Trading Analysis - 29th Nov 2018

Alfacomp

29 November 2018

9:40AM


The publication of the Bushveld Energy Q3 Update at 7:59am this morning appeared to set the cat amongst the pigeons. This naturally sparked off a wave of buying, but with the MMs appearing to be nursing a c. 5M short position they would be in deep trouble if major buying power subsequently turned up. The challenge for them this morning was therefore to kill the initial rise as quickly as possible to try and avoid day traders turning up en masse and swamping them with buying orders.

The presence of a tame seller has been suspected for some time now. This morning we saw their shadow - duplicated pair trades at 8:02:54 (170K), 8:07:30 (120K) and 8:10:14 (200K), all highlighted in green above, all helped to knock the initial buying peak of SP=44.75p back.

I believe that this confirms scenario no 2 discussed in regard to the 250K trade at the end of yesterday's trading - namely that this was a Sell from the tame seller. The rest of today will be very interesting - if day trading money does turn up this could put a serious dent in the MMs ability to do anything about their short position. At some point they will either have to extend their short at a higher average price by allowing the price to rise significantly, or will cut and run, perhaps taking a long position for themselves.

2:40PM


The London Stock Exchange trade listings now show the 80K Sell at 8:05:14 as a duplicated pair:




The timing of the duplicated pair Sells right at the start of opening could not form a clearer pattern.

The rapid supply of these shares to the market is to feed the MMs desire to keep a lid on the share price whilst they still have a short position. Serious discussions need to be had as to whether this constitutes market manipulation - as it is behaviour which has been adopted simply because the MMs have a short position.

End of Day


The arrival, after hours, of the following trades is very interesting:-




We shall concentrate on the 250K and 320K trades. Notice anything unusual about their (yellow) relationship with the existing significant trades (green) around that time (my analysis spreadsheet if you are wondering where this is from):-




Displayed like this it kind of jumps out at you doesn't it ?

The two yellow trades can be decomposed into the two sets of green duplicates (as illustrated earlier the 80K trade is definitely part of a pair) - what we are seeing is two split triplet trades, as previously observed during the First Island Selldown. The diagram below copied from that article helps explain how we can end up seeing a total of 5 trades from just a single Sell to the Market Makers:-


4 out of 5 of these trades are simply Inter-MM shufflings so should not be counted in the overall nett Market Makers position. When we take out the potential triple counting we end up with the following trade profile for the day:


Notice how even once we correctly eliminate the triple counting of the very early Sells the MMs still acquire more shares from their tame seller than they really need to to meet the buying demand in the market. You could conclude that such behaviour is a clear sign that they are responding to their own shorting agenda and can not claim as a defence that they are simply responding to the current buying pressure present in the market.

Despite trade balance for most of the rest of the day two large sells (250K then 150K) dropped in late in the afternoon drop the SP yet again - again if these Sells are coming from the selling down of a tame sellers position then you could conclude that the way in which this is done is designed to meet the short Market Maker's own agenda. The end result of all these games is that today the MM's have only just managed to nibble approximately 400K out of their previous short position of around 5 Million shares. 

This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

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