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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Kanetsu who wrote (11609)	9/3/1999 12:01:00 PM
From: Rande Is	Respond to of 57584

. . . .On Block Trades. . . I don't use big block trades as a reason to buy something, but will watch overall momentum. If I see a block trade that is followed by increasing activity and more block trades, I might jump on, provided I understand the REASON for the activity. If I don't know the REASON for trading activity, I won't trade it. . . an overshorted position is a good enough reason, provided it is at its bottom. . .but if a stock is getting big block trades while shorts are playing it, I pay it no attention. Also, if a stock gets an upgrade or downgrade and it has had big block trades, I pay it no mind. . .as it is probably the broker that issued the upgrade/downgrade moving against their own announcement. It is already someone else's game. . . and you cannot win another mans game. So the only way a big block trade will influence me. . .is if I am watching for an entry or exit point. . .and suddenly 75k goes by. . . or 3 trades of 35k . . . then I will wait to see if the trade affects the stock first. . . since some trades at the bid are actually BUYS, while some trades at the ask are actually SELLS. . . .Hello? Everyone still with me here? So if a big trade on the ask is followed by upticks, I may choose to jump in with my buy then. . . or if I was looking for an exit point, may wait a bit longer to see how high it is driven. . . and the same in reverse on selling. Now remember. . .when you see large blocks at the close of the day. . .especially AFTER the bell. . . pay them no mind. . . .I'd estimate that 95 percent of the time, those trades are merely Market Makers of floor brokers balancing out their books. .. .in other words, if an MM is running short all day long, by the end of the day he will often cover the whole days trading in a single buy to cover. Again, this happens in reverse, should they be long all day. . . so it is not unusual to see a 100k trade that occurs at 4:03 pm or 3:59 pm . . .and it has no affect on the bid/ask whatsoever. Hope that helps, Rande Is