for Don Bright, question about short detection

N

nusrat

In your latest column in TASC (October, page 48),
the first letter, second paragraph, says:
"Next, I saw a short-seller (150,000) stepping down. I was about to bid out . . ."

The letter, and your answer, say nothing about the trader's software, feeds, etc.
And your answer says nothing to indicate that the trader misinterpreted whatever it was that he saw.

So how was this trader able to tell?

I'm trying to figure a way to recognize short-sales when I'm looking at EOD T&S.
(Of course, it would be even more useful to know what to look for
in L-I/II, etc.)

Thanks.
 
Clearly there is only one way to tell this. The trader must have PM'd the specialist with something like:

"I see you are a size seller. Please respond to this PM and tell me the size of your long position and/or how long you plan on stepping down the bid. If you do NOT respond to my PM, I will assume you have no long position and you are a short seller, and will plan my trade accordingly. Thank you in advance for your feedback."

The much more relevant and important question for Don is where we little rinky dink traders can get our hands on the NYSE Specialist screenname lists for AOL and Yahoo Private Messaging so we can take advantage of the same things the big boys can.
 
Originally posted by DATTrader The trader must have PM'd the specialist
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DATT,
Well, I'm in that awkward state -- not too dense to realize that you're being sarcastic, but still too dense to grasp your point. If it was meant to be insulting, it went over my head. Please lower it to my level.
 
If a large seller continues to lower his offer as the stock price drops, he's got to be a short seller. If he were a real seller he would sell the stock at a price he knows he can get it done. Selling at the offer in a dropping market isn't going to cut it.
 
Originally posted by DATTrader
Clearly there is only one way to tell this. The trader must have PM'd the specialist with something like:

"I see you are a size seller. Please respond to this PM and tell me the size of your long position and/or how long you plan on stepping down the bid. If you do NOT respond to my PM, I will assume you have no long position and you are a short seller, and will plan my trade accordingly. Thank you in advance for your feedback."

The much more relevant and important question for Don is where we little rinky dink traders can get our hands on the NYSE Specialist screenname lists for AOL and Yahoo Private Messaging so we can take advantage of the same things the big boys can.
More...

these specialists have unlisted business phones, equally true are their PM names, and subnames/phony-names

I would just about guarantee (against nothing, that is) that should a specialist see and "indication of commitment" and it not originate from one of his key stocks or customers (their customers are the treasurers of these firms they clear at their posts), then it would most certainly go ignored.

Just imagine asking the car dealer from the Used, uh, Previously Owned Car Lot, gee, Mister, are your prices fluffed or is there a lower price that I can bid on, and get that car on?
 
these specialists have unlisted business phones
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LOL, considering how loosely phone lists are thrown around an exchange floor, I am surprised more public customers hadn't tried calling a trading pit directly. I only have one vague recolection of some 1 lot public customer calling a LMM on the Pcoast asking why he wasn't filled.
 
Originally posted by nusrat
In your latest column in TASC (October, page 48),
the first letter, second paragraph, says:
"Next, I saw a short-seller (150,000) stepping down. I was about to bid out . . ."

The letter, and your answer, say nothing about the trader's software, feeds, etc.
And your answer says nothing to indicate that the trader misinterpreted whatever it was that he saw.

So how was this trader able to tell?

I'm trying to figure a way to recognize short-sales when I'm looking at EOD T&S.
(Of course, it would be even more useful to know what to look for
in L-I/II, etc.)

Thanks.
More...

We teach tape reading, and use the "following a short seller" view as one of the primary focal points.
Whenever you see a larger offer "coming down" in price to reflect a legal "up tick" you can assume that this order is "marked short" (as opposed to "long" stock). The assumption is that if they could "hit bids" they would, but since they cannot, they "follow down" the last sale price (plus a penny or so). For example: LS 34.05 they offer 34.06 (short), LS 34.00 they offer at 34.01 (short), etc. This is very common, and happens virtually daily on listed stocks. Seeing this happen can be a tremendous edge to professional traders.

DB
 
Originally posted by nusrat
Thanks. Is it any different on NYSE (versus NASDAQ, ECNs, etc.)?
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Oh yes, there can be very little, if any, tape reading on the naz (no single marketplace, thus no one person to "work the order"(and not an efficient way to read the electronic orders in this fashion).

However, "Tape reading" on the naz, can reflect overall L2 market views, depth and breadth of market, etc.

Don
 
Often, you can use a program like First Alert to find these short sellers that are stepping down on NYSE stocks because you can program into the software certain criteria to look for.

i.e. The program will scan your list of stocks and look for offer's for example that have downticked twice exactly one cent above the bid, then you can add further criteria like the offer has to be greater that 10,000 shares or something.

The bigger firms are able to use programs like this to help their traders find these intraday opportunites because it is constantly telling traders basically, "look at this stock, it meets that "possible short sell criteria you programed me to look for". LOL. That way you can check out stock action you would normally miss. In a sense these programs are like having 50 traders watching your group of stocks for you and constantly yelling, hey Charlie, check out the action on CCR. :-)

If it is a huge short seller, sometimes instead of hitting the bid in front of him you can wait for his stock to get eaten up then you buy the last of his offer if you can and offer it up 15 cents after the pressure on the stock is relieved. Just hope he doesn't come back for more. :-P

A scanning program like isn't as good as just watching a few stocks trade all day, but it can help you find opportunites like this all day.

There is no real good way however to program First Alert to do this type of thing with NASDAQ stocks right now, because the fragmentation of the market makes it too "noisy" to program in. By that I mean using the same criteria you get to many "alerts" which don't pan out simply because spreads are narrower and you rarely get the big huge bids and offers like on the NYSE.

Short sellers on the Naz do the same thing....(ride the bid's down until they get filled) but it is tougher to spot and profit from.
 
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