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

To: Robert Graham who wrote (1040)	5/25/1998 1:46:00 PM
From: paideia	Read Replies (1) \| Respond to of 2120

"Theoretically, the opening price is an attempt to match up current supply with current demand at the open of the day's trading. Realistically speaking where it concerns NASDAQ stocks, I think the open price at times can be determined as much by the current needs of the MM as the current needs of the market with respect to the MM purpose of maintaining two sided liquidity in the market. Note that I am not specifying the price that this liquidity is available at." Bob, thanks for this response. While I've never come across anything about the process by which gaps are specifically created, what you seem to be implying is MM's put the tip of their pencil in their mouth and go, "Ummmmm. Let's see. $14 bucks oughta be about right. Let's try that and see how it flys." I wouldn't be surprised but to find out that you are right. I also wouldn't be surprised to find out that this is another area where John Q. Public takes the NASDAQ shaft, that the opening gap prices often aren't based upon any actual supply and demand at all, but rather, that they significantly influence and CREATE the supply and demand. So this leads me to another question: How do MM's all arrive at such a very close range around the gapped open price? And why isn't that collusion? My bet would be that they all look to the Axe on a particular stock and follow as closely to his open as they can. Anybody else have any specific information on this issue?