow as the retail buyers diminish and the natural sellers start hitting the Bid. If GSCO is trully in control as they usually are, they will move the stock down to their bid price and start buying to fill their orders or replace stock that they have sold and then move the stock back to their ask. This is what I mean by watching the spread. This will give you some feel for the movement of the stock. Actually one can buy and sell with the MM and get 3/16 of a pt. back and forth. I know this seems confusing. I pay attention to the True MM because I think that the big Institutions and their orders via the large MMs usually dictate the movement of the stock. All the individual trader really can do is read the movement and not trade against the MMs that are establishing the trend. Good Luck. Just my observation