SIRI Intraday Thread: Wednesday, April 1st

[underway]

MM=MarketMakers

Think of the transaction events in four separate sales
A customer wants to Sell at .35
A customer wants to Buy at .36

Ordinarily the Transaction would be completed with a .35 price.

But...
A customer wants to Sell at .35

intervention occurs!!!
THE MM BUYER STEPS IN AT .3501 BUY PRICE for their account
THE MM SELLER SETS UP A .3550 SELL PRICE from their account

A customer wanting to Buy at .36 must wait

Meanwhile, other sellers are lowering their asks (and are being interviened) and a price channel is frozen. The customer may not drop their bid as low as the MM ask and allows the MM to intervene with multiple purchase/sales points. This activity stifles the rise of the stock due to the inability of the customer to realise any gain in purchase price.

But, if cust has sell order at .35, and MM buyer offering .3501 in your example, the deal should close since buyer is offering more than the seller wants. And in MM seller is at .3550, then the customer wanting to buy at limit .36, would theoretically buy the MM offer at .3550, cause it's lower than his limit of .36.

I'm not sure I see how it works, nor am I seeing why the MMs would do this. I would think they want supply/demand to move the stock one way or the other since they make money either way. Having it stuck in a sort of fibrilating mode (using the heart analogy) doesn't make sense to me. I'm missing this for sure. sorry. no big deal. I'm confident when SIRI starts showing good news via their own financials and stats, the stock will draw in big investors and that will drive the stock up. Until that happens, as I stated in an earlier post today, i think SIRI is at an equilibrium with few 'big buyers' in play. That will change..hopefully SOON!

[asm610]

asm610, are you sure about BMW ?

I know it is either now installed in all models...or available in all models now, and that was not the case as recently as last year. Let me do some fact checking. The point though is that there are MANY more vehicle models with SATRAD available now straight from the dealership which bodes for higher penetration rates and better sub rates.

[RU Sirius]

This might be a really stupid question:

I thought that when you placed a buy or sell order that you were "in line" based on the time you place the order. I'm gathering that is not true?

In the prior example where the SP was sitting at .35, and I place a limit buy order at .36.........I would expect it to be processed immediately. If it takes a few minutes, I thought that was because I had to wait for orders ahead of me to fill until my "turn" came up. In that scenario, a MM putting in a buy order of .3520 would not block anything.....I thought it was simply a wait 'till your turn comes up sort of thing.

I'm sensing that this is why I've had a hard time fully understanding level II !!! I'm completely off base with this notion of placing an order and being "in line" to wait my turn, aren't I?

[JohnnyIrishXM]

orders with the same price go by time when ordered,but most orders are lined up according to price,so if selling you have to have someone willing to pay that price and vice versa,the Market Makers(mm's) skirt this by adding or subtracting .0001 of a penny with multiple 100 share orders.

[asm610]

asm610, are you sure about BMW ?

choirgirl,

My apologies, BMW has SATRAD as an OPTION in all of it's models as of 2009. Hyundai and KIA now have satrad and 3 month trial subs as part of new car purchases.

[underway]

Thinking about this some more....(dangerous, I know)....
Because this stock is so heavily diluted in terms of shares outstanding, I think it will take huge blocks of shares to really move this SIRI market. Like 100 million block, right?

[JohnnyIrishXM]

the main reason for this right now is that everyone who wants to buy or sell is doing it with limit orders,another words smart investors...the real movement will come when big money shows up and puts in market orders,because they want in at this price under a $1sp...and of course then the shorts will panic and then watch out for the big squeeze,because the lower the daily vol. the longer to cover the shorts..

[RU Sirius]

Underway, I think I have the same issues as you in understanding this process. I believe we are looking at this from the same angle.....I feel stupid....do you???

Another question: Why do you sometimes see a "lull" in trading on level II. For instance let's say there are 50k sell orders listed at .30 and 50k buy orders listed at .40. Here's this .10 gap. In theory this will just sit without any activity because the buy and sell can't match each other correct? What actually makes the transaction "happen" in this case?

Do some of the buys raise their price and some of the sells lower their price until they meet? I see this as a game of chicken.....somebody has to move in order to make something happen. Correct or totally wrong?

Or, is this where the MM's jump in and put some of their blocks in the .10 gap to keep it trading in this channel?........thereby blocking action for the others until they decide to "give in"?

I thought I saw some of this the last two days. The sell side looked like it wasn't budging much. Lots of larger blocks sitting at .34 or .35 and just not getting any action. I think this is what you guys were mentioning during the day right? Normally on level II, if you see a bunch of large blocks of sell orders that aren't budging.......is that going to draw the SP up to it (minus any MM manipulation that is)?

[JohnnyIrishXM]

Thinking about this some more....(dangerous, I know)....
Because this stock is so heavily diluted in terms of shares outstanding, I think it will take huge blocks of shares to really move this SIRI market. Like 100 million block, right?

you are close,they won't be that big at once(at least by 1 customer)but they will do it over a couple of days smartly as they can.

[Brandon Matthews]

choirgirl,

My apologies, BMW has SATRAD as an OPTION in all of it's models as of 2009. Hyundai and KIA now have satrad and 3 month trial subs as part of new car purchases.

I will probably make this the focus of tomorrows article. Although I have to do a lot of research first, my understanding is that Hyundai and Kia are 100% Daimler and the Euro cars is 90% The big 3 average 70%.

Ironically, some of the worst auto numbers we got today were from the Japanese auto makers, which drag the average down to 62%.

All in all it was a good day. The lower GM data means less expenses to Sirius.

The japanese automakers don't offer us as much in the way of factory installs, so their data is not as meaningful as say, Fords.

Ford and Chrysler helped Sirius immensely. I haven't seen Hyundais numbers yet...like I said...need to research data.