Trading Analysis - 25th Feb-1st March 2019

Alfacomp

3 March 2019

Following a significant recovery in the previous week from what appeared to be a short-induced base of 32p we looked forward to see what might arise this week - would the recovery continue, or might further shorting or selling occur ?

Monday, 25th Feb 2019


Three 100K Sells before 10:15AM offset strong buying behaviour from the off. Despite this the effective price for Sells rose to 38.2p before suddenly being cut back, for no obvious reason, around 10:45AM. Further strong buying followed, added to by one of Fatbanker's trademark 80,085 Buys, and the nett trading position moved positive around 12:30.

A degree of balance was struck until around 4pm, when Sells of 75K, 62,354 and a sequence of 30K+ briefly knocked the trade position back to neutrality. It seems the 62,354 was a rollover, as precisely the same number were bought back 8 minutes later, together with another 99,416 Buy at the very competitive 38.0p.

The end of day figures :- 1.43M Buys vs 1.32M Sells whilst the SP drops by 0.5p - go figure.


Tuesday, 26th Feb 2019


Just like the previous day we have a very early, and entirely unjustifiable, drop in Ask from 37.5p to 36.0p. As before this is on a negligible negative trade position. Evidently a Market Maker was looking to buy back shares from someone who may have bought in ahead of the previous week's rise, who had got 4 or 5p profit for no real work and was looking to walk away with their 10% cut. 

If this was the goal then it didn't really work - only 550 shares were Sold at 36.39p, then a measly 13,206 at 36.50p , 10,000 at 36.65p and then 13,075 at 36.72p. It was not until the price of 37.00p was re-obtained for sells just before 10AM that the really big sell of 250K could be taken. It seems that perhaps II's may be getting taken advantage of but not PI's.

In fact PI's were able to buy shares at sub 37.50p soon thereafter, and did so, returning the nett trade position positive just before 1PM - the price paid for share Sells continued to rise despite a lunchtime hiatus in Buys between 1PM and 2:30PM. Evidently fatbanker must have had a good long lunch in his french retreat as he returned with 2x 80,085 Buys soon thereafter, pushing the nett trade position to >140K more Buys than Sells. Only at the close of trading and the arrival of a post close 50K and 250K Sells do we find the nett trade balance restored. Again I take this as evidence of the existing of a sub 40p tame seller who is being tapped for shares when needed.

The end of day figures :- 1.06M Buys vs 1.23M Sells , again with an SP drop of 0.5p. Taken with the previous day it seems we have trading that is very close to neutral.

Wednesday, 27th Feb 2019


Wednesday, same story as usual - a rapid move down in SP despite virtually negligible selling imbalance. The early significant sells of 50K,100K, 100K, 50K simply present another opportunity to Fatbanker to buy another 80,085 shares. The spread narrows as usual, and going towards noon trade neutrality is again restored. The story appears to have been the same for 3 days running - evidently the MM's are using every opportunity to move the SP down - presumably because they wish to procure the shares that they sold at higher prices in the previous week - the standard spike and walkdown game. It seems that they are aided in this effort by a sub-40p tame seller who is having their shares dropped in in 100K chunks.

This narrative appeared to change just after 2pm. With no apparent reason the advertised Ask rose by a full penny. There was no excess buying evident, so what transpires ? In the last 15 minutes there is a clear flurry of large trades - 11 in a row that were all above the normal market size NMS of 30K. This was remarked upon at the time, but the reason was not revealed until the following day -  a Buy of 1Million shares marked at 4:26 PM. It would appear that this must have first started being worked around 2:30pm, and is finally then recorded just under 2 hours later.

However ... the analysis above doesn't seem to have 1 Million shares procured in that period of time ... well not unless you count ALL 11 of the major trades after 4:16PM as Sells. If you do this you get the following result:


The change is evident only on the extreme right - all the major trades are marked yellow as Sells - these number approximately 617,000 - together with another 250K taken from Mr Tame after the bell, and adding the other Sells after 2:30pm you manage to scrape together 1.05M shares - just enough to get the 1M Buy at 37.90p over the line. Given the underlying trade neutrality in previous days it looks like this is a more believable interpretation of the late day trading for Wednesday.

At the end of trading, with this second interpretation there are 2.01M Buys vs 2.00M Sells.


Thursday, 28th Feb 2019


The excitement of late Wednesday's trading did not continue over to Thursday morning - this was very quiet. However at around 12:30PM we seems to get Thursday afternoon all over again. It appears to take little to push the Ask back up and the nett trade balance is further exacerbated by (delayed reported of course) 250K and then 350K trades at 1:12PM and 1:13PM. The above chart shows these both interpreted as Buys.

Two large buys totalling 600K, when the TOTAL number of Sells all day up to that point is only 803K ... and the price does not go through the roof ? Is this believable, and if not what are the chances that they are unrelated being only a minute apart ? 

We have to consider an alternative interpretation - given the different prices that the two trades obtained - that one (250K at 38.0p) is a Buy and the other (350K at 37.90p) a Sell. This yields the following chart:-


Once again this more subtle interpretation, with the pair of trades as some form of rollover, yields a very neutral trade position at the end of the day. An interpretation that seems more consistent with previous days. However this is not a purely arbitrary selection of trades - the timing, pricing and previous balance of trades all hint at this explanation - and this yields the trade neutrality as a conclusion that is in line with the rest of the week's behaviour.


Friday, 1st March 2019


Friday was the first day where Buys immediately outnumbered Sells. However trading was VERY light - only just over 400,000 shares traded before noon. Some speculated that there was in effect something of a trading strike going on. Things picked up after 1PM and for a brief period after 2pm the nett trade position rose above 370K more Buys than Sells.

However... this excess lasted only briefly as within 5 minutes Sells of 314,216 and 100K had knocked the trade position back to neutrality. A sequence of 50K, 42K and 53K Sells just before 4pm took the nett trade position negative, but despite this the SP finished up courtesy of the rather unusual choice of 37.20p Ask price. (Actually the reported SP end day price was 38.0p courtesy of our old friend, the end day auction, yielding a rather overstated UT trade of 1000 shares at the close.)

Conclusion

Over the week we have seen some evidence of a sub 40p tame seller's shares being introduced to the market in an orderly fashion to meet buying demand. It may be that by Wednesday afternoon this source had been exhausted as a 1M worked Buy appeared to take a couple of hours to fill from more organic price movements. It had been speculated that this Buy might have been associated stake building by new Market Maker arrival MACQ, however later inspection suggests that this is yet again our old friend BERB, who had of course been associated with the previous stake building at the end of last year.

Overall despite rather meagre volumes the SP is holding up very well following last weeks post-short recovery, and the MMs seem to be playing reasonably fair at present - i.e. not selling shares they don't have - that would only put pressure on them to walk it down further.

Low volumes and yet the MM's don't want to move it down - this all suggests that an arrival of even mediocre Buying pressure may well spark the start of yet another leg up.

This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

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