Evening trading US shares

[Mr. Charts]

Hi timaru,
It looks like someTHING decided to buy a lot of shares on the level 2 screen instead of via market maker block trades, wiping out tier after tier on the ask.
The prints were normally mixed at the bid and ask as it rose to 49.39, after which virtually every single one was a buy - and not huge buys either - for the following 12 seconds during which the price rose to 51.75. This makes GOOG look positively pedestrian.
That is the "what".
The "why" is interesting. Almost certainly it was a poorly programmed black box trade sequence which triggered buys at precisely the 200 day SMA on the last day of the quarter when some balancing normally takes place.
I trust that answers your question ;-)
Richard

 

[timaru69]

Hi timaru,
It looks like someTHING decided to buy a lot of shares on the level 2 screen instead of via market maker block trades, wiping out tier after tier on the ask.
The prints were normally mixed at the bid and ask as it rose to 49.39, after which virtually every single one was a buy - and not huge buys either - for the following 12 seconds during which the price rose to 51.75. This makes GOOG look positively pedestrian.
That is the "what".
The "why" is interesting. Almost certainly it was a poorly programmed black box trade sequence which triggered buys at precisely the 200 day SMA on the last day of the quarter when some balancing normally takes place.
I trust that answers your question ;-)
Richard

Hi Richard

Thanks, thought as much. I had an alert on this trigger and by the time I switched to it, checked the level II it was on it's way back down.

It looked awesome , like a skyrocket taking off

 

[Mr. Charts]

;-)
I've seen this sort of thing a few times over the years. It's another thing to be wary of if you rely on the ATR. At 16:41 the one minute ATR is 3 cents; literally the following minute at 16:42 the candle ranges through 255 cents with hardly a block trade printing.
Messes up lots of calculations......... and stops ;-)
Richard

 

[Mr. Charts]

Of course we can feel confident that no-one would know of the black box move before hand and buy shares ahead of the 10 second $2.55 move, then unload them afterwards........can't we........?
Richard

 

[Connie Brown]

Info

Over 200,000 shares went off in that period though and that was relatively significant volume.

I imagine you are joking, but if anyone did have prior knowledge of an imminent program trade it would have to be within the outfit that triggered it, and they aren't that smart. There was no subsequent unload of any size (quite the opposite in fact) and they've paid top dollar for every single one.

If you take out that anomalous section of trading, the stock was rather quiet - just over a dollar range and it closed 9 cents up on the day. Even with precise prior knowledge of what was going to transpire retail simply would not have had any opportunity to leverage that action to any advantage.

Somebody's bonus is looking a little bleak.

 

[Mr. Charts]

Hi Connie,
Yes, only kidding. It would have been illegal and also there was no unloading.
Sorry, I've only just seen your PM !
3.18am up in the panhandle ;-)
Richard

 

[timaru69]

Hi all

Couple of trades that may be of interest

1. DNDN, nice trend up and showed strong support until 50c level came in and showed some weakness , out half for small profit but made other half easier to manage until whole number came into the picture, shooting star, out at 14.89 so 49c profit on remaining half.

2. NE. This is a pattern I suspect is quite common and seems to have a reasonable rate of success. In this case went for a scalp move although exited a bit late after my initial target of 20c was hit, unfortunately greed got the better of me, to my cost.

Out for a 12c profit.

Anybody else trade today?

Cheers

Andrew

 

[lloydsc]

Hi Andrew

I found it very difficult to pick anything out as the momentum was very low. Missed the ZOLT move from earlier in the day and the only other ones I was tracking were FSLR and MDCO which although they moved were not strong on level 2. A smarter, more experienced trader would probably have got something out of them though!

Regards
Steve

 

[lloydsc]

Hi All

I noticed that at about 20:45 there was a sell off of lot of block trades going off on Nasdaq stocks that had risen during the day. Are these program generated sales? Is this what people refer to when the say 'balck box trade'?

Regards
Steve

 

[lloydsc]

Sorry about the typo's

Should have read 'black box trades'.

Regards
Steve

 

[PitBull]

Hi Steve and Andrew

Yesterday was a very sluggish day, but with patience and discipline there were still some good opportunities to be had. FSLR, CEPH, DNDN and IWOV were my main culprits.
FSLR provided a nice breakout both am and pm. Typical all day run, with a base over lunchtime.
CEPH was on a power trend all day, but I left my entry until 7.30pm when 75.60 breakout was confirmed which made a nice trade.
DNDN was similar to Timaru's but my entry was a little earlier at 14.32, but exit was near identical.
IWOV was the star, both short and long.

In answer to your questions Steve, at certain times of day black boxes do kick in, but also what I think you may have experienced was a number of cross trades. These are pre-arranged trades between brokers and are designed to minimise market impact.

Hope this helps
Regards
Lee

 

[lloydsc]

Thanks Lee and Andrew

The trouble I had with FSLR is that I was expecting to see big mometum coming in on level 2 for the 14:30 break and when this didn't happen how I expected to I had lost the trade and didn't chase it.

I didn't pay attention to the whole number and so I have learnt something from it though and I suppose that is the purpose.

Regards
Steve

 

[PitBull]

Steve

With FSLR which is quite thin and is mostly traded by daytraders, as it is normally ECN's running the stock, if you watch how the ECN's all jockey for position you can get a good feel for whether it will break or not. When the thinner stocks break, the spread will be jumpy so you must position size yourself so you are comfortable. Knowing the ATR also helps you not jumping out prematurely. Another thing with stocks with wide spreads is you either enter/exit when the spread closes or you offer it out at different levels on the ask and be prepared to cancel them if the stock runs strongly into them. This way you don't get slaughtered buying the ask selling the bid.

Regards
Lee

 

[lloydsc]

Thanks Lee

I remember it jumping around to a spread of 13c around the $55 mark and there being not much size but I never twigged on. I fully understand what you are saying with the exception of the bit about ATR.

I have never used it but have seen Mr Charts post recently with it. I don't know how you would use it in this context.

Regards
Steve

 

[PitBull]

Steve

Some stocks you will not see big size, ECN's mostly using reserve order but watch T&S for the true picture.

When I look at a stock the first evaluation I will make is it's ATR in the different timeframes, 1, 5, 15, daily etc. So, if on the 1min it says 0.15, then I know that "historically" it moves around in 15 cents. On the 5 min it may say 0.40 so moves 40 cents in 1 5 min bar. This will then help me place my stop and give me comfort once in a trade that I may have 0.40 cents retracements on the same candle. But ATR can change going forward, if we have been in a quiet consolidation.

Hope this clarifies

 

[lloydsc]

Thanks for the explanation Lee.

I will look at that tonight.

Regards
Steve

 

[Trader333]

I noticed that at about 20:45 there was a sell off of lot of block trades going off on Nasdaq stocks that had risen during the day

This could also be affected by many day traders wanting to be in cash before the close


Paul

 

[PitBull]

Potential Swing Play

Holding JSDA for swing trade and looking to add on pullbacks. Already sold some position at 24.15.
from entry of 23.40. Like the stock for medium term play, as a drinks maker just like HANS and HANS went from $10 to $50 within a year!

Hope you caught some RIMM and CEGE!

Regards
Lee

 

[PitBull]

Beware of the news

Having a live news feed is essential if you are going to catch the best opportunities. JTX was alerted to me as some bad news came out on tax fraud. I missed the leg down and was trading something else on the bounce up, but it was on my radar as a potential play given the fact of the unusual volume and the big moves it had already done. I attach entry and exit chart.

As I speak it is still dropping like a stone. Oh well

 

[PitBull]

Looks like exit was good as capitulation, and volume climax, now trading up to 28.10