icgreen22,
Sorry for the late reply. I have been in Lake Tahoe skiing/gambling since Friday evening.
You wrote:
"re:alam1221,"A Market Maker receives an order to buy 100 shares from its client.It does not have 100 shares in its inventory.It must go buy 100 shares from someone else.It then sells these 100 shares to the client.Thus,these are two trades in this example for a total of 200 shares."I copied this from Technical Analysis of Stocks & Commodities.Would that mean that your numbers need to be cut in half?"
The above statement is true in its simplest form but let's say Cornell is trying to sell 500,000 shares. This means the Market Maker must find another client who wants to purchase 500,000 shares. I don't believe this is happening. I believe the two large blocks we see near the end or just after the close of each trading day are two blocks of shares that Cornell sold IMO.
Scenario: Cornell submits to market makers two sell blocks of 250,000 each for a total of 500,000 shares to sell. The market maker then goes fishing for buyers. The market maker gets some bites, 10,000 here and 25,000 there but it's not enough. So they take the price a little lower and they get a few more bites. This continues till Cornell's sell order is filled. After the order is filled the market makers take the average price of all the buys used to complete the sell to determine Cornell's average selling price. While Cornell's transaction shows up as two large blocks, the buys show up as smaller orders throughout the day.
This is IMHO and I may be way off. Now, if the Market Makers are collecting all the smaller buys by different individuals only to show it as one large buy at the end of the day to match what Cornell is selling then you are right. You can cut my estimation of the number of Cornell shares remaining in half. Let's hope that is not the case.
Alan
