Hey zent, if they didn't have a financial
interest in trading then I would agree with you 100%. However, MM's are allowed to have their own resources invested long or short in stocks. They are the only ones allowed to short pinksheet stocks. We as the public cannot.
For me, the day and and day out osmosis of seeing this leads me to this conclusion on CERTAIN PLAYS, not all. In my job, I have to compare what is usual to what is not. When it's not I have to investigate why this is so. I use this trait in looking at stocks and trading.
LENF is an example. News hit this morning. Strong news. Why did it stutter (with high volume), drop (again with good volume), then suddenly well after the news was out begin to run and the B/A change after basically every trade?
EYDY was like that yesterday. I'm not saying there would have been record volume yesterday, but there cetainly was interest in the stock. MM's painted the B/A at such a wide and weird spread someone trying to buy into it 30 minutes after the news hit would have no clue what to enter at, so it froze. Today it was trading over 75% from when I first saw it yesterday at .20.
In both these cases, I saw great opportunity but like your riddle the stock dropped and the B/A were being frozen and reversed. LENF then turned around and rose to 40-50% levels today and ENDY up to 75% above yesterday's pre-news levels. Unlike what you posted, I didn't have a crystal ball telling me this. I just have been watching this market enough to see what is normal versus not normal. Not every stock that drops on news do I feel this way. Certain characterstics have to be there (low o/s, high emotion news, heavy steady buy volume at the ask). When those are in place and the B/A don't move higher or actually move backward, then that triggers the question.
If a stock has a high o/s, little impact news and not much interest there is little surprise if it doesn't rise much or if at all.
This is my opinion, but again for the most part when MM's are trading their own resources, their best control and surest way to make money is by shorting them. When there is strong news, they either have to cover quick and get out of the way, or chose to stall trading to accumulate shares setting up a run.
Is it an exact prediction when this is occurring? Of course not. But above are just 2 of many examples where I will call it out because what I'm seeing isn't a normal pattern of what the market expects. It seems when the characteristics I mention are in place, this accumulation stage followed by a run is seen quite often.
When you see stocks take off on news with each trade taking the B/A and Last higher, then turn around and see EYDY and LENF, you have to stop and analyize what is going on. BHSR got a heck of a lot of interest and volume with a low o/s and no movement in the B/A. If it were allowed to move up, I think people will buy and hold even if it runs over .30 pending further buyout news.
My .02 to answer your riddle. : )
Bo
