# Zero volume on spec stocks - Has everyone given up?



## prawn_86 (21 August 2008)

Hi all,

Just an observation of late, and was wondering if anyone has noticed the same.

I have a watchlist of 25 stocks that could be called spec. In the last couple weeks anywhere between 3 - 10 of them do not trade in a day, and they're not in halts. Some are normally illiquid, but up till a month ago they all used to have at least a few trades in a day at a minimum.

Obviously specs are not in favour but i guess you could take this one of two ways:
1. No one is willing to buy anymore and it will be a long lonely road till any recovery in the micro cap sector.

2. All the fear and panic selling is finished (hence the zero volumes) and it may be a good time to buy.


Any VSA techies out there care to enlighten as to what no, or miniscule volume generally means? (Im aware VSA is best for highly liquid stocks)

Discuss....


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## tech/a (21 August 2008)

> Any VSA techies out there care to enlighten as to what no, or miniscule volume generally means? (Im aware VSA is best for highly liquid stocks)




No interest plain and simple.


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## disarray (21 August 2008)

i reckon it might be something like money flows into large cap stocks first like banks and bhp etc., then when they have stabilised and there's less profit to be had it flows into mid caps, then finally down into the speccies. maybe its just a psychology thing, everyone is nervous and large caps are safer so money goes there first, this atrtacts more money until it reaches value so the overflow filters down with a lot of perceived risk mitigated by the stability of the large caps.

i noticed specs get hammered hard and fast over the recent corrections and they are very slow to recover, and with the market the way it is you'd have to be brave to be venturing in there.


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## Kauri (21 August 2008)

No liquidity...  no me...  :alcohol:  

 Slainte
.............Kauri


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## prawn_86 (21 August 2008)

So pretty much what i thought. Although its weird that there is zero volume for so many stocks



tech/a said:


> No interest plain and simple.




Now the question is when will it pick up and how do you use volume as an indicator if there has been no volume for a while. IE - do you still do it based on historical volume or use %'s or what


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## Kauri (21 August 2008)

prawn_86 said:


> So pretty much what i thought. Although its weird that there is zero volume for so many stocks
> 
> 
> 
> Now the question is when will it pick up and how do you use volume as an indicator if there has been no volume for a while. IE - do you still do it based on historical volume or use %'s or what




  History repeats...repeatedly...  dare I say it..    why nott    like bad prawns...    
Cheers
.........Sauri


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## prawn_86 (21 August 2008)

Kauri said:


> History repeats...repeatedly...  dare I say it..    why nott    like bad prawns...
> Cheers
> .........Sauri




Is that meant to mean something? Have you been drinking? :


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## Kauri (21 August 2008)

prawn_86 said:


> Is that meant to mean something? Have you been drinking? :




it means nought... as I don't drink anymore.. or for dat matter any less neither.. but tanks for accepting my warped humour..  

Watch out for roaming barbies
................Kauri

 PS...
without liquidity nothing works... at least in my limited experience..  slainte.. bottoms up.. an cheers..


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## CanOz (21 August 2008)

I think its from no interest in the speccies from a seasonal low volume, plus RISK AVERSION, tight credit, and higher bank interest. 

Basically it is a sign of the times.

Cheers,


CanOz


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## cuttlefish (21 August 2008)

prawn_86 said:


> So pretty much what i thought. Although its weird that there is zero volume for so many stocks.
> 
> Now the question is when will it pick up and how do you use volume as an indicator if there has been no volume for a while. IE - do you still do it based on historical volume or use %'s or what




That '_when_' will be never for a lot of the poor quality spec stocks - many will dissappear from the boards in one way or another - those with quality assets and no cash will get bought out for a song by peers with more cash - those with poor assets and poor prospects will bump along until they spend their cash and suspend themselves while they ponder their next moves.  Some will re-emerge recapitalised and with a new direction and a fresh band of enthusiastic shareholders, others won't.   The existing shareholders will have been diluted to oblivion through capital raisings or in the ones that go under altogether will end up with nothing.

The ones that will survive with existing shareholders intact to reap the rewards will have a strong cash position , exceptional assets and good management.  The first to recover will be those that are generating an income now or are likely to start to generate an income soon - when cash is king investors are attracted to stocks that pay good and growing dividends.  

The pattern tends to flow along the lines that dissarray describes.

Very low liquidity doesn't necessarily imply that the stock is a dud but its a fair indication, as even in a flat market the better quality junior stocks will still have trading and accumulation occurring.  Rather than volume I'd be focusing on their fundamentals  - cash levels,  asset quality, management and near term cashflow prospects (and capex between current situation and cashflow - i.e. do a proper conservative NPV on the assets). 

There is often the opportunity in a bear market, due to mispricing, to swap from poor quality to better quality without giving away too much on price.


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## tech/a (21 August 2008)

> Now the question is when will it pick up and how do you use volume as an indicator if there has been no volume for a while. IE - do you still do it based on historical volume or use %'s or what




Although Kauri's humor is questionable his observation is supported by me at least.

If you sat in a car with no gas would you expect to get somewhere?

Most buy smalls because they seem cheap.
You can buy 20000 at 10C or 50 at $40.

But a 5% move in either is a 5% move.
One you can analyse the other----well you can gamble.


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## nunthewiser (21 August 2008)

personally been using these distinct lack of vols in the little pond to my advantage , been picking up 2 uglies that make a quid at silly prices provided by severe gapping and lack of depths  gawd bless these lil park and wait spots for patient traders happy to sit and wait a while . but as far as general trading of the dreadfuls , nah leave it till the fresh bushy eyed punters come back to reinvent them again .


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## nunthewiser (21 August 2008)

and yes tech A , its all about %


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## Kauri (21 August 2008)

tech/a said:


> Although Kauri's humor is questionable his observation is supported by me at least.
> 
> If you sat in a car with no gas would you expect to get somewhere?
> 
> ...




 I'm glad it is only my humo*U*r that is questionable... however your general approbation is .. well~~~  what the heel.. bottoms up.. 
Slainte
..........Kauri


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## JTLP (22 August 2008)

tech/a said:


> Although Kauri's humor is questionable his observation is supported by me at least.
> 
> If you sat in a car with no gas would you expect to get somewhere?
> 
> ...





Take that...rewind it back...
10 cents to 10.5 cents = 5%
$40 to $42 = 5%

Which seems more attractive now?


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## Whiskers (22 August 2008)

Re: Zero volume on spec stocks - Has everyone given up? 

Nope... I've been picking a few desperate sellers off... but it takes a few days for some of them to come to me.


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## MichaelD (22 August 2008)

JTLP said:


> Take that...rewind it back...
> 10 cents to 10.5 cents = 5%
> $40 to $42 = 5%
> 
> Which seems more attractive now?




10 cents to 9.5 cents = -5%
$40 to $38 = -5%

Which seems more dangerous to your capital now?


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## Sean K (22 August 2008)

I think there's a few factors with the specs.

1. There aren't many buyers in the market, people are scared.
2. Punters have been moving to cash, people are scared.
3. A slight switch to financials over commods, people may be silly.
4. Punters are more risk averse, people can sometimes be smart.
5. With low liquidity specs are harder to sell out of, people can sometimes be patient.
6. Some specs have exceptional long term potential so people don't want to sell, and they are sometimes smart. 
7. When caught in the headlights, some people freeze. 
8. Buy and Hopers are scared to turn their computers on to see how much they've lost, and have no ability to trade. 
9. I am in Quito working out of Cafe's and have limited time to create volume.
10. Punters are too drunk from having resorted to the bottle, and can't find the buy button.


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## Trembling Hand (22 August 2008)

MichaelD said:


> 10 cents to 9.5 cents = -5%
> $40 to $38 = -5%
> 
> Which seems more dangerous to your capital now?




PERFECT!!

How much will I make :evilburn: 

No dear son, how much can you lose:engel:


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## Porper (22 August 2008)

JTLP said:


> Take that...rewind it back...
> 10 cents to 10.5 cents = 5%
> $40 to $42 = 5%
> 
> Which seems more attractive now?




One way to look at it.How about this way.

1 tick down from 10.5c = 4.76 % loss.

1 tick down from 4.00  dollars is 0.00025%. and I am hopeless at maths.

In this market which would you want to hold ?


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## JTLP (22 August 2008)

LOL.

My point of emphasis was based on the fact that people buy specs because a 1 tick gain can equal massive gains. Of course the opposite applies.

Me? They call me Mr Cashman (and not the gaming machine from the early 2000's)


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## Julia (22 August 2008)

JTLP said:


> Take that...rewind it back...
> 10 cents to 10.5 cents = 5%
> $40 to $42 = 5%
> 
> Which seems more attractive now?




Wouldn't you be buying either stock with a given percentage of capital so how does it matter?  Am I missing something here?  (entirely possible.)
If either stock rises 5% then your capital increases by 5% - makes no difference which stock you hold because you have fewer of the $40 stock.


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## Family_Guy (22 August 2008)

Species are great. Tell me a $40 stock i can make 50% (before costs) in 6 weeks? Just sold this today. Mind you, i only throw small amounts on and limit myself to 4 stocks.

15/07/2008	NWT	250000	0.002	500.00	22/08/2008	250000	0.003	750	220.00

Long live the specs


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## Trembling Hand (22 August 2008)

Family_Guy said:


> Species are great. Tell me a $40 stock i can make 50% (before costs) in 6 weeks? Just sold this today. Mind you, i only throw small amounts on and limit myself to 4 stocks.
> 
> 15/07/2008    NWT    250000    0.002    500.00    22/08/2008    250000    0.003    750    220.00
> 
> Long live the specs




BHP. think about it!!!




Ok still confused. Here is a hint. Options.


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## Timmy (22 August 2008)

CFDs too ...  DMA of course ;-)


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## nomore4s (22 August 2008)

Family_Guy said:


> Species are great. Tell me a $40 stock i can make 50% (before costs) in 6 weeks? Just sold this today. Mind you, i only throw small amounts on and limit myself to 4 stocks.
> 
> 15/07/2008	NWT	250000	0.002	500.00	22/08/2008	250000	0.003	750	220.00
> 
> Long live the specs




But a $40 stock will very rarely lose you 50% in 6 days.


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## Family_Guy (22 August 2008)

nomore4s said:


> But a $40 stock will very rarely lose you 50% in 6 days.




Only if you sell that far down.

I understand (in very very basic terms) the options and cfd's etc etc, but my heart doesn't need the stress anymore ( 2 heart failures in the last 18 months). I take your points. I'm just a simple man with simple needs. Still, if you can make 50% on BHP in less time then i'd love be shown how and i'll paper it.


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## Trembling Hand (22 August 2008)

Family_Guy said:


> Only if you sell.
> 
> I understand (in very very basic terms) the options and cfd's etc etc, but my heart doesn't need the stress anymore ( 2 heart failures in the last 18 months). I take your points. I'm just a simple man with simple needs. Still, if you can make 50% on BHP in less time then i'd love be shown how and i'll paper it.




It means nothing to sprout "50% in 6 days" unless you know what was risked to achieve that single return.


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## Family_Guy (22 August 2008)

Trembling Hand said:


> It means nothing to sprout "50% in 6 days" unless you know what was risked to achieve that single return.



Well.......that's kinda my point as well. I'm happy taking small risks for 50% in 6 weeks. I don't have the balls to put it on the line like that. If that's what you do then i wish you the best and stand back in awe.


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## pointr (5 September 2008)

I'm not sure this is related to the last few posts but it certainly seems relevant to the title. A barometer of mood may well be the number of entries in the A-Z stock chat forums. Numbers are down big time. I haven't bought anything of late because I'm already fully committed with the cash set aside for shares. If the saying " well bought is half sold" is true there must be some good buying opportunities out there to be sold when either mood, sentiment or fundamentals drives a companies price up. I am very aware that the 'market' is skilled at putting a value on stocks. We are overweight in the small explorer/ developing energy sector and did well last year, we are still OK.
The fundamentals of these companies projects hasn't changed apart from commodity prices. Short term the northern winter approaches,longer term demands will increase. So I wait for buyers to return


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## jonojpsg (5 September 2008)

kennas said:


> I think there's a few factors with the specs.
> 
> 1. There aren't many buyers in the market, people are scared.
> 2. Punters have been moving to cash, people are scared.
> ...




Classic kennas, I love it!  

PS Working out of cafes sounds nice, better than working out of a classroom full of smelly teenagers


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## prawn_86 (5 September 2008)

pointr said:


> A barometer of mood may well be the number of entries in the A-Z stock chat forums.




Very good point.

Perhaps this should be re-named:

"Has everyone given up?"


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## nioka (5 September 2008)

There seems to be a relationship between the stock chat /general chat percentage and the red/green stock competition percentage. Plenty of green on the latter is followed by plenty of chat on the other. Too much red lately means very little confidence.


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