Trading Analysis - 9th Nov 2018

Alfacomp

9 November 2018

11:30AM 


First the detail of the spike down following the Q3 Operational Update RNS - the trade log only becomes clearer after 9am, when the 1 hr delayed trades were reported. These are shown below:



I have highlighted the most interesting trades both in the trade log and in the chart at the top - you can see that after an aggressive opening sell of 100K there follows a sequence of sells - all around the £30K value, plus a couple more 100K sells thrown in for good measure. To me this looks like a fairly premeditated attempt to drive the SP down - three quarters of a million shares, worth some £280,000, sold in the space of 10 minutes.

I don't believe that Market Makers would muck around in quite this way but perhaps a shorter or trader, the first which would and the second which might, be looking to buy back at lower prices, could perhaps think that it is worth trying to pretend to the Market that these are all Sells by genuine PIs.

We are all well aware how the immediate and decisive buying response by PIs took full advantage of this ill-advised drop in Share Price - within minutes the SP was back were it started whilst those who stood on the sidelines for too long, or had their assets tied up in other shareholdings were left to sit and rue their inability to take advantage of this short-lived pre-Christmas Black Friday sale. Cash, as they say, is king.


Things trundled along quite nicely until about 10 o'clock which was around the time that it became clear that our beloved Broker had chosen to increase their target valuation by over 133% (from 37p to 87p). At this point buying pressure took over again and the SP rose to 42.0p - just shy of its all-time 42.25p record. At this point it appears that there has been over 1 Million more shares bought than sold.

We'll perhaps see how the MM's sort this particular conundrum out later in the day.

End of Day


The complete chart incorporates the following significant trades reported after the end of trading:


As you can see there are almost 2 Million shares trades reported late. It turns out when you slot them into their relevant positions on the chart that they are all Sells. Quelle surprise !



Zooming in on the afternoon action we can see how two of the 500K Sells took place just before 3p, at just above 41.1p. The 3.15p pm peak triggers two, relatively small, 100K Sells just after the peak and then the SP relaxes back down.

The other 500K sell, earlier in the day occurs at 10:34 - at 40p, again just before there is a sharp increase to a peak of 42.5p around 11am. 

Note how this behaviour is different to the usual drop in SP when we get when a Sell is dropped into the market.

Here the sell presages the subsequent rise in share price - it is almost as if the Market Makers are holding down the share price until they can get a nice large block of shares at cheap prices, and then allow the SP to rise so that they can get 5-10 times the spread they would normally get when they subsequently sell minutes later.

Who is getting done over on this ? Two groups of people - 1) whoever is giving them the shares 2) whoever is chasing the SP up when the price starts moving up.

Unless you are a significant seller, or warrant holder then there is nothing you can do about 1) - but if you are buying then there is something you can do about 2) - namely be more patient.

The very large nett trading imbalance at the end of the day, >1.5 Million more Buys than Sells may cause the Market Makers some difficulty, as it would tend to suggest that they have had to increase any short position significantly. However the get-shares-then-sell-shares behaviour identified above wouldn't be the behaviour of someone running a short position - they are much more likely to sell-shares-then-worry-about-finding-shares-later. 

This apparent dichotomy leads me to wonder about the two share trades at 10:52:43, around the time of the late morning peak.



Just musing here, of course, but it seems to me not out of the bounds of possibility that we might subsequently discover that the 100,000 trade at 41.8p, a Sell, turns out to be a 1,000,000 Sell that was "accidentally mistyped" (damn those pesky zeroes) - that would have a significant impact on the end of day calculated MMs nett trade position, bringing it much more closely into line with typical balance limits.

We have seen such manual 'errors' on numerous occasions before.


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