Capping

avnerk · May 21, 2003

I have noticed the following on both Level II and Time and Sales.
I'd appreciate any comments from experienced traders:

It's a thinly traded stock (<200000 per day).
On the ask sits someone using btrd.
4 days ago he showed 1.10 on the ask, and although about 150000 were traded at 1.10 he never moved.
then because of a few hundred shares, the price fell to 1.06.
So now btrd moved to 1.06 and stayed there for the rest of the session. The same happened the day after: he started at 1.06
and although 150000 shares went thru on the ask, he never moved. later in the session he moved lower to 1.04, and so on.
This has been going for 5 days now, and the stock is at 1.00.

What I don't understand is this: If he's long and wants to sell, he could easily have taken the price up and get a much better price.

If he's shorting, then why not throw a big chunk at the bid.
He could easily have taken the price to 50 cents if he wanted to.

It seems as though he just doesn't want the price to go up.

Is it possible to interpret what he's doing as bullish?
Any ideas?

DHOHHI · May 21, 2003

Quote from avnerk:

What I don't understand is this: If he's long and wants to sell, he could easily have taken the price up and get a much better price.

If he's shorting, then why not throw a big chunk at the bid.
He could easily have taken the price to 50 cents if he wanted to.

It seems as though he just doesn't want the price to go up.

How could he have taken the price up if he's selling as much as you stated (150K/day when avg. volume is 200K)? That's 75% of normal daily volume. It sounds like simple supply vs. demand. Once he sold a bunch at 1.10 if the bids disappeared then it seems natural that he'd lower his ask. Sounds like he wants to get out of the stock.

avnerk · May 21, 2003

Quote from DHOHHI:

How could he have taken the price up if he's selling as much as you stated (150K/day when avg. volume is 200K)?

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He shows only 1k on the ask. So after he sold 1k he can move his ask higher, and sell there, and when another 5k are bought from him, he can move further up. and so on.
In short, if he was long, he could have received a much better price than he did.