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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (11104)	6/22/1998 11:21:00 AM
From: Robert Graham	Read Replies (2) \| Respond to of 14631

I want to make clear that I am not saying the MM is responsible for a given print or change in price of the stock, even though as a middle man technically speaking they are responsible for the changes in price of the stock. If you were to review my past posts on this subject, you will see that I have never said that every movement in the stock can be explained through MM manipulation, or that this happens most of the time. However, the MM in their role can have a profound short term effect on the price the traders place their orders at. And since the SEC has proven MM manipulation of prices, why would you think the MM is a generous group of people and stop at only a "little" manipulation in the form of the spread? For that matter a NASDAQ MM told me that very little of their profits come from the spread itself. This would imply that it comes from taking a position, which is a vested interest, in the stock itself. How else are they to make a profit? It is widely known that the NASDAQ MM has an investory to manage in a given stock that exists beyond a given trading day which is assumed to be for liquidity reasons. So there is your vested interest in the pice of the stock. I have seen the IFMX MMs peg the ask at 7 for a period of time even though there was no buying activity there to justify such a quote but there was significant selling activity at the bid. When the spread was moved down then orders would start to come in at the ask. Go figure! Normal trading would have the MM testing both directions for activity which is a necissary part of their liquidity function and arrive at a position that does provide this liquidity on both sides of the quote and not just one side. I think it is important to allow them an opportunity to keep their position in the stock "even", but what I am talking about here is more that the MM just taking advantage of the "normal" ebb and flow of the stock to cover themselves in this way. Bob Graham