Cramer: Wall Street Frontrunning Robinhood in Premarket

[bone]

Jim Cramer said that Wall Street professionals were bidding up downtrodden stocks like airline stocks in premarket trading in order to game the Robinhood users.

Cramer pointed to American Airlines, Hertz, and Carnival Cruise Lines being bid up substantially in recent premarket sessions. He pointed to American Airlines, which was up 15% in early trading despite a second quarter revenue decline anticipated to be 90 percent. He also mentioned Hertz stock being up 50% in a recent premarket session and Carnival cruise lines being up 12% in a recent premarket.

Cramer said that if Robinhood investors would simply wait until after the NY open they could have bought the stocks cheaper - but that the Robinhood users felt compelled to buy immediately during the fast premarket session action.

https://www.cnbc.com/2020/06/12/cra...ng-a-game-with-amateur-robinhood-traders.html

 

[Cuddles]

Lots of shilling going on at reddit/WSB

 

[S2007S]

I heard that this morning. The games on wallstreet are unbelievable

 

[newwurldmn]

I noticed that. Those stocks would be up 10percent premarket and then open up 2percent.

 

[bone]

That's fair. It's also fair to point out that having extremely available technology and a few thousand dollars in a commission-free account is a great way to lose said account equity.

First, Robinhood offers commission-free trading because they sell the order flow. To Wall Street. Second, you can't just be drawn to trade simply because a stock is moving dramatically. Just a modicum of basic economic understanding would dissuade a person to pay a 50 percent premium on Hertz rental car during the early stages of a recession.

I heard that this morning. The games on wallstreet are unbelievable

 

[DaveV]

I don't believe that is front-running. My understanding of front-running is seeing an order already submitted from one exchange or broker, and using an extremely fast system, buy/short the shares on another exchange before the original order can execute.

What you are describing sounds more like the Greater Fool Theory; i.e. buying a stock at a ridiculous price because you know a bigger fool [Robinhood users] will come along to buy at an even higher price. I see no problem with Wall Street pros doing that.

 

[bone]

You're right. What comes to my mind is what we used to call down on the floor "racing" broker orders.

I don't believe that is front-running. My understanding of front-running is seeing an order already submitted from one exchange or broker, and using an extremely fast system, buy/short the shares on another exchange before the original order can execute.

What you are describing sounds more like the Greater Fool Theory; i.e. buying a stock at a ridiculous price because you know a bigger fool [Robinhood users] will come along to buy at an even higher price. I see no problem with Wall Street pros doing that.

 

[Cuddles]

I don't believe that is front-running. My understanding of front-running is seeing an order already submitted from one exchange or broker, and using an extremely fast system, buy/short the shares on another exchange before the original order can execute.

What you are describing sounds more like the Greater Fool Theory; i.e. buying a stock at a ridiculous price because you know a bigger fool [Robinhood users] will come along to buy at an even higher price. I see no problem with Wall Street pros doing that.

Isn't that exactly what Robinhood allows for when they sell order flow to HF shops on wall Street? Nevermind, I see your point. They're front running AND shill bidding

 

[BlacknBlue]

I can't find the post for reference, but does robinhood post high volume stocks within their platform for the day prior to market open? Or do they only post it for the previous day?

Asking since it could be a viable strategy to short these stocks just before the open for at least a scalp.

 

[murray t turtle]

That's fair. It's also fair to point out that having extremely available technology and a few thousand dollars in a commission-free account is a great way to lose said account equity.

First, Robinhood offers commission-free trading because they sell the order flow. To Wall Street. Second, you can't just be drawn to trade simply because a stock is moving dramatically. Just a modicum of basic economic understanding would dissuade a person to pay a 50 percent premium on Hertz rental car during the early stages of a recession.

%%
Carl Ichan made a small fortune on an airline, most lose money long in that sector;
but cut a loss on CHK...………………………………………………………………………………...One airline analyst said BA may make a profit in 4-8 years/LOL