Good question... if it wasn't meant facetiously.
You asked: " Paul, no sign of INCA on the ask for the last few days. Five other MM's on the ask however. What's going on? "
Rich Wolf gave you some background on the market makers, let me talk a bit more about it.
INCA has been the main market maker handling CC's orders, and has been on the ask most of the time for over a month. In fact, starting Monday morning September 27th, INCA showed at least 10,000 shares on the ask for the most part up until late last week. At the lows this cycle, INCA took multiple hits on the ask of 10k shares at a time, at 4 13/16, 4 3/4, and 4 11/16. When INCA lowered the ask block price to 4 11/16 one day, they took two 10k hits about ten minutes apart. They pulled back to 4 3/4, and took another 10k hit ten minutes later. Since then, they retreated their big block asks to higher and higher asks.
This last Thursday morning, they tried one last push, putting up a big block up at 5 1/16, and got hit with a 20.7k buy order! Since then, INCA hasn't been so aggressive putting big blocks up on the ask <ggg>.
On Friday, one seller was JPMS for awhile, but they were just liquidating some shares they picked up in the high 4s... looks like normal market maker action to me. Since INCA didn't show up, we noticed some of the market makers handling other shorts starting a little covering action... but not much. Notice that Friday's volume dropped way off without CC active.
We have noticed that on big push days, that INCA has sold in excess of 30k shares... How can they do this if CC is limited to selling 30k per day? Well, most of the time we see INCA buy an offseting block immediately(within a few seconds) if they get hit. Appears as though the selling coalition has some sort of 'Quid Pro Quo' arrangement, where the coalition partners sell shares short to INCA if someone hits the ask.
REDI has also been a big net seller over the last month, usually in concert with the attacks on the bid. Looks like CC uses INCA to short shares, and REDI to sell long shares, when they can't short. We could be wrong about REDI, and we may have an active shorter there... we don't know for certain.
A large shorter seems to be active using NITE. As Rich pointed out, NITE also handles a lot of shares for other traders as well, but NITE has been a heavy net seller, particularly on September 27 and 28.
Smaller shorts seem to be using SHWD and ARCA... both of these were more active in August than now, and in fact we are sometimes seeing some buying from these two, like ARCA's buys Friday. Also there seems to be a short at INCA besides CC. My guess is there are 4-5 large shorters in the selling coalition besides CC.
The biggest buyers are PRU, HRZG, and MASH, with occasional buying from JPMS, and several others. PRU has on occasion, been an extremely heavy buyer. HRZG has tried to buy 15-20k every day for several weeks, and the buyer there seems to have accumulated at least 300k shares already. I suspect this buyer is an institution. HRZG wasn't able to buy much on Friday, but had pushed their bid up to 5 3/16 by the last hour. MASH is more erratic, but we have seen sizable blocks of 5-10k coming through MASH at critical times. PRU and HRZG almost never sell significant amounts of stock, and MASH is a heavy net buyer, even though at times, there is some selling from MASH. Since MASH is Schwab's MM, this should be expected.
So, in conclusion, you are correct... INCA did back off Friday, and isn't actively sitting on the ask with a big block of shares. It seems clear that CC was not in the market Friday. At least two of the buyers were though, and we seemed to see the first short covering we have seen for a while from the likes of SHWD and ARCA shorts. OTOH, the evidence from the tape completely contradicts Zeev and your "Superman trading theory" where you believe the shorts are significantly covering in the dips. The tape doesn't support this nonsensical theory at all.
CC's absence on Friday, plus the trend in the conversion price, means next week is critical for the selling coalition. The game could end this week.
Paul |
