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  • chl94611 chl94611 Aug 21, 2012 4:06 PM Flag

    Machines Starting to Exit AMZN

    If ever there was a doubt that AMZN the stock is run by dark pools and hedge fund HFT machines, all you have to do is look at AMZN's trading behavior.

    Over 80% of the volume in AMZN is between machines. And as such, AMZN often displays little true price discovery, bouncing wildly between .50 and $1.00 with wide bid/offers in between.

    But the machines appear to be exiting, especially after last weeks attempt to break the old highs. Except they didn't. A classic failure at the top, even with AAPL the magnificent pushing new highs. Clear divergence.

    Today at the close, AMZN displayed remarkable price discovery. Although volume is light, characteristic of a market top, transactions were occurring at tight bid offer spreads. Selling occurred all day, but at orderly levels. A sign that the machines took the day off. Or maybe more.

    At the close, the machines got involved just for a moment. AMZN was trading tightly between 239.10 and 239.25. Then, without any real transactions, the close prints 239.55 -.82. A sign the machines want the stock as high as possible in the morning, so they can start distributing again.

    Once the light volume is absorbed, AMZN will start to have gap down days. Then everybody will really start scratching their heads.

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