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According a spokesman for Nasdaq, each stock on the exchange has an avg of 11 market makers, with the largest volume stocks such as Microsoft having up to 50.
So, when a NASDAQ stock opens on a serious gap, as was the case, today, with Leap Wireless, who makes that decision? Is it a collective, or is it the mm with the largest stake?
Thx in advance
LEAP
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This is what I did for a living.
Pre-market trading is a big contibutor to where a NASDAQ stock opens, but like usual, it is short term demand/supply that ultimately determines.
say MSFT closes at 30 but has positive earnings after the close. It could trade to 30.75 in the evening, then pre-market trade between 30.50 and 31 the following morning before 930AM EST.
But lets say buffet decides he wants a stake in his buddy bill's company and puts an order in with his broker to buy 10MM with a 31 limit (not an outlandish scenario).
say goldman sachs has the order, they will start buying every single share offered for sale below 31 and assuming buffets order was entered before open, the stock will almost definitely NOT open BELOW 31.
the opposite scenario would be true if someone like paul allen tried to sell 5MM with a 30 low or whatever....IF both are happening at the SAME TIME, you may see a big block trade or just heavy volume until the biggest player wins...
does this make sense?