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EastCoastPlunger - Tue, Jul 8, 2003 - 02:00 PM
I didn't explain myself properly on my last post and a few individuals were confused by what I meant. I was rushing to get my thoughts out on the web page that I posted and was a bit ambiguous. I think it was tdog and another individual that pointed this out.
The smart money does not distribute to the market makers...that is correct. HOWEVER, the smart money uses the market makers to do their bidding. They are required to as per their agreement with the exchanges, and, remember also, that the market makers are in bed with the smart money. They are all essentially bankrolled by the same groups or individuals. Every single share of stock that the market makers or specialists take into their account from these groups (insiders, offshore banks and BIG TIME traders, etc.) is already sold before hand. This inventory is shopped to the institutional investment groups (mutual funds/pensions) before they take delivery. The market makers and specialists are used as a medium to feed stock to the retail side (pensions and mutual funds). They know exactly when their buy programs will initiate because they are the main participants. Most of the time, the market makers are almost always position neutral or slightly long or short at certain points of market extremity where they know the tide is about to change directions. How do they know?
They ARE the market.
Sorry for the confusion or if I wasn't clear enough. My apologies.
Also, an individual asked about the "blue arrows" on the diagram. Once again, the blue arrows denote a measurement of market opinion in one direction or another based on our on-going calculations and compared to historic data we have on file. We then will start to scale in very slowly after another point is reached (no mark on chart). So, yes, we start getting long or short AFTER the blue arrow and not before.
- the plunge.