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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: TFF who wrote (1556)	7/16/1998 9:26:00 AM
From: Rommy B.	Respond to of 8307

Irby, From what I've learned, MMs (market makers) act as the middle man for stock exchange for stocks traded on the Nasdaq. Originally, they were supposed to get their pay from the difference between bid and ask prices. What had happened, however, is that when a lot of people want to buy a stock (say, Eggs), the MMs have to fill these orders (if they don't, then brokage firms would go to other MMs and the MM that couldn't fill the order would lose the trust of the brokage firm). What does this mean to us? Well, when MMs have to sell stocks on high demand that they don't have, they end up borrowing the stocks and selling it to you (definition of shorting a stock). So many MMs have shorted EGGS at high levels. This has nothing to do with the company fundamentals, the MMs have been "forced" to short the stock so they can fulfill orders. Of course, since they shorted the stock when it was high, they would like to buy it back from you when it is lower (and make money). That's why they shake the stock (like yesterday, it went down to $19) and then they also play other games like fake rallys to sucker more people to buy for high prices. The MM game is not ethical as I see it. But it is there. MMs also sometimes work in conjunction with each other. That adds to the price manipulation. But if you are careful, and you are not driven by hype, you can beat the MMs in their own game by trying to foresee their moves and motives. Of course, it doesn't always work, but with EGGS it seems clear to some of us that it will drop to the 15 area within the near future. That's why I am short on this stock for now. Best of luck!