Trading Strategy

[cookie]

Market Makers were at it again today with Ncipher (NCH)

Closed at 280 mid last night then following a 'slowdown disclosure' by the company ( a new term for an veiled advanced profit warning ) MM's totally over reacted slashing
the price by 47% by close of business and effectively wiping approaching £170mln off the companys market capitalisation as a result. However over 50% of trades were buys and of the large blocks traded 80% were also buys. This certainly does not represent a major sell-off and as such MM's extreme treatment cannot be justified.

You will all have experienced similar MM over reactions to profit warnings with the likes of Psion, Matalan, SSL, Iceland, Interex to name but a few, and I am pretty sure in just about every case there has followed a minimum 10% bounce within 2 days.

I wonder whether there are sellers who want to get out and wait for this correction before jumping ship.

I have used this strategy several times and reaped handsome rewards and would be interested if others use this one and to hear your views.

Either way I shall be watching closely tommorrow for the first upturn in price.

Be careful as with an illiquid stock after a couple of days volumes tend to drop off dramatically.


Good Luck




Cookie

 

[traderx]

Cookie

Exactly my thoughts mate when I was monitoring about lunch time. What possible justification for the savage mark down? No computer system marked down the price, based on trading volume, the price should have gone up. This was human interference with an objective. YOU MARK MY WORDS THIS IS PART OF A PLAN TO MAKE MONEY. It creates instant volume, just what the MM needs for healthy business. Is there no way we can instigate an investigation by FSA. This practice is widespread in the business at the moment. MMs sitting in pubs discussing having a field day to make big bucks at the expense of the hapless investor. These companies are supposed to be respectable city institutions!!!! The only thing I can't understand, the substantive company MUST be involved or the MM would be sacked. The word CONSPIRACY springs to mind.

I am amazed by the passive nature of financial services industry. The players just seem to accept everything meeted out and roll over and die. If I just lost a million quid today at the hands of these sharpsters I would be kicking the door in at MMs office to meet the jokers involved. Surely, it is time for FSA to investigate these companies. This practice just has to be the scam of the year. You do not need to be an accountant to see what is going on. In order to bid down the price to this extent you would need to place orders for millions of shares at silly prices. I never saw orders of that magnitude so the price was reduced as part of a plan. I know what I would call it but I do not wish to push my luck so I will just leave it at that. I think it is highly risky to hold shares on the day of results. Stocks rarely go ballistic on results so what is the sense of holding. You can always buy the share back next day and you might get a bargain.


Tx

 

[Riz]

well said...

Well said cookie and Tx..read the results nothing to suggests such a dive almost -50%...another ICE..it will probably follow a similar route..but let it bottomed out first..as sells usually come in 2 or 3 waves..though not a selling spree with this one...

rizgar

 

[cookie]

The current state of the Naz is not helping this one. A limp set of buys prompted a 5 point rise just before close and was immediately followed by a couple of meaty Late sells. Too risky to get in at the moment and will continue to watch for the next two days.

Tx

I had no idea you were an anti MM's sympathiser, I thought I was on my own, with the rest just humouring me. Our colleagues have put up with a steady stream of 'Hate' posts from me with regard to their behaviour which in the absence of any major complaint or organised campaign against them appear to carry on and do exactly as they please apparently TOTALLY UN-REGULATED !!!

It is fair to say that they must be allowed to make a market and it is also fair to say that they have to protect themselves, however I simply cannot see that to savage a companys share price by more than 10% at any time in the absence of trading volume is acceptable to anyone barring of course themselves. Not forgetting that they are always covered by the spread.

Maybe we can get together at T2W and submit a report firstly to the Financial Media and subsequently to the SFA.

I have mentioned this before to my broker who suggests that it would be a complete waste of time.


What do you think ????????



Cookie

 

[ChartMan]

Cookie and others- I am in agreement with the arguments against MM's. I see this as fighting the establisment an a monstrous task with little possibility of a successful outcome.
However, I am in contact with the "business section" of one of the tabloids and they may be interesteted in some dirt digging. I also have access to a legal type,that I know has contacts in the City......I'll try her as well....
Probably a waste of time but....
50% write down is a joke of the biggest portion.

 

[Uncle]

Cookie..........No your not a lone wolf howling in the night. Many of us have experienced the wiles of the b******* especially, as you say, the way they mark down prices savagely on a whim, or make a spread so wide they push investors to take action they otherwise would not.

John

 

[Burney]

Re MM's

Hi All,
Really interested to read all the posts on above subject as I too have become increasingly frustrated by the apparent illogical moves of a number of stocks-I was always led to believe if more people bought than sold then the price should go up .However I have seen a number of stocks recently where I have bought only to watch the price plummet on the back of high volume of buy orders.I am fairly new to these short term issues having been a buy and hold guy for a number of years but any more info people can give on this BB about playing short term with these types of tricks is really helpful-thanks guys-anyone got any thoughts or ideas about how to find out more of these tricks of the trade as learning the hard way is costing me a fortune.

 

[ChartMan]

Hi Burney- the nature of the beast is such that it can strike anywhere for no reason- just a whif of news can be a licence for MM's to trash a share.Best avice is already given- stay away from shares that have iminent results announcements, full or interim.

 

[Burney]

Re MM's

Chartman,
Thanks for the advice-I take it that Cookies tips on how to profit from these "adjustments" is worth checking out

 

[ChartMan]

Sure is. As I speak, NCH up from 140 is to 159- 12% or so in a few hours.Nothing like the MM's made though

 

[cookie]

Up 6% today - but I haven't made a move yet in current market conditions - too risky. The only good call at the moment is a short. As I write Naz = 2099 -53 Dow = 10341 -154.

Burney - See MISYS (MSY) trades today - over 1 million more shares bought than sold and share price loses 49p = - 8%

MM's stands for Market Manipulators !!!!

Watch this one but beware it is very Nasdaq driven.


Good luck



Cookie

 

[ChartMan]

Nas closed up so worth watching tomorrow, maybe...

 

[Burney]

Cheers Guy's Appreciate the advice-will keep an eye on Misys tomorrow Cookie-incidentally agree with the view that at the moment more money to be made from shorts rather than anything else-any of you guys know any brokers who will allow short positions on UK shares ??