Quote:
Supply and demand shouldn't have an effect on stocks, if you ask me. But then, nobody does.

Why not? Stocks are just like any other good for which there will be supply and demand, and basic economics tells you what's supposed to happen to the price.

As such, the price going up or down actually makes huge amounts of sense. For fun, let's look closer. Assume, for the moment, that there's no such thing as a market order ("buy now at whatever the current price is"). Instead, it's all limit orders ("buy at this price, or anything cheaper if you can get it, otherwise wait until you can get my price"). In such a world, whenever my limited buy and your limited sell overlap, the market pairs us up and away we go. As such, what you're left with is buyers looking at a price that's lower than any seller is willing to part with. You can go to Yahoo or whatever and see the real-time list of open orders and it's exactly like this.

Now, stir in market orders. If you issue a market buy order, you're saying "take whoever has the lowest selling price posted and give me that". If your order happened to be much larger than whoever was first in line with an open sell order, then you end up going to several higher sellers as well. Good for them, bad for you. As a result, you will have increased the spread between the first open seller (the "ask") and the first open buyer (the "bid"). The spread is, in fact, a pretty good measure of how liquid or illiquid a given share happens to be. If there's a lot of volume, then the spread will be very small, and market orders will be very efficient. If there's little volume, then market orders can get screwed. (If you're ever doing a non-trivial stock transaction, and you're not in a nowNowNOW! hurry, pay the extra bucks for a limit order.)

The "price" that's recorded for a stock is simply the last price at which a trade happens to have occured. As such, even if you see the "price" go down, that doesn't mean that you'll be able to buy at that price. Instead, you might be seeing a transient because a big market sell order consumed a bunch of lower buy orders. I expect that the "big boys" have enough visibility into the market to see the full stream of transactions, allowing them to distinguish between transient price fluctuation and genuine market motion. "Wow, somebody posted a sell order for that? I'll take it!" The only way that "normal" investors can do such a thing is to have some kind of standing buy (limit) order. Otherwise, that great deal will be gone long before you can hit the "buy" button.

Advanced topic for another day: market makers who try to keep a stock's trading liquid, and how they can make money off the spread. (Incidentally, the Wikipedia article on day trading is a good read.)