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In a nutshell, a specialist is a legal insider (with unlimited inventory) out
to maximize
his profits. Except he is not a company director or officer. But he has still
be competent
by his doings or the market can still overwhelm him.
You raise an interesting question about manipulation by market makers or
> specialist. Years ago in 1975 (when the Dow was "locked" under 1000), I was
> trading the bid ask spread of Eastman Kodak and Dupont. My reason for
> trading these two stocks were because they were represented by the same
> specialist, and both were components of the DJIA. It was my desire to trade
> based on what the specialist was doing. I reached this decision after
> reading a book by Richard Ney "The Wall Street Gang" copyrighted in 1974.
>
> In order to understand the specialists' practices, the investor must learn
> to think of specialist as merchants who want to sell an inventory of stock
> at retail price levels. When they clear their shelves of their inventory
> they will seek to employ their profits to buy more merchandise at wholesale
> price levels.
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