Hi Ken! Good week! Anyway, had posted the message below on the sector thread which Irby started and felt that it might be useful for some of your readers:
The question related to needed volume for potential trades: Someone felt that 3 mil -ish was a min. As well, I addressed an issue re: NYSE vs. NASD which you and I offhandedly discussed on the site the other day.
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I think 1mm is a bit high. I would agree that the 2, 3 hundred thousand isnt enough, but I feel more confident seeing movements in stocks that trade 4,500k rather than 5million. At 5 million, trades in stocks like CPQ or INTC just start to blend together. The stock becomes to fluid that you cannot see the particular action. You can get an approximate feel for the trend, up or down, but I, me personally, find it too active to spot true buyers.
Obviously for every buyer there is a seller, so lets not go there. I am talking about the active buy, going after shares. The problem with a stock like Dell is there is some actively going after shares and someone actively dumpring shares each moment.
Personally, the most successful trades I have had include stocks that are slighly lower priced, perhaps 20 to 40 bucks, and trade 1/2 to 2 million shares. Just enough to see a buyer, a fund, some institution picking of clips of stock.
Oh yeah, let me also say that I greatly favor the NYSE and AMEX via superdot and other auto-exec. systems rather than the nasdaq. ie...if you see an offer of 20k on nyse, and you (or more importantly a MF) wanted the 20k, one push of a button, you own. YOu might be late, but you won't runinto the problems we see on the NASDAQ with a mm doing 1 or 2 k at their offer (if that at all) and then stepping away.
The reason I mention this is not to bitch re: nasdaq mms, but more to explain that if I see 10 mm' all with 1k shares offering on nasdaq and see a piece go off for 100k shares, I know it is NOT someone taking out all mm. Infact, it could have been the closing piece worked over the past few hours. It is clearly 1 mmaker handling the piece and will probably leave the offers there. They may see the piece and run, and it confirms that some bot ( as well someone sold) but doesnt really add pressure to offer or bid, except for inclination that big buyers usually buy more.
On NYSE if you saw 100k offer and a buyer took out the whole offer, it would clean up the cumulative parties that comprised that offer. the offer should adjust unless it was done in the crowd, third market or the seller immediately refreshes and has more to go. But then, atleast you know you are dealing with a nicely sized seller.
Nasdaq has the beauty of L2 and SOES. Soes, very good on nonactive, stocks whree mm's aren't jiggling. Go to a stock like Dell at the open on an active day and its a disaster. No liquidity. Why?mm's are acting as principal. They are usually taking the other side.
On nyse, superdot executions can often be done in seconds, 2, 3. perhaps., net a much better market upon which to succeed, and in my opinion, the companies, outside of the once-listed Centennial Technologies, are better.
I know this is probably off base from the focus of this Sector thread, but somehow i diverged. I figure this is a trading oriented thread and maybe my point proves useful for someone.
Interesting LACK of correlation: Given the great day on Friday that the internet companies had, I would have originally thought the networkers would have come on strong also, csco,,xyln, fore,bay, etc. Didnt'. infact some, especially csco looked real bad. CSco looks like trouble.
I don't know about you all, but given recent volatility and concerns about approaching a possible market top, I am seeing breaks in correlations. Box makers down when Dell, IBM and GTW are up, networkers down when internet co are posting blow out (if you can call it that) quarters.
I love having the day off!
Regards,
Steve@yamner.com
yamner.com |
