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Message: PPS Action

PPS Action

posted on Dec 30, 2004 08:09AM
Okay, I`ve suggested that perhaps an MM is unloading a huge inventory of shares (possibly accumulated in the high teens/low twenties). I still suspect that this is the case, though others have suggested:

- MMs hold no inventory ``over night`` and desire to end the day with a zero position.

- Someone has a huge, not AON, buy order in that is getting ``trickle filled`` at .33.

Putting these two thoughts together doesn`t work. If there is no MM inventory available, where are the shares coming from to trickle fill that buy order? Gotta be some sellers at .33 to provide inventory to support the buys.

And I`ve noticed that orders being filled are not paired (i.e., two trades of equal size going through in close proximity), which flies in the face of the huge buy order scenario. Further, this is not ``normal`` MM behavior. Usually, when you see paired orders, there is at least a half-point spread (e.g., a sell at bid of .33 immediately followed by a buy at ask of .335), and this is where the MMs make money (and why I think MM should stand for Money Makers and not Market Makers; they make a market at their pleasure, they make money as their objective). Even if the MMs are taking the week off, it doesn`t explain this activity (or lack thereof) IMO.

So I again conclude that we`re seeing one or two MMs unloading a huge inventory (at probably a 50%+ profit). They are allowing it to get picked at, though I can`t explain the extremely small orders going through (who buys 100 shares of a 33 cent stock even if the commission is only $7 per trade?).

JMO, and a little weak since I have little to base it on. In any case, this is very strange trading behavior going on for several days. As always, groping for meaning or understanding!

BTW, OTCBB keeps giving me a ``Market depth not

available for EDIG`` message on the delayed level 2 today. Anybody know how many MMs are at .33 bid today? (was just one most of the time the past few days).

And here I say with confidence: I KNOW nuttin`!

SGE

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