Eagle's Nest

[eaglesurvivor]

A question was asked about how and why prices fall and rise in its relationship to volume. Interestingly, it is not pure market, as in both directions, volume does not directly effect price. Volume causes liquidity and tighter spreads, which in turn, induces better volume. A good example of this would be in an entity which I hold, CTT, an AMEX issue and dictated by a specialist. http://www.amex.com/?href=/atamex/aboutAmex/mktStructure/at_mktStructure.html

Even though the specialist has all trades in front of him, orders come in from different markets and some are merely bluffs. Thus any activity in mainly one direction will cause the price to go that way rather sharply. This is less pronounced with MMs (such as on the OTCBB). Share structure is another factor. A low floater, like CTT moves on almost any trade. Entities, with several billion shares, need a lot to move it.