Joe: Regarding the trading Volume for Earnings Day (May 29, 1996)
There is no way one can tell if "4 million" shares were bought by Novell but I doubt it. I was at the terminal for most of the day watching the trades. In fact the trading volume and block trades were quite interesting. If you were watching the short board, I was giving a play by play analysis. Here is summary what occured.
1) Stock actually traded higher on the open
at 6:35 AM $15 1/4..b/$15 1/8..a/$15 1/4...volume 230,000
at 6:36 AM $15 1/8............................... 278,600
at 6:40 AM $15 1/8............................... 367,800
at 6:42 AM $15................................... 457,800
at 6:45 AM $14 7/8............................... 663,200
at 7:00 AM $14 3/4...............................1,202,600
at 7:03 AM $14 5/8...............................1,375,000
at 7:05 AM $14 1/2...............................1,585,700
at 7:06 AM $14 1/4...............................1,729,100
at 7:08 AM $14 1/4...............................1,760,100
at 7:09 AM $14 3/8..b/$14 3/8..a/$14 1/2.........2,462,100
at 7:14 AM $14 3/8...............................2,530,200
at 7:16 AM $14 1/2...............................2,537,200
at 8:20 AM $14 13/16b/$14 5/8..a/$14 7/8.........4,435,400
at 8:25 AM $14 3/4...............................4,493.500
at 8:35 AM $14 3/4...............................4,595,200
at 8:36 AM $14 13/16.............................4,623,700
at 8:44 AM $14 3/4..b/$14 3/4..a/$14 7/8.........4,732,300
at 8:45 AM $14 7/8...............................4,765,600
at 8:50 AM $15......b/$14 7/8..a/$15.............5,030,300
at 8:55 AM $15......b/$15......a/$15 1/8.........5,162,900
at 8:57 AM $15 1/16.b/$14 7/8..a/$15 1/8.........5,373,400
at 9:19 AM $15...................................5,673,600
at 9:24 AM $15...................................5,729,900
at 9:29 AM $15 1/8..b/$15......a/$15 1/8.........5,808,100
at 9:35 AM $15 1/8...............................5,957,500
at 9:37 AM $14 15/16.b/$14 7/8.a/$15.............6,033,100
....
....
close......$14 9/16..b/$14 1/2...a/$14 5/8.......8,063,000
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Block Trades: Time is PST
7:00 AM 100K sell @ $14 3/4
8:00 AM 100K buy @ $14 1/2
8:10 AM 100K buy @ $14 5/8
8:15 AM 50K buy @ $14 3/4
For the most part the sell off was controlled and no panic. The market was down ticking about every 200K shares to a low of $14 1/4 at around 7:10 AM. I was surprised that there were not more block trade sells. The only one I saw on the sell side was the one at $14 3/4 at 7:00 AM. It appears that all the institutions that wanted to sell, already sold at $11 3/8 as I mentioned in my earlier post in February.
THE REAL NEWS BEHIND THE TAPE:
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The real news behind the tape was the strong ralley after about 8:45 AM with trades running 30K per minute. Lot's of buying in the $14 7/8 and $15 range, almost 2 million shares! I only saw three block trades totaling 250K shares.
Also if you analyze the distribution of shares traded through 9:37AM, we get the following distribution:
at $15 or above............. ~1.7 million (22% of vol.through 9:37AM )
at $14 5/8 - $14 7/8........ ~2.5 million (32%....."...........")
at $14 1/4 - $14 1/2........ ~1 million (12.5%..."...........")
You can see that $14 5/8 is a key resistance point, which is a consolidation point. I usually do not track a stock in so much detail, but on an earnings day it is important to see the distribution of stock and the magnitude of Sell vs Buy blocks.
OBSERVATIONS (I am giving away my secrets)
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I noticed three VERY important items:
(1) The sell off was very minor on all large blocks and even the small trades. All large institutions who wanted out are gone. This will relieve any selling presure in the future (IMO) unless there are significant fundamental changes in the company.
(2)There is aprox. 2 million shares short in the price range $11 3/8 and $13. As the stock moves higher or continues to consolidate at these levels...the shorts are going to cover. Some may already have.
At 8:45 AM, volume picked up significantly! I can only think of three possible reasons (a) some shorts began to cover, (b) Novell bought BUT not in large blocks (they usually buy in 50K or 100K block trades)-remember Novell purchases an average of 1.5 million shares per week through October'96, or (c) institutions began to buy AFTER they finished reviewing the financials, specifically the Income Statement and completed the conference call held in the AM. Most of this stock was bought in the $15 area.
(3) Finally, technically we almost obtained an "interday" Volume and Price reversal (which still may be in process). If we close tomorrow above $15 1/4, this will complete a two day volume & price reversal. Which is very bullish and allows us to establish a new up trend leg.
Hopes this gives you an idea on how the days trading went.
EKS
PS I do not day trade much anymore because I make more money buying value and holding. I suggest more stock 'players' use the buy and hold strategy and not worry about the day to day changes. Periodically, I go through such an exercise on critical days (earnings, double bottoms, etc) in order to calculate distribution flow and study the institutional (block) trades.
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