Marketmakers at Work - OCH

[cookie]

On a previous thread I had highlighted the work of the Marketmakers in uneccesarily savaging the prices of the likes of OCH, KWL, IQE, and DCM to stir traders and to induce some action - well today there was a classic example again with Orchestream (OCH).

From an open Ask/Bid of 300/290 MM's decided to have some fun by slashing the midprice by 27.5p to 275/260. By 11.30 this had encouraged 180,000 shares to be traded but still only approx 19% of avg vol. So they then brought down by another 30 points at 240/235 but to no avail. Why not slash it again by an extra 17.5 ( Total= -75pts = -25% ) to 225/215 and induced another 96,000 shares to be traded but still only just over 25% of avg vol.

And then the sting !!!!

Having frightened the life out of stockholders they then raised the Bid price to 225 then 230 then 235 and bingo a 1,000,000 share sale @ 235 representing a 19% discount from open.

There appears to be no fundamental reason (tech sell off sentiment excepted) for MM's to take such drastic action other than to prey like vultures on the poor old shareholder. (Interims not due until Monday)

This was pro-active and not re-active and surely there should be some regulation as to the severity of their actions.

Your views please.

Jumping up and down - Cookie


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[Cigar]

They obviously had an order to fill at an agreed price. They will look after their larger customers. If the mm turns down the deal, the buyer will ask another mm.

 

[cookie]

Cigar , this would be the most reasonable and acceptable answer but I very much doubt it. There were certainly no buy trades to correspond - we will have to watch and see.

My my here we go again -25% to 180 by 9am this morning. Shareholders do not deserve this treatment. Price is now below the placing price of 185 in June this year.

I cannot believe that we are all so apathetic in this respect.

I at first accepted their extreme behaviour as simply Marketmaking but having been the victim of both Harrier and Psion and when there are regulations to protect the shareholder it appears that they simply do not apply to MM's.

Am I just being a whimp ?????

They have done the same with ARM, BLM, and PON this morning immediately marking down, -(35 = -7%) - (15 = -4%)- (-11 = -5%) respectively with barely 200,000 shares traded on the first two and 70,000 on the latter, simply as a reaction to Naz overnight.

Surely there should be in place some maximum % limit that they can go to without proving trades to correspond with price movement,
after all they are allways protected by the spread.

Be interested it could be your share they savage next.

Cookie

 

[titus-uk]

As I have time off to prepare for my test next week, I am also able to see how shares are manipulated during the day. A look at the techmark is interesting with only 3 equities up - inc toratrak, but the rest down.

I have to agree with Cookie. Yes, we know that MM's have orders to fulfill. And yes, we know that they shake the tree to fill them. However, at the moment they do apppear to be taking things to extremes - crashing the price on very little trade, and very early inthe trading day. My share BLM has had a very rough time of it, despite the fact that on most days, buys are equal to sells, and occ. more than sells. Ok, the market is being revalued, but these falls on trades alone are extreme. Of course, for many stocks the panic selling allows them to build up huge stocks of cheap equities. So when things reverse - be the catalyst the US election results or whatever, you can bet that the prices will rise quick - the MM's aren't gooing to sell the shares back to the punters at the same price they bought them from them! It will not be long until a host of institutions start to say that the price of "x" is undervalued - just as long as they have creamed off the top first! Fair - of course its not! However, understanding will allow you to work alongside them, rather than them working against you! Thats why MM's tactics should be debated. Me - I am only learning....

Mark


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[Riz]

This time tree-shaking is for the whole range of techs..and expect them all be hammered..just to be hyped again next time the clever boys think they are low enough...in the mean time we private investors being robbed...

 

[waldorf]

MMs seem to be unregulated,have free will to do as they please.Would you say they are Lions spooking the herd and finding the weakest, to make a killing, or Hyenas taking advantage of an already weakened prey.
An article from iii, that was on the old CI bb, on MMs is worth reading http://www.iii.co.uk/investment/detail/?type=discussion&code=cotn%3AMSY.L&id=807100&action=detail
Regards

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Col

 

[cookie]

'kin ell, the bastards are at it again.

In fairness there was a negative statement from IEN - Intelligent Environments today however :-

Stock was marked down by 2.50p at open at Ask97/Bid90 which MM's maintained until 11.22am by which time there had only been 11 trades , 3 Buys (31,000 shares) and 8 Sells (35,000 shares).
At 11.22 MM's savagely marked down to Ask65/Bid60 - only two Sells were recorded - 7,000 shares.
At 11.23 MM's marked down to Ask50/Bid47 there followed the big sell of 100,000 shares.
From thereon in to close prices hardly changed and there were recorded only 24 Sell Trades (180,000 shares) against 65 Bought Trades (290,000 shares).
Total trades for day = 89

MM's effectively HALVED the Market Capital of this company in seconds for a few measly trades on which they were coverd by the spread.

Will shareholders be given the opportunity to recover in the same way? I don't think so.

I'm off to the Office of Fair trading.

Jumping up and down!!

Cookie

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[traderx]

These are top quality posts, I think we are now understanding the dynamics of the market. The reality is that MMs simply cannot lose. Whether up or down the system is geared to take money off punters. That will not change but half the battle is knowing what is going on. I know it is difficult to remain calm and unemotional when your wealth is disappearing before your eyes and nothing you can do except take the loss or risk further downside and long term bull-trap scenario. But the more we remove the mystery of what these people do the less likely we become a victim. Bottom line, we cannot change the system, but we can try to use it to our advantage, being on the right side of the market. Easier said than done.

Tx

 

[Riz]

What do you think will happen to a company's share price if they announce that their pretax profit for the six months to September 30 doubled, turnover increased 105% and earnings per share rose to 0.6p from 0.1p..

Share price will go up? Those who said yes are wrong..its shares will dive -40 (-11.19%..and if you don't believe me have a look at Cedar (CED) share price..You would have thought they issued a profits warning...

[This message has been edited by rizgar (edited 29-11-2000).]

 

[shelman]

Spot on Tx and Cookie, if you can't beat them etc.
Remember Woolwich, the price was driven down and down to less than 250 despite the fact that everything was looking good and then wallop BARC puts a bid in and overnight a quid is added and it's too late for the retail investor.
Steve

 

[cookie]

Today - Refer Plasmon (PLM)

I rest my case now otherwise I will blow a fuse. Spoke to my broker this-morning, he agrees but said you will never change them.

Just the sort of challenge I like.

Cookie

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[Joe]

My stockbroker suggests that there are a lot of people who shorted stocks, who will have to be buying next week in order to fulfill their commitments.

Me I'm sceptical and am holding until an up trend develops .... eventually.

Ah well
Joe

 

[Uncle]

I continue to sit back and watch all this play itself out...........ready and waiting for the opportunity when it arises..........

You wont beat the MM's anymore than you'll beat the Bookie, Whether you selling or buying they will always be on the right side.

Patience is the name of the game at present.

Good luck to all ye out there

ohn

 

[Riz]

Good on you John,

Looking back at the last 2 months I keep telling myself I could have well spent all this time doing research and prepared myself fot the killing...glad you've done that..

rizgar

 

[shelman]

And if you want to employ the best,forget qualifications, go for experience.
You have my admiration John...all along you stuck to your guns.
Steve