Trading Analysis - 13th Aug 2018

Alfacomp

14 August 2018

The arrival, after hours, of an RNS detailing the exercising of 5M warrants (at the strange exercise price of 13.84p per share ?) and the late reported sells of 1M and 0.5M naturally leads one to look at the trading patterns for the day in more detail. This is shown below in the usual format, with the large sells mentioned highlighted in green.

One of the first things that strikes you is just how dense the data is - one of our busiest days in our history, but none of the 5,6,7% rises to explain the sudden buying interest. It would appear that this buying is perhaps more driven by fundamentals than momentum and short-term opportunism.

Secondly the clear walking down of the price demanded for PI Buys is evident at noon and 3pm - another way of putting this is that the Market Makers took the opportunity to get the most enthusiastic to pay the highest prices for shares. This would have also been evident around 9:45am were it not for the fact that nobody took them up on their invitation to be spiked quite so obviously. The moral here is of course not to jump on immediately after the Ask is raised, but give it an hour and you'll be able to pick up shares cheaper.

The nett trade position shows the dramatic situation that the market makers found themselves in at 12:15 - 1.3M shares needed and rising fast - however there was little evidence of any attempt to use the Bid/Ask to reign in or balance buying immediately prior to this point - evidently the MMs knew already at this time that they could call upon the 1M shares, which are presumably being presold from the warrants block exercised.

This naturally raises the question at what point was this new source of shares known about, and might there still be further delayed Sells to be notified? The end day trade position is a chunky 600K more Buys than Sells so might there be another 500K Sell to be inserted at around 11:15. At this point the nett trade position reached 900K, which is quite a lot more than the MMs seem to be able to tolerate these days, and the market dynamics appeared to change very significantly. Before 11:15 there are significant fluctuations in Buy price paid but not after - it is very reminiscent of a disorder-order phase transition in a real physical system.

A very small trade inserted by someone with direct market access into the end of day auction led the end of day Share Price to be reported as 28.50p - this I believe to be an attempt to mislead the market into thinking that todays (Tuesday) price performance will not be as good as it really is. The true end of day trade price for Monday should really be 28.10p. We shall no doubt see why someone would go out of their way and pay over the odds to try and misdirect the market in this way.


 

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