What the New York Stock Exchange floor specialist in WM did today either is illegal or else it ought to be.
Specialist cross less than 40% of NYSE stocks now.
And most bid and ask size is hidden.
This ain’t yo’ Daddy’s equity market.
jas3
>>> For most of the day, the bid size was significantly larger than the ask size, sometimes as much as 10 times larger
I am not going to say that there is not some degree of manipulation to the PPS at any given time. What I do want to point out though, is that when you are looking at the Bid/Ask board, what you see is the limit orders that have been placed. Those trades will not be executed unless someone decides to buy at the ask limit or sell at the bid limit. So... while the number of bid orders may be much higher than ask orders, the bids may very well be much more resolute about the price they’re looking for. So it is not so much supply and demand as the price the balance of the orders is willing to settle upon at any given time.
The price jumped at the outset of the news break because people did not fully read the release and assumed it was the buyout they were waiting for.
“If anybody is naive enough to believe that stock prices fluctuate based on supply and demand, I recommend the study of today’s time and sales data of the stock of Washington Mutual (WM). For most of the day, the bid size was significantly larger than the ask size, sometimes as much as 10 times larger, and yet the price continued its relentless decline, only bobbing up briefly before the close.”
WM had at least one very large natural seller today. Getting any bounce out of it took hours, iirc.
Order size is almost meaningless in this context, because the seller uses reserve-display offers. He might only show 100 shares offered, but have a million at that price hidden.
Claiming the NYSE specialist was illegal is simply wrong. It is possible the natural seller(s) didn’t even use the floor (or maybe they did), but there is nothing illegal about having a very large seller sit on the stock.
A good example I watched more closely was what was probably Greenberg selling AIG today - they used mm FLOW and just killed the stock, and would NOT let it up until some guy on cnbc yakked about it. I wouldn’t be surprised if he sold far more than 10 million shares today.
For that matter, who is mm FLOW (listed)?
“The price collapsed in a period of minutes from $2.30 to below 40 cents! Truly astounding to watch.”
After-hours is thin anyway, but I am amazed they didn’t halt the stock. Presumably it will add a Q and trade pink sheets soon, joining LEHMQ?