Tuesday, January 13, 2009 9:02:05 AM
This is why it is key to be able to see the cusips and the trade data for every transaction. But the DTCC protects the market makers that feed them daily. You know, it would be very easy to contend it is just one glorified casino. Or perhaps just a big front for mob like activity! Oh no! That would be more conspiracy theory talk.
But listen, yes, we can make life miserable for everyone involved. Any time the CEO files a lawsuit against a market maker on a stock, the SEC and FINRA are immediately notified and the stock is then put on watch for manipulative activities. If anyone is doing anything, THEN, the trade data can be pulled from that point forward, and even going backwards to help build a case for market manipulation. In fact, I don't believe it has to come from just the CEO. We're a lawsuit happy society. Shareholders can file a Class action. Also, individuals can.
The thing that absolutely amazes me is that the Act of 1934 was very clear about manipulation and deceptive devices. These algorithmic programs and Level 3 are by their nature of existence deceptive devices. A market maker running a program of any kind on a stock where even one single trade crosses like what I described last night, then the SEC is required by law to shut them down.
To date, I haven't seen anyone file a lawsuit against the SEC. I guess that would be like filing a lawsuit against the IRS for grand theft.
If you did, you better start running.
Of course, the shorts and bashers will argue, "What more do you want? You've got a 38% rise off the bottom on this turd. If it was manipulated, that could never happen." Of course it could for one simple reason. More profit for the manipulators if they play it out correctly.
The easiest way to overcome it is with buying over selling. Even though at this point as it exists it will take 4 times as many buys at the ask to move the stock higher. It is this way with almost any stock in the market. Still, the increase in PPS will always be manipulated even then.
Now you can see why it is and has always been crucial for anyone garnering a position in this stock to get their asses off the bids. Any trade should be a bid on the stock followed by a second position entry on the ask. Stock moves up, you move that second bid up. The tighter you can maintain the spread and move those bids up, the lesser of a chance the stock will show you these characterisitics. Think about it. NITE isn't going to play this game as freakishly when the scratch on each trade is only one or two tenths of a cent.
Also, tightening those bids to asks affects the program to take a cover into the ask buy the sheer bid volume.
We could sit here all day and organize, and teach one another how to put a run on a stock. As long as the market makers are running these algorithmic programs in the background, then we have every right to organize a run up on the stock. Nothing anybody can do to us because anyone that loses will have the deceptive devices and the past trading profits brought into the public and all their profits will be disgorged.
So technically, there is no way for the market makers to win if a group of investors, or a couple of hedge funds organized a run up on a stock.
Who is going to complain??
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