tape reading question FINL

D

doji

Ok I've been watching the tape on FINL (Finish Line) fairly illiquid stock. The Spread has been narrowing this afternoon from about 15 cents down to a penny. So while watching I see the following which I find strange. the offer is at 36.10 100 shares the bid has been moving up as all the offers have been hit repeatedly, so eventually the bid is at 36.9 900 shares. The offer however just stays put refreshing constantly so I know it's true size is hidden.
Eventually the bid pops above the offer for a bit (hit pretty much instantly) . My question is in what circumstance would someone just stand pat on an offer despite every indication that the buyers are willing to chase the offer. Someone putting through a big short? A big iceberg order and no one pays any attention from that point on what?

-doji
 
this happens if the seller knows that the buyers are wrong. He knows that he is going to dominate trading activity by being a big seller.
Look at where FINL is trading 2 hours later ($35.83) even though the overall market is up. The previous buyers must have realized that they were wrong....


OLiver
 
Quote from doji:

My question is in what circumstance would someone just stand pat on an offer despite every indication that the buyers are willing to chase the offer.
More...

One more point to consider. MMs are taking orders from clients and has an order to fill for 1 or more. He feels that he can fill this order at a specific level where other competition is not present. If he lifts his offer into a level where competition from other MMs are, he might not get the full order filled and risks pissing his clients off or screwing his firms profit objectives. It's not necessarily a price objective from inventory, but rather minimizing his risk to fill a client's order at a level he "knows" he can fill at, versus a level that he may or may not fill at.

Chris
 
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