Who sells on rapid down days?

[Smack]

So, i bought bhp at 31.00 last thursday in the morning which then proceeded to fall to around 30.54 before recovering the next day to close at 31.40.

I am still holding and did not sell.

What i want to know is who was selling the stock down as it went into free fall on thursday?

I see this happen alot on negative sentiment days, but really curious who these traders are?

Is it pure panic selling by mums and dads and if so, what is a likely price they bought at prior?

Or is it the market manipulators trying to shake traders out to exhaustion levels?

No, i do not use stop losses on purpose, and have not lost a trade for 12 months and know that any stop loss price is booked in for the mamiuplators to observe this.


Smack

 

[skyQuake]

So, i bought bhp at 31.00 last thursday in the morning which then proceeded to fall to around 30.54 before recovering the next day to close at 31.40.

I am still holding and did not sell.

What i want to know is who was selling the stock down as it went into free fall on thursday?

People who believe the free fall is justified and that there is further to go.

I see this happen alot on negative sentiment days, but really curious who these traders are?

Is it pure panic selling by mums and dads and if so, what is a likely price they bought at prior?

Generally big money pushes it around ie. price discovery. Mums and Dads cant move a chunky stock like BHP.

Or is it the market manipulators trying to shake traders out to exhaustion levels?

No.

No, i do not use stop losses on purpose, and have not lost a trade for 12 months

I would guess a fair few people also didnt use stop losses on purpose on Babcock and Brown or ABC learning and had longer winning streaks.

and know that any stop loss price is booked in for the mamiuplators to observe this.
Smack

No it isnt. Even then why would someone want to bust your stop for say $10,000 of shares when then need a few $million to push it down 10c?

 

[Smack]

Thanks for response.

So, even though the stock was already down by more than 3.0% on the previous day, the market wanted to drive bhp down further on the thursday, and then the following day it bounced up 74 cents.

Why did the stock drop by more than 4.0% one day and rise by around 2.0% the following day?

How was the fall justified by those who sold it down on the thursday?

Fyi, i traded 6000 shares of bhp in thw one transaction.

Is there a chance, someone was tring to shake me out with this volume and value?

I was watching real time market depth (dynamic feed and not refresh data, etc.) on the thursday, and there was definitley small packets of bhp stock being sold down to fuel this dive down. Bot trading was alive and well - and bloody obvious!

Tom williams states in his books that placing stop loss orders in advance allows the manipulators to drive the market down to achieve their sell orders at these stop loss levels.

Why do u disagree with this position?

Smack

 

[skyQuake]

Thanks for response.

So, even though the stock was already down by more than 3.0% on the previous day, the market wanted to drive bhp down further on the thursday, and then the following day it bounced up 74 cents.

Why did the stock drop by more than 4.0% one day and rise by around 2.0% the following day?

How was the fall justified by those who sold it down on the thursday?

The US markets turned around overnight, Copper was up, good figures out of Europe... take your pick. Theres a lot of factors, but generally Aus follows the US lead overnight.

Fyi, i traded 6000 shares of bhp in thw one transaction.

Is there a chance, someone was tring to shake me out with this volume and value?

BHP does about 10mil shares a day. What makes your 6000 so special?

I was watching real time market depth (dynamic feed and not refresh data, etc.) on the thursday, and there was definitley small packets of bhp stock being sold down to fuel this dive down. Bot trading was alive and well - and bloody obvious!

Bot trading doesnt drive down price any more than it drives up. When a fund manager has 6 million shares to sell he cant really hit market with that. So he gives it to the broker to break it up with an algo which generally has less market impact. Small packs of shares won't drive a behemoth like BHP down. Its throwing pebbles at an oncoming freight train.

Tom williams states in his books that placing stop loss orders in advance allows the manipulators to drive the market down to achieve their sell orders at these stop loss levels.

Why do u disagree with this position?

Smack

I only partially disagree with this.

1. No-one can see your stops. Plus even if they could, they wont "hunt" your stop as your order won't have any real market impact. 6k shares is easily absorbed in BHP. Pushing the market down 10c to bust your 6k shares will require the use of about 50k shares in BHP. Then they gotta buy back 50k shares...
2. Stops hunting may occur at major levels. Eg $30 at BHP is a good example, its a big support level and there will be lots of stops there. The "evil manipulator" may want to push the stock below $30 to bust stops.
However the risk is that there are hidden buyers at $30. Bigger fish that can absorb selling and push the price up and squeeze the shorts.

 

[Smack]

Great response and much appreciated.

So, who were these people you refer to who thought it was justified to fall even further on thursday?

What is "price discovery" you refer to?

Who in your opinion is "big money"?

I see hundreds of small packets of 101 shares on a very regular frequency for bidding into bhp on most days.

This was extremely evident on friday.

Smack

 

[skyQuake]

Great response and much appreciated.

So, who were these people you refer to who thought it was justified to fall even further on thursday?

Well lets see what happened on thurs...
- Dow drops 200pts overnight
- Copper drops about 5%+
- Tues saw a huge reversal, wed digested those gains and held its ground. I'd imagine a lot of fast money chased into that. Come thursday, BHP gaps down BELOW the prev lows and its all day people getting out.
- Senior management changes, I don't follow it closely but I heard there were some disappointments.
- UBS cuts price target by 15%, though BUY rating unchanged.
- tea leaves, animal entrails, stars aligning etc.

What is "price discovery" you refer to?

Who in your opinion is "big money"?

I see hundreds of small packets of 101 shares on a very regular frequency for bidding into bhp on most days.

This was extremely evident on friday.

Smack

Price discovery as in demand/supply. In this case supply coming in a beating up demand and setting its car on fire.

Big money usually = Funds. Domestic super funds, international hedge funds, etc. Instos generally.
With mid caps and small caps, big caps can include big shot individuals who could be on the top 20 shareholders list. However with BHP, its a $150b company, so only the whales can "bully" BHP around significantly.

Small packets mean nothing. The real market moving algos are designed to be inconspicuous. Otherwise everyone will jump ahead of it and the algo will get crappy executions.

 

[Smack]

Great insightful response.

I just find it really amazing that a stock drops hugely on one day on fear, and then in less than 24 hours - that same fear appears to have disapeared and climbs back up......

Yet, the company had no actual changes to productivity/profit within ths 24 hour period.

Smack

 

[CanOz]

Great insightful response.

I just find it really amazing that a stock drops hugely on one day on fear, and then in less than 24 hours - that same fear appears to have disapeared and climbs back up......

Yet, the company had no actual changes to productivity/profit within ths 24 hour period.

Smack

I suppose i found it amazing too Smack, 8 years ago when i first started paying attention to the price action of equities. Then i thought ....if the price moves that much in one day, there must be a way to make money from that volatility.....But alas, day trading was not a new concept.

All successful traders have given up being amazed by the price action because they're too busy making money from it...

ASX equities are not the best for intra-day trading, but the US stocks are ripe for it, long/short, just add some news and then they're in play and day traders are in there...


CanOz

 

[Smack]

Thanks canoz.

As you are in china, what markets do u trade?

One day, ill drum up the courage to daytrade US equities on the daytrade.

Why do think asx equities are not ideal for intraday trading?

So, basically fear is only perceived in this game?

I like trading bhp - great volatility on most days and its a blue chip top 50 asx share, which i only trade.

Smack

 

[HyperText]

When a stock falls dramatically it often passes peoples stop losses they have set, which causes them to make sell offers which then in turn decreases the price turning the stock into a downward spiral. I believe the best thing you can do in these events is to buy more near the low and hope it rebounds soon.

 

[skyQuake]

When a stock falls dramatically it often passes peoples stop losses they have set, which causes them to make sell offers which then in turn decreases the price turning the stock into a downward spiral. I believe the best thing you can do in these events is to buy more near the low and hope it rebounds soon.

Disagree with the martingale system

 

[statisticalg]

I'm pretty sure it's margin calls.

Or it could be someone trying to pop the prices in another financial instrument. e.g. unhedged CFD positions.

They only need to push the real stock price down a few dollars and they eat out a few hundred CFD positions that are stopped out. That's the only profitable method. Otherwise, there is no reason for the volatility and the concept of uninformed and stressed investors.

I don't think the concept of a stressed investor who sells deliberately at a loss (with their free will) exists because everyone knows that stocks will go back up in time... Even the mum and dad investor holds for major losses. I had a client who held AMP for several years, it's now down over 70%

Furthermore, in a market with few buyers. The price could be deliberately pushed down as you only need to sell a few small parcels to push the price down a lot. A few investors that are fearful, could drag the price down sufficiently, but it doesn't explain why the spreads don't just widen instead of pushing the prices down. There are almost always people coming in to sell at lower prices (using limit orders) after the stock has slipped a few percentage... It must be some market making strategy or they are paid to provide liquidity.

I'm not sure about the situation in Australia, but in offshore markets, you are paid to provide liquidity.

 

[clowboy]

So, i bought bhp at 31.00 last thursday in the morning which then proceeded to fall to around 30.54 before recovering the next day to close at 31.40.

I am still holding and did not sell.

What i want to know is who was selling the stock down as it went into free fall on thursday?

I see this happen alot on negative sentiment days, but really curious who these traders are?

Is it pure panic selling by mums and dads and if so, what is a likely price they bought at prior?

Or is it the market manipulators trying to shake traders out to exhaustion levels?

No, i do not use stop losses on purpose, and have not lost a trade for 12 months and know that any stop loss price is booked in for the mamiuplators to observe this.


Smack

Some of the trades would also be the straw that broke the camels back, if you have been thinking of selling for a while (sitting on a loss) all the negative sentiment could be the trigger for a final sale. don't forget the End of tax year is days away

- - - Updated - - -

Great insightful response.

I just find it really amazing that a stock drops hugely on one day on fear, and then in less than 24 hours - that same fear appears to have disapeared and climbs back up......

Yet, the company had no actual changes to productivity/profit within ths 24 hour period.

Smack

There were massive changes to perceived profit in that period no? If one of there core products fell 5% in that time that's 5% less they are making

 

[CanOz]

Thanks canoz.

As you are in china, what markets do u trade?

One day, ill drum up the courage to daytrade US equities on the daytrade.

Why do think asx equities are not ideal for intraday trading?

So, basically fear is only perceived in this game?

I like trading bhp - great volatility on most days and its a blue chip top 50 asx share, which i only trade.

Smack

Just saw this now...

ASX stocks are mostly long only, with a small list of exception. The costs are higher than the US as well.

Remember though, the big guys can still short a bigger list than the retail guys no doubt...they also have to cover shorts, which also drives price up.

CanOz

 

[barney]

After a pretty crappy day on the markets personally, I happened upon this "ancient" Thread.

A couple of good 'ol boys in @skyQuake and @CanOz posted some useful insight (I'm not sure if SkyQuake is still listed as a Member?)

Pity: smart chap, so I hope he is still in the game and doing ok

Anyway, nothing of great value to add: Just licking my wounds after losing half a year's wages in a day (On paper that is)

I see that the SPI is heading down towards the 6500 mark. Under that and we might need to have a cold face washer on hand in the short term

Hopefully the Dow will reject the 29950 level tonight and we can all rest easy. Either way, I suspect it could be a bumpy couple of weeks.

All part of the game of course.

 

[tech/a]

Very rapid deep falls are “ generally “ followed by an inside day snap back and vic versa with rapid gains —- inside days tend to signal continuations in the direction of the thrust

I sold a lot today recovering over half of yesterday’s losses. ( losses in open profit )

Haven’t read the thread so my comments may be covered by others

 

[barney]

Very rapid deep falls are “ generally “ followed by an inside day snap back and vic versa with rapid gains —- inside days tend to signal continuations in the direction of the thrust. I sold a lot today recovering over half of yesterday’s losses. ( losses in open profit )

Absolutely Tech, and glad you picked up some of the "slack" today.

It will be interesting to see how the Dow etc travel tonight. I don't have any charts on this computer, but my gut feel in the short term is:

Continue to "Buy the Dips" until your accountant says "you screwed up" Lol

Definitely not doom and gloom just yet, but caution is often a useful "Trading Tool" perhaps??

 

[tech/a]

Guess we have our answer @barney

 

[barney]

Guess we have our answer @barney

Yes @tech/a Looks like the bumpy ride is on in the short term.

Quick look a the Chart says the 50% Level could be in play soon.

Not sure whether history plays on people's minds, or whether the Wall street lads are using last years post January selloff (covid) as a means to an end.

Sharp drop won't surprise, but I think it would lead an equally sharp return when it turns.