is a very tightly controlled burn.
The market makers know that huge numbers of shares must be disposed of but no one is served if the price dives, least of all the market maker himself who is then stuck with a lot of depreciated inventory.
So there is a cooperation between sellers and the market maker. Supply is fed in at a controlled rate and the market maker absorbs temporary imbalances to keep the price steady.
If that works it's a market makers dream since he lives of the bid ask spread and a stable price is what he wants.
Needless to say there has to be some demand to make this work. To get this demand the price is moved down to a "support level" or a psychological level like 9 now.
Care is taken not to let the price fall below this by easing off with sales and the market maker absorbing small supply surplusses.
Weeks before that operation a promo campaign touts the virtues of the upcoming Hammer processor.
The rationalization of a near constant price
even as volume is much increased is that "support" is active at the "support level".
Support is indeed active but not in the way they have you believe.
.... The AMD Specialist just spent several days SELLING AMD stock to foolish AMD longs at $9's, $10's, and up to $11.18 !!
.... Now he's using those funds to BUY AMD back at $9.30 down to $8.50 for 1 day !!
.... He makes as much as nearly $3 per share on 22 million shares!!
As an employee of one of the nations largest market makers, I must say LOL. You really think MMs take on that kind of risk to manipulate prices? You've got to be kidding me. A large fund or another MM will just keep shorting at the overvalued price.
MMs are only allowed to take minimal risks.
Why does everybody seem to think that large corporations behave like day traders?
You must be from the school of thought that says that there is a conspiracy behind every price movement....
The price action is simply a function of supply and demand. The ONLY reason that the price is what it is, is because that is the current concensus of price among all the market participants. Period.
What we are witnessing is a whole big bunch of loosers getting out and a whole big bunch of either new loosers buying in, or a winners getting a great price. Only the future will tell which is the truth.
My opinion is that the buyers right now will see an easy double in 4-6 months. Especially as good reviews on hammer continues hitting the street. And AMD proves it can hang in there through the worst ecnomic conditions ever for the PC industry. This is a good solid company. Good fundamentals. Good growth opportunity even if the PC market has matured. Which cannot be said about INTEL. INTEL has no where to go but down in a mature PC market. It cannot do very much better than 80% of the market. And relative to their size, if they gain that last 20% of the market it wouldn't help them much. Especially, it would not help the consumer because INTEL would immediatly raise their prices if AMD folded up the tent.
Obviously AMD is a bug in the INTEL ointment. Their monopoly days are over. We will see CPU prices continue to fall. Both INTEL and AMD are increasing production by switching to the new 130nm process this gives them both a 50% increase in production and in a market that isn't growing.... can you say GLUT? then next year we go to the 90nm process and get another 50% increase in production... then what?
Long term, 3-5 years out, the only way to stay in business for these company's is to be cutting costs and reducing output. INTEL certainly must. AMD might not have to reduce output as they are in position to steal market share. If hammer is what everyone wants, INTEL is in big trouble. They're only reaction can be to cut prices to create more demand. But even then people may not buy them if they perceive the 64bit future. Yamhill is inevitable now. But were going to see INTEL bleed really badly until then. Once the hammer comes out.
"is a very tightly controlled burn.
The market makers know that huge numbers of shares must be disposed of but no one is served if the price dives.."
6.8 BILLION shares is a LOT to dispose of.
Oh, you werent talking about Intel?
You should be.
Your scenario fits their recent trading pattern better than it fits AMD.