Are Market Makers Morons?

I've been banging my head against the wall lately trying to explain how erratic and choppy Nasdaq stocks trade now. Swings out of nowhere, strong turns weak and weak turns strong. I've traded since '98 and it seems the charts just keep getting uglier.

After getting trapped in a nasty move in KLAC today and ERTS yesterday I've got a hypothesis I wanted to run by everyone. OK, so I'm short KLAC small down at the $50.20 level. I see MLCO on the offer selling heavy and there's a BRUT offer at $50.21 that was solid. MLCO lifts, BRUT lifts and I cover and get out. Now she starts flying, BRUT chasing the offer up. I dabble small at .71, keeps going. Get a little heavier all the way up until it busts through the figure and I'm starting to think there's news out or something. Short 1k more at $51.12 and get ready to cover. BRUT holds the bid there for what seemed like an eternity then drops and KLAC gets crushed back down a buck.

Now I see this happen all the time and am starting to wonder if this just isn't market makers who either don't care to work a large order anymore, opting to simply drive the stock up taking offers until it's filled, or if they are too dense to identify natural sellers who could enable the buyer to get a much better fill. When the buyer tips his hand everyone just steps aside and lets it fly. I guess I should try to hop on the train but as soon as he drops they usually come right back.

Any color is appreciated

 

they are morons and motherf*ckers I would add

I just got screwed by CME specialist. One minute I buy at 307.48 , two minutes later my stop is triggered at 306.60 that's outrageous

a couple of days ago I had the same thing on Nasdaq MIDD 1 minute I buy at X, two minutes later I sell at X-1 point. How can this be done and allowed ?

 

What? You think they're in business to give you their money?

 

don't ask WHY the market moves as it does. It doesn't matter. who cares. just have a plan; if it does this I do this.... if it does that I do that...... next trade.

You'll never figure exactly why the market moves as it does. It may be becuase of someone's keystroke error. it could be a ceo wanting to sell all his stock because he is in a messy divorce. who knows. who cares. it doesn't matter.

 

IMO , its all about anti scalping techniques. They figured out how to fark daytraders by making the moves bizzarre,

 

I think its just a symptom of the overall illiquidity of the markets. Sure, people will argue "look at the volume", but its what is behind that volume that counts. If its all artificial market making to game the market for pennies all day long, well those arent committed buyers and sellers, they are just there for their scraps. Unfortunately, the illiquidity of the individual issues has now spilled over to the indicies themselves, which are just a composite of the games going on in the stocks.

Aside from these programs overwhelming the markets, I think the market has been thinned out big time.

 

There are few human market makers remaining. And they all have like 30 stocks each to follow. So every time you see MLCO change quotes, there is a 99% chance that it wasn't a result of human intervention.

A stock like KLAC is almost entirely driven now by vwap programs and trading algorithms, which leads to less liquidity and unpredictable moves.

 

computer vs computer in a penny/tick war all day long

 

Ouch, did you get back in before the big move?

 

Oh man, this bs game is still going on with the CME/GOOG to parity trade. I swear its surreal watching this.