Trading Analysis - 26th Oct 2018

Alfacomp

27 October 2018

End of Day



As the chart above shows there were (as pretty much always in the last year) more Buys than Sells - 4 times as many actually. Taking the sizes of all trades into account there's more than 270,000 more shares Bought than Sold at the end of the day and yet the SP stays constant - how come?

After a couple of brief attempts to spook the SP lower at around 9am, having now obtained an excess of more than 200,000 Buys the Market Makers relented and returned the Bid and Ask back to where they were when we started (repeat that statement to appreciate all that it implies.) Then there was persistent buying until 10:50 when it appeared that the dance of a thousand veils started. 

Confused - you should be because I think they tried very hard on this one. But first, as ever, the data (this taken from LSE.co.uk):


Starting at the bottom, the first revealed trade A at 10:52:28 for 250K at 28.25p - we'll leave this for now and move onto an easier question.

B - 10:54:03 (also reported on ADVFN) for 150K at 28.25p

C - this reverses B, we're told around a quarter past 2 in the afternoon - almost three and a half hours later, but guess what it gets replaced by D which is now 300K at the same time and price ... until ...

E - this reverses D, we're told 5 minutes before the close of trading. ADVFN doesn't show trades or the effects of trades C, D, and E.

To cap it off an hour or so after the end of trading we're told that now there's now a trade F, this time for 550K and again at the same time as trades B-E. Wow, is that it ?

No I don't think so - remember the trade A for 250K - combine this with the 300K we though we had got to at E and you sensibly get the result of 550K at F. I don't think this is a coincidence.

So is this my only reason for thinking that trade A will be reversed at some point in the future ? No - there's another reason - that trade is not and to my knowledge never has been shown in either the ADVFN or the MoneyAM trade logs.

So assuming we factor out all the to-ing and fro-ing between 10:52 and 10:54 and just assume that we end up with a 550K share trade - what does this mean, what was all that effort for ? The top chart chart shows what happens if we assume the 550K is a Sell (ignoring the other trades in that shambles) - it seems not unreasonable (Scenario A.)

The chart below shows what we get if we assume that the 550K was a Buy - on the surface of it this might look less promising. However we should perhaps remember what happened at the end of the previous day - there were a series of 150K Sells at 28.25p which left the end of day trading position at minus 640K - I mentioned in yesterday's analysis that these were suggestive of a large background Buy being worked, just as had happened earlier that day.

The 550K could be that Buy - attempts early in the day to reduce the SP only turned up a meagre handfuls of PI's shares at less than 28.1p - so the 550K Buy needed to be filled with 3x150K bought the previous day plus another hundred or so K bought before 9am on Friday morning. This is scenario B. The apparent excess of around 1.4M Buys on Friday gets reduced to a more realistic (albeit still chunky) 0.75M or so once the excess of Sells on Thursday is taken into account.




Which of scenario A or B is correct may be determined - as the obfuscation pattern observed on Friday seems similar to the one observed on Thursday I am inclined to favour scenario B marginally. Further information may of course come in which changes this interpretation, however on the basis that the the 550K was a Buy the nett Market Maker position would currently be as shown in the chart below.


But why all the scrabbling about to get shares from us when seemingly First Island have a big bag of shares that the MMs can apparently dip into when they feel like it. The key is the Marker Makers short position - a significant one of 4-5M which they have previously managed to get an average of c. 28.30p when selling the shares. If First Island are not prepared to take much less than 28.25p then the Market Maker with the short needs to find some alternative source of shares at less than 28.25p to be able to get any real profit. They could well be in a bit of a tight squeeze which may not be able to last for much longer - it is now three weeks in to their short.

Disappointed ? Should you be ? It depends whether you are disappointed in the fact that the share price has not recently risen like it did around the 25th of September. The above graph makes it pretty clear why this is so. Disappointed because you can still buy shares at unexpectedly cheap rates - well not if you are buying !


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