To: CRay33 who wrote (2121 ) 7/26/1998 9:03:00 PM From: Kip518 Read Replies (1) | Respond to
As LGregg has frequently reminded us the MMs are players too. They buy stock from us and sell stock to us. As any player they wish to buy low and sell high. EGGS moved very quickly from 9 to 29 because the demand came in a rush. The MMs quickly depleted their inventory purchased below 9 and had to bid up the price to get shares to sell. My guess also is that in the lower price range they didn't want to short because no one could tell where the momentum would push the price (it was interesting to watch the ticker on the day EGGS made a top. Supply in large quantity came in at 28 7/8, only a couple of sales went through higher but the ask never went above 28 7/8. MMs build a ceiling by shorting large at that point. Shortly thereafter the price started to decline). Since the high, MMs have had cover their shorts and to resupply themselves with shares sold down from 29 to 20. Given that this gives them a relative expensive inventory they are not likely to want to encourage nervous retail selling by have the price fall below 20. Now, if they were pretty sure that EGGS will have a bangup earnings release, then I'd say there would be a possibility of the stock price moving below 19 prior to the release (to pick up cheap shares from scared longs), but it would bounce back to the 20s again quickly. However, no one seems to be able to count on the release. Hence, my guess that MMs will try to keep the price within relatively close proximity to their average cost. If, as many apparently expect, the release results in another price spike, they're prepared to make money by selling us their shares.
