Hello all: That was an interesting day. I have no more solid explanation for the spike than anyone else so far, so this post is just speculation. If you are disinclined to read meaningless conjecture, then move on to the next post.
When the price started running up I expected to find some news release that caused the buying, but as we all know, nothing came out. So I had to wonder if this was buying by people who had some inside information. Since most of the trades were pretty small (i.e. not a lot of large blocks traded, I think the average size was around 1.5k), I tend to doubt this. If someone knew of pending developments which would cause a big price increase, they'd probably buy a few big chunks instead of lots of little slices.
So that leaves us little investors to do the buying - but based on what? It could be that people are getting excited waiting for a news release about financing, and wanted to jump in before the news comes out. When the price started going up, they figured it's now or never. As the price kept going up, the effect was a snowballing, until sometime in the afternoon the price had peaked and more selling pressure came back.
But I have to wonder how much of this is honest market forces, and how much is due to the market makers. I hate it when people start blaming stuff they don't understand on the MM's, and I certainly don't claim to understand the hazy netherworld in which they reside, but it seems like some strange stuff was going on yesterday. I used DBC to watch part of the trading yesterday, and although I missed a lot of the trades, I did see some things that caught my attention.
Some examples:
At one point the volume stood at 76.3K, price was 3.00x3.12, with last trade at 3.06 (also the higest trade of the day). The price went to 3.12x3.18. No trades had taken place, and the highest trade of the day was still 3.06. A trade of 3k went through immediately at 3.12, and the ask went up to 3.25. Then 100 shares were traded at 3.25. To my uneducated eye it looked like the MM's were jacking up the price for no reason, possibly even masking a sell (on their part) at 3.12 as a buy.
Exactly what happened next is unclear because I must have missed a few trades, but we went from the previous volume of 79.4K at a price of 3.12x3.25, to a volume of 89.5K at 3.18x3.31. The last trade was at 3.18, but the high was at 3.31, so somewhere there was at least one purchase. We are now at the high point for the day. Another trade of 200 shares went through at 3.31. Then, with no trades, the price was rapidly dropped to 3.18x3.25, then 3.12x3.25, then 3.06x3.25. As of yet, no more trades. Then a buy (or sell?) of 1K went through at 3.18, then another 2.5K at 3.12 and the ask was dropped to 3.21 (bid still at 3.06).
Later in the day, the price stood at 2.81x2.87, with no trades the ask went up to 2.93, someone bought 1K at 2.93, and the ask went back to 2.87. Looked like someone put in a market order and got screwed. A little later, price is at 2.87x2.93, with last trade at 2.93. No trades and the price jumps to 3.00x3.06, and 10K goes through at 3.06. I have a hard time believing someone put in a market order for 10K. Something else was going on here.
What this all means, if it means anything, I have no idea. Are the market makers manipulating the stock to make more profit for themselves? I don't know. Sorry this post was so long. I'd better end it before I start speculating about the shooter on the grassy knoll.
regards,
Mike |
