Trading Analysis - 28th Nov 2018

Alfacomp

28 November 2018

2:20PM


In the first 6 minutes of trading there are two significant sequences of repeated trades - 4x20K and then 3x32K :-


These are all sells and serve to move the Bid down by 0.5p - however the Market Makers have no interest in playing ball and lowering the SP as they have it where they want it and are likely more than happy to just have another 500K-1M shares from their tame seller today. 

The balance of trades is recovered at about a quarter to 10, at which point the only really significant sell so far today, 150K is dropped in at 42.70p. A buy of 116,248 (£50K) just after noon pushed the trades balance positive again, but at this point there see no corresponding sell dropped in yet at that time.

Trading is quiet and from a short MM's perspective there is perhaps no need to go dropping Sells in to lower the SP further.  There is of course no reason to justify any large Sells suddenly appearing, so if they do then we can only conclude that the timing is purely to satisfy the MMs desire to close their c. 5M short position.

End of Day - Scenario 1


Not much happens until the following trade turns up:-




It's a 43p which is where it seems the Buys have been pinned for the last 2 hours of trading so it must be a buy, right ?

The problem with this is that this leaves the market makers apparently needing yet another 420K of shares that they have sold but have not yet bought. If there are no additional Sells that are yet to the be reported then this seems to conflict with the behaviour earlier in the day and in the previous day.

End of Day - Scenario 2

The observation below, by NickD before the 250K trade was reported, sheds new light on this trade:-

Delving more deeply we discover that the London Stock Exchange trade log shows this as a duplicated trade - much like the duplicated trades observed throughout the First Island initial selldown

We must therefore entertain the possibility that this trade is actually a Sell from the tame seller, being used to offset PI Buys / try and reduce the MMs short position.


The chart above shows what happens to the nett MMs trading position for the day when the 250K trade (the righthand green marker) is allocated as a Sell - note how the nett trade position returns close to neutrality. The overall short position of c. 5M shares remains unchanged.

Of these scenarios I believe that the latter one is actually more likely although seemingly more incredible.

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