Todays vol was very light, and where there was volume, it appeared to be Mr Market accepting everything that came out in a narrow range. This behavior by itself says alot, Mr Market knows he's being stalked by multi hundred billions of side line dollars, so his own accumulation must be done artisticly.
Me thinks the last few days were for Internal Supply rebalancing, allowing Mr Market to deliver shares against last Fridays expiration, and getting ahead of where action might be coming.
I noticed some shorts piling on but their effects were less pronounced than usual. This may because so much of the TA that triggers there moves is ill constructed showing overbought when the stocks are distinctly oversold. I am on record and will defend my position that Stocks with high short interest cannot be overbought unless and until the short part of the overall volume, is accounted for in the TA of that particular stock.
By way of example, my work with Free floats has proven that when XYZ company has a Trade float of say 10 million, with 1.5 million short, and Investors of all classes are holding some 70% or more of the float with Intent, than any TA not reflecting the imbalance in the Supply, is simply wrong.Because the 2.4 million share short position is levied on an actual free float of only 2.7 million shares...this is the key to understanding price behavior in many stocks.
Program trading has taken over, its painting the tape with so much bogus intent that it isnt intent at all. Real Accumulation and distribution takes place everyday, and its those acts of buying and selling by investors, not traders, who dictate the trajectory of the companies stock price. Addition by subtraction. As supply becomes dear, prices move to reflect the scarcity value of the issue.
In a Supply Demand model, the traders share of any free float represents the undecided portion of potential investor interest. As the trade portion of the float meets support and resistance, Investors decide to Accumulate or Distribute dictating the stocks impending trend.
In my admittedly small universe of stocks with prerequisite screens built in...I saw a market today that was working to correct its own needs and not lending strength to the bear case.
When Mr Market Needs Inventory prices go down, its pretty simple and very clear.
Indy; most people are buying 100 to 700 shares of a 20 $ stock at a time...If your an investor and plan to hold for either a liquidity event or dividends or long term capital appreciation, your entry plus or minus .20 does not matter. What matters is showing intent. The tape is running an alogrtyhm to paint ta. Along with that the trade is using Artificial Intelligence systems, to model human behavior. I just read a book called Fooled by Randomness which speaks to the latter issue, wouldnt recommend the book, because its premise is bad, but it shed light on the subject most know very little about.
Most of us were, are, used to be customers of the Mutual fund industry. Why no more..? For me this is obvious.
Last January, a spammer came on the thread with a research report...that suggested shorting KVHI for the most ridiculous reasons...we traced the author or was it the authors employer back to a hedge fund in a Dallas Law office. Come on...these folks are destroyers of everything good about free markets, they want hegemony, they want to use their influence to steal value however they can. They have seen how the industry works and have muscled in to become a player...same goal as everyone whose held those seats before at the table of churn.
Its all about CHURN the public...Its about time the Public starts reversing the process and that possibility starts with understanding the LAW of Supply and Demand.Specialists can and do make markets both ways, if they do their job without succumbing to corruption, the markets will flourish once again.
JD just posted about the terms of the decline in 2000..guess what CNBC 's statistical lackey was saying about money flow for the greater part of the churn...thats right just the opposite of what the reality was.
My focus is Supply Imbalances, I have come to understand the mechanics of this industry the hard way..I have no illusions about the game, but with others we are developing awareness and tactics for prosperity within the game.
You must do whatever suits your intent, think of me as a defense mechanism and you will probably benefit by it. My Mission is clear, to help the individual investor with tactics and rules, my schtick hasnt changed in six years, it just gets better with experience.
I could care less when the trade employees bash me, this game; is what it is.
DVD, I read your messages about the tactics of the market with a good deal of interest and can see your logic. But your advice to buy or sell this particular stock with market orders seems a little dangerous. I've never seen market orders filled at good prices much less fair prices here. For example, if there's news on a weekend or overnight that lines up buyers for the a.m. trade, those buyers get killed on market orders to buy - guaranteed.
Other thoughts about holding or trading shares here: For many years this was a sleepy little stock that barely moved at all for days and weeks on end - not enough volume or volatility to allow for decent trading opportunities. Today, with all the newer momentum built on the new A-5 product and the fact that many large blocks of shares have changed hands this year - it's a completely different situation. The number of shares didn't change, but the complexion of the owners did, and the market's attitude toward the stock/company. And, with that came the chance for many to take profits which has produced more volatility.
The long term longs here didn't create this new environment as we were the ones hanging on to boring quarters and years (price wise) -- they (we) merely attempt to make the more recent reality work to our advantage, while continuing to stay long the stock. The new environment affords plenty of opportunity to do so, and to ignore that would be foolish, imo. It's what makes a market and creates dividends for a growth stock that doesn't pay any.
Now we're getting to the real reason someone was paid $140 million. It was to keep the regulators distracted, so the games could be played. BTW, the other side of the games is John Q. Public...the games can't be played without them,IMO
<or destroy its value by whatever means available. This is the great untold story of how the bubble burst...
I really really believe that. The average investor wasn't selling off their long positions so aggressively as to explain some of the nose dives we saw. They might of stopped buying....but I don't think they or very many of the Funds were in that mode in 2000.
As much as people will argue the merits of the mechanism I think it is more destructive to the market process than constructive. I don't buy this BS that it is important to "maintaining reality". I think all it does is give a few the leverage they need to play a pretty exclusive game against the majority. It's the grease on downhill runs that I don't think most market participants benefit from.
Dont ya love this business model...
Think about how your broker dealer handles your shares...the best corallary is that of your mortgage lender...you finance your house through XYZ so until you pay it back XYZ has control...lets say you live in Chicago and want to go on vacation in July, well the mnortgage lender has a conference the same week and uses your house as a way to save the expenses of a hotel for his staff....this is the way of this industry, they loan you money so you can buy shares, than they house your property in a way that allows them to loan that property to someone else whose aim is to take it away from you or destroy its value by whatever means available. This is the great untold story of how the bubble burst...
These are life lessons...Individual Investors must begin to understand and integrate Supply and demand...its your single best defense against an entire industry working to add you to the CHURN statistics.
The entire industry needs to be reigned to the supply demand metrics, otherwise the theft by deception will continue to glorify these business suits managing the operation.
<Unfortunately, naive institutions, such as mutual funds, loan their stock out to these "shorts, hedge funds etc for a small fee>
I betcha the Funds are all reviewing any and all business policies that involve hedge funds. If only for reasons of "how it looks" to the general public. Folks like Janus are taking a way bigger hit on reputation than what any Fund would ever wish on their worst enemy.
I think we'll see a bunch of these outfits try to take advantage of this miring muck and pull above it waving banners saying... "Come invest with us - We don't even know how to spell 'Hege Fund' - We're squeeky clean"
With the fine print on the bottom of the banner saying-
" * Squeeky Clean not to be taken at face value, or investment to be made, without reading our perspectus. This is not an offer to sell securities"
Unfortunately, naive institutions, such as mutual funds, loan their stock out to these "shorts, hedge funds etc for a small fee. Imagine loaning your stock to someone who is going to sell it back down your throat. Also, short sale uptick rule is still in effect, but even the SEC doesn't care to enforce it. sad....IMO
Certainly the existing short sales are a done deal. They've created a bit of a headwind, but not much more than that.
Let's say they want out... that will be from the "free float" which is tight. Ah, now a big tailwind.
An interesting situation. Mainly because the 2.4 M shorts represent positions already taken. Sure, more shorting could lower the stock price, but the existing shorts at this point can do nothing more negative to the stock price.
Aboslutely Correct, those shorts functioning with TA that does not account for the change, mask their own effects on the trade. With companies where floats are hundreds of millions or billions, none of this matters much. But KVHI is a Supply driven stock...its moving along a path to liquidity creation as it grows up and becomes a BIG Dog. This is an inescapable fact. Shorts are here for one of two reasons;
1. Price Suppression for the purpose of Accumulation;
2. Short on broken TA.
you get a graduation certificate for that fine PHRASEOLOGY.