Significance of trades after close

[ozambersand]

I use Commsec Protrader. With this I can track trades that occur before and after market close.

I noticed that today 42 trades went through for Brambles after 4pm at a price not much higher than the 4pm "close price". By my calculations, just over 500,000 shares were traded after the market closed at 4pm. By far the highest volume for the day.

Can any significance be read into these trades? Do they indicate that the price is likely to rise tomorrow (or fall?)

(They are not XT (cross trades) or OS trades (although these are commonly found in the afterhours trade figures.)

One factor that may explain it:

Brambles is currently undergoing an on-market share buy-back. I have checked the quantity reported as being bought each day and it varies depending on the share price. eg when it is trading in the region of $12.80, the company may purchase in the order of 1 million shares on that day (as it reported doing on Friday). While usually when the price gets above $13, the company nly buys a few thousand shares.

Are these "after sales" figures the company doing its share buy back? Or is it people expecting a big price difference tomorrow?

I'm not sure if this fits the same scenario or reason, but sometimes, there is a big price variance between the 4pm price and the after market sale price eg Lion Nathan today at 4pm was showing a sale price of $9.15. After 4pm a number of sales went through at $9.20. Do those traders expect the price to go above $9.20 on open tomorrow. Is that why they traded at that premium price?

The trouble is I suppose in interpreting why things like this happen is for every trade there is a buyer and a seller. I assume therefore that the seller expects the price to drop tomorrow and hence is happy to take the over-priced trade while the buyer expects it to rise and therefore is happy to trade for the 5c higher price.

I know there are a number of questions here, but basically I was wondering if any indication of market open the next day can be found from after sales figures.

 

[stoxclimber]

It never ceases to amaze me that people can trade in a market; the mechanisms of which they don't understand.

OP, look up opening and closing auction on the ASX website (or do a search here).

 

[Gordon]

Considering this is in the beginners lounge I think you are being rather rude.

While you are being so considerate am I just stupid or is there no search function for this website?

 

[constable]

oz you will find that the pre open and end of day auctions can be a stamping ground for the instos and larger investors who are looking to buy or sell huge volumes. During the course of a normals day's trade these transactions would not be possible without wildly fluctuating prices. Whereas in the preopen buyers and sellers wanting to do business have to become a little more transparent and have the abilty to test the water with their transaction before commiting to the trade. Should the indicative price be unacceptable either side can pull out. Mind you this can lead to a lot of bluff and fluff!

 

[robandcoll]

Quite an appropiate answer Gordon and well done. I am sure if we all knew the mechanisms of trading their would not be any trading at all

 

[constable]

considering this is in the beginners lounge i think you are being rather rude.

While you are being so considerate am i just stupid or is there no search function for this website?

Search function is top right, three functions across from the log out!!

 

[ozambersand]

Thanks for your kind replies.

Yes I did search and have read the thread on what happens pre and post market which explains the mechanics. I understand the mechanics of what is happening, even understand a bit about how to do the calculations to determine what the pre market is likely to be (although Protrader does the sums for me).

My question was why do they do it and thanks to Constable, I have my answer:

oz you will find that the pre open and end of day auctions can be a stamping ground for the instos and larger investors who are looking to buy or sell huge volumes. During the course of a normals day's trade these transactions would not be possible without wildly fluctuating prices. Whereas in the preopen buyers and sellers wanting to do business have to become a little more transparent and have the abilty to test the water with their transaction before commiting to the trade. Should the indicative price be unacceptable either side can pull out. Mind you this can lead to a lot of bluff and fluff!

If you look at the way the XAO has acted in the last few days there has been a massive move at the start of the day and a horizontal line (virtually) afterwards.

Looking at the pre-open has been very helpful to me in working out what is likely to happen at least at the start of the day. (I realise these patterns are not the norm).

I was wondering whether if these big investors pay a premium after the close of day, does it mean they think the price will go even higher in pre-open in the morning.

 

[dubiousinfo]

I use Commsec Protrader. With this I can track trades that occur before and after market close.

I noticed that today 42 trades went through for Brambles after 4pm at a price not much higher than the 4pm "close price". By my calculations, just over 500,000 shares were traded after the market closed at 4pm. By far the highest volume for the day.

Can any significance be read into these trades? Do they indicate that the price is likely to rise tomorrow (or fall?)

(They are not XT (cross trades) or OS trades (although these are commonly found in the afterhours trade figures.)

I'm not sure if this fits the same scenario or reason, but sometimes, there is a big price variance between the 4pm price and the after market sale price eg Lion Nathan today at 4pm was showing a sale price of $9.15. After 4pm a number of sales went through at $9.20. Do those traders expect the price to go above $9.20 on open tomorrow. Is that why they traded at that premium price?

I know there are a number of questions here, but basically I was wondering if any indication of market open the next day can be found from after sales figures.

Ozambersand,

The market doesn't just close at 4:00pm, there is a closing auction to finish the day.

The same process is followed during the closing auction (4:00-4:10pm) as before the market opens at 10am and before any pre-open auction.....ie...usually about 10 mins before a stock resumes after a trading halt for any reason.

The stock market goes into pre-open from 7am during which time anybody can put in whatever bids/offers they like (auction). During pre-open SEATS (Stock Exchange Automated Trading System) then goes thru a 4 stage algorithm to compute the IAP (Indicative Auction Price) based on the mkt depth whenever it changes. The IAP represents what the opening price would be at that particular time based on the current market depth if the stock opened for trading there and then.

At 10am stocks begin trading in alphabetical order. The market is fully open by about 10:12am. When the stock opens for trading, all orders with bids above the IAP and all orders with offers below the IAP are executed at the IAP. The IAP when the stock actually opens becomes the quoted opening price. During pre-open people put in bids above the IAP and offers below the IAP to ensure their orders are executed on opening.

At 4:00pm normal trading stops but again anybody can continue to put in whatever bids/offers they like until 4:10pm, just like in the morning preopen, but the orders aren't executed until 4:10pm. During the 10 mins closing auction SEATS again computes the IAP as above each time the market depth changes. At 4:10pm, for each stock all orders with bids above the IAP and all orders with offers below the IAP are executed at the IAP. In this case the IAP will be the quoted closing price.

 

[constable]

Dubious do you know off the top of your head the exact start times for each alphabetical group? cheers.

 

[stoxclimber]

Google search "ASX Opening Times"
3rd link


Stocks Starting With: Opening Time*
A-B 10:00am
C-F 10:02:15am
G-M 10:04:30am
N-R 10:06:45am
S-Z 10:09am

* The ASX reserves the right to set opening times 15 seconds on either side of the times prescribed. Times are based on Sydney time.

 

[toothfairy]

I'm not sure if this fits the same scenario or reason, but sometimes, there is a big price variance between the 4pm price and the after market sale price eg Lion Nathan today at 4pm was showing a sale price of $9.15. After 4pm a number of sales went through at $9.20. Do those traders expect the price to go above $9.20 on open tomorrow. Is that why they traded at that premium price?

My understanding is that after the 4pm price (which was $9.15), there will be about 10 min. (I think) that anyone ,you & me included (not only the instos) can put in buy/sell quotes as much and as little as we like for as many shares as we like. Say I put in and say I want to buy 10,000 shares @ $9.50 and some may say 20,000 @ $9.60. And there will be people selling 10,000 share @ $8.70 etc. The ASX computer uses some intelligent (I hope) algorithm to work out the strike price so that most of the shares offered after 4pm are traded. Today the strike price for Lion was $9.20, that means anyone (most maybe) who wanted to buy @ any price ABOVE $9.20 (like me who put up my hand at $9.50) will get them @ $9.20. Those who said they will sell @ anything LESS than $9.20 will get them sold @ $9.20. Everyone is happy.. Including the brokers.

 

[constable]

Google search "ASX Opening Times"
3rd link


Stocks Starting With: Opening Time*
A-B 10:00am
C-F 10:02:15am
G-M 10:04:30am
N-R 10:06:45am
S-Z 10:09am

* The ASX reserves the right to set opening times 15 seconds on either side of the times prescribed. Times are based on Sydney time.

Ta stox .....handy to anyone bidding above the indicative with their finger on the cancel order

 

[toothfairy]

Yeh, I typed too sloowly, someone beat me to it.

 

[ozambersand]

Thanks for the reply Toothfairy, but what I want to know is why you would want to buy Lion Nathan for as much as $9.50 when it had been trading much lower than that all day.

It has already gone ex-dividend, so you won't get that and the chance is it may trade even lower tomorrow.

Did you try to get it earlier in the day when it was going in the $9.12-$9.14 range?

Or is there something you know that I don't (ie that will make the price rise tomorrow)

Am I missing something here?????

 

[toothfairy]

Thanks for the reply Toothfairy, but what I want to know is why you would want to buy Lion Nathan for as much as $9.50 when it had been trading much lower than that all day.

It has already gone ex-dividend, so you won't get that and the chance is it may trade even lower tomorrow.

Did you try to get it earlier in the day when it was going in the $9.12-$9.14 range?

Or is there something you know that I don't (ie that will make the price rise tomorrow)

Am I missing something here?????

You ended up only paying $9.20 anyway. I am just using it as an example if you don't want to miss out. You could have put in buy @$9.19 but then you would have missed out. (I am just assuming it was a good buy @ $9.20, I don't even know the share). Most people probably put in very close to the closing price anyway. But you can be a stir and want to buy 2 shares @ $11.00. May be the algorithm won't even consider that, I don't know how they programmed it. Actually I am sure there is something there to prevent manipulations.

 

[stoxclimber]

You're willing to pay up to $9.50. But everyone knows you aren't actually going to pay $9.50 (unless all the sellers pull their orders). See the below example.

The first two principles for opening/closing price are:
maximum volume traded
minimum surplus

Max volume traded means the price will be the one where the most volume can be traded...almost always this is close to the previous market price/
Minimum surplus is where there is a tie for max volume, you choose the orders with the minimum shares remaining

e.g.
Buy Stack
1000 $8
2000 $7
1000 $6
1000 $5
500 $4
300 $2

Sell Stack
2000 $5
1000 $6
2500 $7
10000 $10

Wheres the maximum volume?
If price = 5, volume = 2000
if price = 6, volume = 3000
if price = 7, volume = 3000
if price = 8, volume = 1000
So price will be either 6 or 7, under the maximum volume principle
If price=6, the $8 guy gets filled for 1000, the $7 guy gets filled for 2000 and the $6 guy gets nothing (so surplus = 1000)
If price=7, the $8 guy gets filled for 1000, the $7 guy gets filled for 2000, the $5 seller gets filled for 2000, the $6 seller gets filled for 1000, but the $7 seller gets no fill (surplus 2500)

Therefore, $6 is the closing price (minimum surplus volume is at $6)

There are further steps in case of a tie for the above.

The $8 has put in an order willing to pay up to 8, so he knows he will get a fill. But in the real market we know that the sellers wont push their orders up to $8 just to get the $8 guy (as the markets too big) so the $8 guy knows he'll pay 5-7ish. Same with the $5 seller..he knows he's not actually selling for $5 since there are two big buyers there. He just wants to get executed today. If he put his sell at a higher level he might not get executed.

 

[TMo]

...

That's a great answer, thank you very much for that.

 

[Gordon]

Search function is top right, three functions across from the log out!!

Ahh thanks a lot for that - i generally do all my reading while not logged in as i dont know enough to post generally - seems like you can only search when logged in!!! time to look up all my favourite stocks.

 

[constable]

Looking under preopen this morning INL has someone selling one share at 15c.
Is this an attempted cross trade by a broker?

 

[Kauri]

Looking under preopen this morning INL has someone selling one share at 15c.
Is this an attempted cross trade by a broker?

Possibly a broker or larger player just holding his place in the que????