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Message: My opinion on the pre-market gap down in the bid/ask...

As I write this I'm seeing the bid/ask both at $2.76...up a penny from earlier.  Yesterday of course we closed at $3.01 so if we open in the $2.76 area its obviously a decent sized drop.  

So what's the reasoning behind it?  This is my opinion....

Years back the DOJ in the US did an investigation of Market Maker activity and they noted a particular practice which was termed "Moves on Request".   Basically it was a quid pro quo system whereby a MM caught short on a stock asks other firms Market Making for that stock to lower their bids and asks so as to create a bearish impression.  Likewise if a MM was in a situation where they had inventory to move they would ask other MMs to move their bids/asks higher. 

The reason the DOJ article said that MMs would honour these requests is because each MMs knows they'll be in a situation themselves at times where they'll need to affect the market....you scratch my back I'll scratch yours in other words.

RVX.TO moved up decently yesterday, and while just over 100K volume across all platforms is hardly earth shattering...for RVX it does represent more trading than we've been seeing for the better part of this month on average.  I can see that some MMs might have been caught short and now want to try and influence investor sentiment by 'shaking the tree' to use a commonly used bromide.

Here's a link to an article on it.

https://www.law360.com/articles/529847

 

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