Today was a clear example of smart MMs taking advantage of a thin bid
From time to time during any trading day, the bid depth can change significantly and it can go from looking very thick to very thin and vice versa
Both ends of the spectrum provide money making opportunities for MMs
If it's very thick, the MMs will hit the ask a few times and run the stock up, with the idea that they can start a large rally and sell their inventory at much higher prices after retail traders engage in panic buying
And if it's very thin, then the MMs feel encouraged to take the stock down by shorting small amounts of stock, which has an unusually exaggerated negative effect on the price of the stock, given it's temporarily thin bid
This afternoon was such a time of the latter scenario -- In less than 24 hours, the MMs saw SIPC fly from .035 yesterday afternoon to .061 this morning -- that type of move, coupled with the fact that it was triggered by the announcement of upcoming hemp legalization -- is the kind of thing that makes an MM salivate
The MM thinks, "Damn, I wish I had accumulated more shares when SIPC was in the .02s, this stock is so explosive now and I think it's going to continue this way"
But the difference between a retail trader like you, and an MM, is that he has Level 3 and you don't
So when the bid thins out significantly after such an explosive move up -- which is not an atypical occurrence -- the MMs can see it, their Pavlovian-induced salivation begins, and those dogs short the stock down, not because they are betting on it staying down, but because they are hoping to induce a large volume panic selloff, so that they can get a 2nd chance to accumulate on the "falsely" cheap before they run the stock back up
If it works for them, the fear they create causes a high volume dump and they therefore become less dissatisfied with the size of their inventory for the ongoing runup they anticipate will continue
And if it doesn't work for them, they can tell themselves "At least I tried..."
Given the fact that the selling volume on the takedown was pretty miniscule, the MMs did not succeed today
Any significant meaning assigned to the midday price dip, outside of what is stated above, is largely irrelevant to SIPC's continued runup in THE 2018 HEMP SUPERMANIA, which is now only 2 days old
And don't get me wrong, there are always going to be dips and pullbacks that go along with the upswings in any major sustained runup, especially after a stock has already quadrupled from its bottom in only 3 weeks -- but today's large intraday dip was not an example of such a phenomenon
SIPC
Sleek
