Trading Analysis - 19th Nov 2018

Alfacomp

19 November 2018

10:05AM


The usual - a quick spike up to get buyers buying at high prices followed by a quickish walk back down to get sellers taking profit at low prices. Easy-peasy !

Then tighten the spread and we start to see the underlying behaviour - if the Market Makers were short, and had a ready supply of shares they could call upon this would be the point that they chuck some of these in to drive the price down. However this does not happen - instead it appears a pretty small excess of c. 150K Buys is enough to push the buy price back up past 48.5p. 

Even once an excess of Sells has accumulated the Bid and Ask remain stable - apart from the short term, small short position developed during the opening buying spike I do not see the any great desire at this point in time to walk the price down.

End of Day


Alas my previous estimation of stability did not stand the test of time - it seems that there is currently not enough buying pressure to punish SP drops sufficiently enough to prevent them from occurring and persisting. The significant sells at 8:08 (100K) and 9:40 (150K) both appear as duplicated pairs - suggesting a Sell followed by transfer in between Market Makers. The significant sell just after noon is 200K and that after 4pm is 215K, neither of these is duplicated.

Buying still seems regular, but selling also appears to have picked up in regularity. This behaviour may continue until most of the weak holders have sold out. If those selling are doing so because they believe the BMN SP has gone as far as it can or wish to cash out on their quick profits then so be it - it is better to transfer these shares into the hands of someone prepared to pay 46p than leave them in the hands of someone itching to cash out at the earliest opportunity. This is consolidation, and is necessary.

There is perhaps not much that we can do about these 'grass-is-always-greener' holders that flit from one company to the next, never having to understand any one company in any detail. These people roam zombie-like across the desolate plain of AIM, looking for the next meal, but always missing the feast.

There is however another group - those tempted into thinking of selling now in the hope of buying back at lower prices. This group, the traders, have perhaps already missed that boat - they should have sold down at 49.5p, just below the round number 50p ceiling. Selling now to buy back later will only work if the trader can be confident that there is somewhere a greater fool who will sell to them at an even lower price in the future. Good luck on that.

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