YHOO Gap Trade, Short Fade Documented on YouTube

Stockman,

thank you for the video, and I will check out your blog.

However, right off the bat, I dont understand the premise of "market makers" marking the stock up.

Unlike listed stocks (NYSE/AMEX), the NASDAQ market increasingly has the majority of its volume traded through ECN's, and market makers dont play a role in "moving" liquid issues.

The idea of marking up a stock would require multiple "players" working in unison, which doesnt happen intentionally.

I used to be a nasdaq market maker (back when they were relevant) so I am just speaking from what I know.

Most market makers wouldnt even have a sizeable overnight position to care about, let alone attempt to mark up/down a stock.

I am not disputing your method, or your ability to make money, but I think the reasoning behind it seems a bit off.

Maybe if you could explain more I would see where you are coming from.
 
I watched around 2 mins into the video. You entered short at $29 and change after MSFT announced a $31 offer. Fair enough. After being stopped out for a small profit, you say you were hoping to make ... holding on to my seat ... FIVE TO SIX POINTS on this short???? On the same day??? Speculating what, that MSFT will withdraw the offer within a few hours?

And you keep saying how the "Market Makers will knock down the stock". YHOO had 10s of millions of shares sold short - probably by large institutional players that probably were and are still looking to cover. What are the MMs going to do against millions of shares that need to be covered?
 
the deal was announced already.

this was a gap up not a mark up.

gap ups are created by the market makers when there is news on a stock. the stock is gapped up to protect the market makers from loss. they are also selling a stock they do not have, a naked short in a sense. they want to buy it back later on to balance their books.

this is not an arbitrage.

i would suggest reading my blog about these trades under stock mans's prematket category.

ty
 
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