Gang,
I think we need to talk about strategy. This stock has got to close at higher highs and higher lows or the momentum is lost. Read Spencer/Bo's comments on the matter:
Subject: Internet Trading Patterns
Over the past weeks we have noticed a trading pattern in GRNO stock. The stock volume and price increases occur in the morning, and volume and price declines in the afternoon. What we have determined is that when positive news is released and/or strong supportive "buy" comments are made on the internet the upside action is in the morning. In essence, buyers (probably those who follow the internet) are all placing orders before the opening of trading or in the morning right after the open.
My guess is most of you reading this are doing so in the evening hours in the comfort of your home. Let us assume for the moment what you have just read is the best GRNO news in weeks and because of this news you make a decision to add to your GRNO position and buy your first shares. Many of you can place your orders through E-Trade or with a discount firm who takes orders 24 hours a day. Let's assume another group of you decide to watch the morning activity and then make a decision. And since you are reading this, and are willing to invest your own time doing your own research, you too go to a discount firm or even to a full service firm. Here is what HAS been happening over the past weeks (and probably months) based not only on our own
in house tracking system, but from 2 Level trading sheets we have been
provided.
1) ALL orders whether placed with a full service, discount or electronic trading system are given to market makers for execution.
2) A discount firm will not "work" an order, but rather give your order directly to a market maker. They will not generally spread that order to other MM's but rather give it to one.
3) An individual may only want 1000 shares, but if 10 individuals want 1000 shares and they all use the same firm, those orders are bundled (grouped as one order) and given to a market maker as a "buy" order of 10000 shares. (For example, there was one order this morning on the opening for 25000 shares given to one market maker. We feel this was a bundled order because it was with one MM, and most people, if they are going to buy a large # of shares will break up there own orders.) This is true for discount firms, full service brokers who just take your order, or electronic trading firms.
4) Market Makers now see there are buy orders for, let's say for example, 45000 shares coming from 5 different firms. The self created problem is that the MM's know the firms generally used by those who rely on the internet as a source of information, and most of the orders are coming in the morning which generally indicates it is from a group who have received stock info after a market close.
5) It is perfectly legal and within NASD guidelines. A MM is only obligated to fill an order at the posted price and shares. Generally, most MM's will only ''bid" and "ask" for 500 shares at a preset price.
There is no way anyone or MM can truely know if an influx of orders is an aboration, pattern, or a run on a stock. If they raise the "ask" or lower the "bid" and the orders continue, they have no way of knowing if it will last. When the orders "dry up", which is what has been happening over the past weeks (and months), it is perfectly legal to change the quote. "If no one wants to buy at 2 1/2, maybe they will buy at 2 3/8." Where earlier, with a large influx of orders the economics of supply come into play - the greater the buyers, the lesser the supply, the higher the price.
6) Now, the originating order takers - your broker. Assume for the moment you hire a "broker" to play 5 card draw poker on your behalf and he is never to fold your hand. You instruct him/her to open your bet with $0 on nothing,$10 on a pair, $20 on two pair, $50 on three of a kind, etc., pretty soon the other players at the table are going to know exactly what your holding by your opening bet. That is what you, as a group, are in essence telling your brokers when you buy stock through a discount, electronic trade, or a full service firm not familiar with GRNO.
In summary, Ladies and Gentlemen, the MARKET is reading you like a book. It is obvious that the action in GRNO is in the morning. The first orders tell whether it is buying or selling. As Bo said, GRNO has established the trading pattern of seasonal stocks.
Our advice. We really don't have any. The problem is twofold: 1) if we suggest a change then that will become the pattern. 2) If we tell you to wait, that will be the time GRNO breaks and continues. All we can say is be aware of the pattern and make your own size and time decisions.
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As this pertains to almost any stock traded online, I would appreciate some thoughts on strategy. One would be that we do two trades for any position over 1,000 shares and mix them around during various times of the day. However, I realize most of you are like me and trying to get the best price available.
However, I recommend never place a "Good til Canceled" order, only day orders. GTC's set you up for being filled at the mmkrs leisure and best profit.
What this fundamentally comes down to is that that we have to look for this stock closing at higher highs and higher lows. If that means trading in the afternoon, after the price has run up, then so be it. Pour on the coals. You may pay a little more, but you'll apply pressure to maintain the price at the close of the session, and THAT will attract other interested parties watching the battle go on.
I once heard a quote: "Amateurs trade in the mornings, professionals trade in the afternoon". Maybe there is some wisdom in that. And just in case their reading this, then I would suggest that we vary our patterns ever couple of days so they don't get tipped off.
However, there are many of you, More Experienced than I, and I look forward to your responses.
Regards,
Ron |
