Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : THREE FIVE SYSTEM (TFS) - up from here? -- Ignore unavailable to you. Want to Upgrade?

To: Doug Meetmer who wrote (1640)	6/3/1998 12:37:00 AM
From: Noblesse Oblige	Respond to of 3247

Hi Doug... No problem, I will try to explain. At a half hour before the close, TFS was trading with a 500 share specialist market, 15.375 bid, 15.625 offered. (500 x 500) A seller came in with 2500 shares, sold 500 to the specialist on his bid at 15.375, another 400 to the "book" at 15.25, and left 1600 shares of his total order remaining offered at 15.25. Final quote for the day was 15 bid, 15.25 offered, with 500 x 1600. In short, a sale of 900 shares of stock left the shares bid three eights of a point lower, and without even the completion of a minimal size sale. The guy that makes this market is the weakest of the weak, and that kind of specialist performance is more than embarrassing, it is pathetic. I hope that is helpful, Doug. Have a good evening. PS: As a matter for the rest of you in the hope you will improve your trading...2500 share sales are always a clue that the order being shown isn't the complete size. No one ever owns just 2500 shares of something. If that is what is being offered, you can bet your "dupa" that there is more behind that trade. Its just one of the rules of the road. <G>

To: Doug Meetmer who wrote (1640)	6/3/1998 1:18:00 AM
From: dfloydr	Read Replies (2) \| Respond to of 3247

Hi Doug: N.O.s later post does state the trading situation very clearly. Just step through his text carefully and it is clear what is going on. What he is describing is the business of being a market maker on the New York Stock Exchange floor. That market maker is supposed to conduct an "orderly market" in his stocks He maintains the book for each of his stocks. Most member firms have several stock that they are responsible for. A small, thinly traded stock is usually given little attention as the market maker gets his real bread and butter from dealing in a stock like Proctor and Gamble or At&t. To conduct an "orderly market" you should know your stock really well ... talk to management ... talk to analysts ... track the news and then act. You should also recognize emotion in the crowd both as to the overall market and as to your stock. You also need to know the brokers who bring the trades to you ... how they play a trade. With all of that knowledge you then make a market in that stock. If a big seller ... and 2500 shares is not big ... shows up ... you might offer to take on his stock at a little under the current price and then feed it out to buyers over the next few hours or days. This means you put up your cash to pay for the stock and take on some of the risk. If a big buyer shows up you might provide him the stock out of your inventory or know whom to call to get some stock to supply the buyer. In some cases you might short the stock to him and then replenish your position by buying in stock that becomes available. Balancing all this is very tricky stuff and done well it is a real art and usually profitable to the market maker as he should know more than any living being what that stock is really worth. When you see the kind of botched trading that has taken place in TFS over the past year, you know that the TFS's market maker is not tending to this stock very well if at all. If a seller shows, he runs. There is little stability in the price. If one were a cynic one might think that the market maker saw the 200,000+ shares coming at him these last few days and let the price fall fast so that he could load up and make a killing. They could get away with a smidgen of this sort of thing, but they are pretty carefully monitored by the exchange which tracks every trade on their computers. If he was the buyer here at 14 and 15 having allowed the price to plunge, he would probably get pretty thoroughly disciplined. What we are seeing is the unfortunate combination of a thinly traded stock and a market maker who is showing minimal interest in what he does in this stock. He is either distracted from TFS by bigger things or just plain lousy at making a market. It is my understanding that TFS does not have to tolerate this. There are other markets ... NASDAQ and the American exchange. NYSE, according to recent studies, seems to be the better market overall but clearly we are experiencing one of their weaker performers. Floyd