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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (3832)	11/4/1997 12:04:00 PM
From: Robert Graham	Respond to of 42787

Thanks, Chris. Here are the two first posts I made on tape reading, which was followed up by the post that you reposted here. From now on, I will make my posts on tape reading in both places, the "From the Trading Desk" thread and the "Stock Attack" thread here. I hope my series of posts on tape reading will prove to be interesting to all of you. Subject: From the Trading Desk \| Previous \| Next \| Respond \| Remove Navigation To: steve goldman (1465 ) From: Robert Graham Monday, Nov 3 1997 12:53AM EST Reply #1477 of 1510 [Long post warning] Let me go over a book that is a primer on tape reading here on this thread so that Steve can make his comments where applicable. In this way, we can all learn about tape reading first hand from Steve without taking up an unnecissary amount of his time. Are you game for this, Steve? The book is out of print, so I will be at times reprinting some of its contents for the benefit of everyone on this thread. So goes post #1 in a series of posts to follow: The book first off coveres important material on the stock market itself before he goes into the topic on tape reading. I find this preliminary material very illuminating about what occurs "behind the scenes" in the stock market. He places market participants into three groups. One group is the investor seeking income over the longer term which include institutions, banks' investment affiliates, and investment trusts. Another group is the ameteurs who trade in hope of making easy money which include what he terms as "business-men speculators", brokerage house traders, trading trusts, and corporations. The third group is the professional operators which include investment bankers, stock exchange floor traders, and other intelligent traders. Basically, the author stipulates that what descibes much that happens on a day to day (short term) basis is the flow of money between the two groups: the ameteurs, otherwise known as the "public", and the professionals. He further defines the difference between the ameteur as the speculative-minded public who hopes to make money trading in an hit-or-miss fashion, and the professional trader who skillfully engineers his maneuvers so scientifically that the public will take from him stock that he has aquired at a lower price. The investment banker "manufacturers" stock to sell to the speculator. This is what they are in business for. The stock is simply a product to sell. Their job is to engineer the successful sale of a given stock. The eventual target of this sale is the ameteur speculator, the "public", which keep the stock afloat until they are picked up by the investor. The investment banker approaches the sale of stock like any company the sale of a product. First step is to generate a market for the new issue, and then to sell it at the best high price. The investment bankers employ many approaches to facilitate the sale of securities. This includes other businesses that facilitate distribution such as brokerage houses, and high-pressure sales-managers (pool-operators). The pool-operators accumulate stocks when they are cheap for the purpose of selling them to the public at much higher prices. The professional is called in as a specialist for any number of reasons. A company may wish to finance their new product line by issuing stock. The professional may tell this company that before any additional stock can be issued, it would be wise to arrange for a more active market for their stock. So the professional would facilitate the promotion of the stock to generate buying interest in the stock. The professional may be called in by a lgroup of large shareholders of a corporation who wish to sell their stock , but they realize they cannot afford the simultaneous sale of all their stock without breaking the price of the stock. The professional in this case would be employed as their selling agent with the objective of garnering the highest price he can for their stock. One company may wish to gain control of another company through open market aquasitions of the stock. A professional may be called in to act as the purchasing agent. His goal is to purchase the stock cheaply. So his efforts will go to depress the stock price in order to persuade the public to sell. It is very important for the speculator to understand that the professional sees them as a customer and not a partner. And it is also important to understand the methods of the profesisonal in order to be able to trade with them instead of against them. It is said that stock prices seldom rise of their own accord, that they will sag under their own weight unless they are pushed up. In order for a stock to remain active, there must be a motivating power behind it that involves persistent buying and selling whcih creates an active market for the stock. There are doubtless several pools, and many professional operators, all interested a tthe same time in some of out most active stocks. The money to be made in speculation is to be found in trading active stocks. The stock of interest to the trader would be one in which the pool is active, which has strong sponshorship and support from banks, and the earnings are progressively on the increase. Then the problem becomes one of timing -- when to buy and sell. The individual trader faces one of the most difficult tasks conceivable when he attempts to outguess the keenest minds on Wall Street -- who are on the inside. And the trader must not lose sight of the fact that the insiders are usually well fortified with capital and are able to stand losses when their judgement proves incorrect. It is useless as an outsider to guess what "they", the professionals, are doing. Their objective is to keep what they are actually attempting to accomplish secret from the rest of us. They only let us know what they want us to know when it furthers their interest. So the approach for the speculator to take is to allow the actions of the market reveal what is passing. This is accomplished by the reading of the tape. So how goes it so far? Is it worhwhile for me to continue? Steve, how does what I have covered here meet with your experience? Bob Graham Subject: From the Trading Desk \| Previous \| Next \| Respond \| Remove Navigation To: Robert Graham (1477 ) From: Robert Graham Monday, Nov 3 1997 1:19AM EST Reply #1478 of 1510 A correction to my previous post on tape reading: This book I am reading was originally published a while ago, and has been updated for this 1970 printing of the book. I have just read in an addendum by the author that there are no pools operating in the market today in the sense the title was used in the past. So he suggest substituting the term "pros" for "pools", and "operators" for "pool operators". Still, I suspect much of this same thing is going on albiet in a modified form by those well-funded individuals or firms with large buying and/or selling interests in the market. Any comment on this Steve? Can you provide us any examples of this? Bob Graham