Tape Reading Techniques??
- Thread starter jsmooth
- Start date
I'm going to go through it tonight.basic question - from the attachment earlier provided on page 18 - he writes:
"He ( broker ) observes that several thousand shares are bid for at 164 and only a few hundred are offered at this price"
I am assuming that the broker is your current Level II data feed?
Thus, my question is how can you determine the actual amount of shares at the bid and ask, with the example that he provided?
Most ( my assumption ) bid/ask level II screens, show the same share amount on the bid and the ask. Someone showing a buy with 50 - can be 5,000 shares or 50,000 shares - same on on the ask.
or do you guys constantly call your broker and get concrete info on what is going on?
"He ( broker ) observes that several thousand shares are bid for at 164 and only a few hundred are offered at this price"
I am assuming that the broker is your current Level II data feed?
Thus, my question is how can you determine the actual amount of shares at the bid and ask, with the example that he provided?
Most ( my assumption ) bid/ask level II screens, show the same share amount on the bid and the ask. Someone showing a buy with 50 - can be 5,000 shares or 50,000 shares - same on on the ask.
or do you guys constantly call your broker and get concrete info on what is going on?
I'll give it a try
Watch the Open Book in this case. Most short squeezes are traders covering through the OB and causing a blow off spike. If the specialist is backing off the quotes and filling on the offer side only what is shown in the OB, he is squeezing and pushing the price. Often you will see a bid cross to, let's say, 60.80 from the previos example and the quote will just change 60.81 x 60.90. At the end, most panic and go market, that is where the master thief shorts everyone.
Completely depends. Many times the large blocks are pre-negotiated and the specialist just needs to move the price to set the block off and that's it. Sometimes it is just a chunk of the order being finished and then settling off before continuing the buying. Those small lots for 2-5 min that you mentioned are the weaker players getting shaken out.
The price will back up almost all the time regardless of whether there is a continuation in the institutional buying for the simple reason that ppl start shorting right after the large print. Hence, most gotta get out in this thin & trader heavy market. What you pay attention to is where the price hits a certain level, be it on the bid or the offer, from the floor not the OB (meaning 2k bid executing 2k offer in the Open Book is pretty much noise)
You'll go insane trying to figure this out, I almost did. 1.5-2 years ago it was easy, if the dead offer is getting ripped through and market sells were being picked up at a steady price, you would make money just grabbing the offer, as too many day traders had a pattern of shorting dead offers (or buying dead bids). Nowdays, half the ppl short at the offer, while the other half goes long with the idea that dead offers get lifted. Stocks go through big offers/resistance and pull right back, getting chopped to death. Many times the seller/buyer come back at that same price, the orders are being more and more fragmented like Nasdaq. My advice, and take it with grain of salt cause I pretty much gave up on this situation, wait for the offer to be broken through with certainty. A spread raised by 4-5 cents means nothing, at times the price will whipsaw as much as 35 cents just to get the shorts out. Let it run up and wait for the pullback but make sure the pullback does not turn into the offer building up back at that price. Unfortunately, in the scenarios where the break through the offer move has real follow through, the price just rips and does not look back. You can also try being more selective and go for more significant offers at key resistance levels that have had a good amount of time & congestion before getting ripped apart. You can at the least catch a decent scalp from the short covers and breakout players.
The basic tricks are simple. I'll give a recent example. 2nd day on CNX run up from like a week or two ago, I jumped on the last 75 cent move cause I saw the specialist sucker out a 3k seller. The quote was 73.50-73.53 and a 3k offer in the book came down at .50. The specialist backed away and was chopping in the 40s. There was a 3k bid in the book at 73.40. The 3k offer stayed for a while and eventually said screw it and changed his order to hit the 3k bid at 73.40. There were maybe 200 shares in the book before 73.40 bid. The specialist printed it at 73.41. He obviously got long. I knew to start getting long right there so I started putting up bids, waiting for some more sucker sellers. In came another 1800 share offer crossing down to 73.41, but this time the specialist filled it at 73.47 cause some day traders like me had bids from 73.46 to 73.41 trying to get long. After that it was more of an obvious buy and even though I wanted to get 1500 shares at a price no higher than 73.60, I only ended up with 500 shares, which I had to grab on ECNs since the CNX guy is a complete pig. I was not happy at all cause I should have been filled for at least 1000 shares as I was crossing offers by 5 cents without even 100 shares being filled. (This scenario is part of the reason why I'm pretty much giving up on NYSE, that was the best set up and THE trade for me that day).
You basically need to recognize market sells & buys treatment by the specialist. The quickest dives & rips seem to take place after a quick run up/sell spike, as the specialist wants ppl out and knows he can, since a chunk of an order was executed and he can put it on hold in order to get another guaranteed money position. He is not worried about the traders on the wrong side but the ones on the right side since thats the stock he needs. Watch the orders tumble and then all of them sucked up at a certain price level. Also take note, that when a reversal or a longer term pullback takes place, the move is more choppy and slower. Specialists purposely make the stock look ultra weak or ultra strong when the opposite is true. Large speculative buyers & large panic sellers are rare, most of the time it's just traders being run like sheep by the NYSE boys.
This is the thread that is probably the best explanation of how orders are handled by the specialist & the institutional mindset on NYSE. Very insightful.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=3282&perpage=6&pagenumber=5
Take note that the NYSE tape is dying technique, IMO, assuming the Hybrid gets pushed through next year. The skill of reading price and volume on Time & Sales is applicable in any market, but the specifics of reading the specialist will pretty much become worthless as NYSE starts to imitate Nasdaq.
Watch the Open Book in this case. Most short squeezes are traders covering through the OB and causing a blow off spike. If the specialist is backing off the quotes and filling on the offer side only what is shown in the OB, he is squeezing and pushing the price. Often you will see a bid cross to, let's say, 60.80 from the previos example and the quote will just change 60.81 x 60.90. At the end, most panic and go market, that is where the master thief shorts everyone.
Completely depends. Many times the large blocks are pre-negotiated and the specialist just needs to move the price to set the block off and that's it. Sometimes it is just a chunk of the order being finished and then settling off before continuing the buying. Those small lots for 2-5 min that you mentioned are the weaker players getting shaken out.
The price will back up almost all the time regardless of whether there is a continuation in the institutional buying for the simple reason that ppl start shorting right after the large print. Hence, most gotta get out in this thin & trader heavy market. What you pay attention to is where the price hits a certain level, be it on the bid or the offer, from the floor not the OB (meaning 2k bid executing 2k offer in the Open Book is pretty much noise)
You'll go insane trying to figure this out, I almost did. 1.5-2 years ago it was easy, if the dead offer is getting ripped through and market sells were being picked up at a steady price, you would make money just grabbing the offer, as too many day traders had a pattern of shorting dead offers (or buying dead bids). Nowdays, half the ppl short at the offer, while the other half goes long with the idea that dead offers get lifted. Stocks go through big offers/resistance and pull right back, getting chopped to death. Many times the seller/buyer come back at that same price, the orders are being more and more fragmented like Nasdaq. My advice, and take it with grain of salt cause I pretty much gave up on this situation, wait for the offer to be broken through with certainty. A spread raised by 4-5 cents means nothing, at times the price will whipsaw as much as 35 cents just to get the shorts out. Let it run up and wait for the pullback but make sure the pullback does not turn into the offer building up back at that price. Unfortunately, in the scenarios where the break through the offer move has real follow through, the price just rips and does not look back. You can also try being more selective and go for more significant offers at key resistance levels that have had a good amount of time & congestion before getting ripped apart. You can at the least catch a decent scalp from the short covers and breakout players.
The basic tricks are simple. I'll give a recent example. 2nd day on CNX run up from like a week or two ago, I jumped on the last 75 cent move cause I saw the specialist sucker out a 3k seller. The quote was 73.50-73.53 and a 3k offer in the book came down at .50. The specialist backed away and was chopping in the 40s. There was a 3k bid in the book at 73.40. The 3k offer stayed for a while and eventually said screw it and changed his order to hit the 3k bid at 73.40. There were maybe 200 shares in the book before 73.40 bid. The specialist printed it at 73.41. He obviously got long. I knew to start getting long right there so I started putting up bids, waiting for some more sucker sellers. In came another 1800 share offer crossing down to 73.41, but this time the specialist filled it at 73.47 cause some day traders like me had bids from 73.46 to 73.41 trying to get long. After that it was more of an obvious buy and even though I wanted to get 1500 shares at a price no higher than 73.60, I only ended up with 500 shares, which I had to grab on ECNs since the CNX guy is a complete pig. I was not happy at all cause I should have been filled for at least 1000 shares as I was crossing offers by 5 cents without even 100 shares being filled. (This scenario is part of the reason why I'm pretty much giving up on NYSE, that was the best set up and THE trade for me that day).
You basically need to recognize market sells & buys treatment by the specialist. The quickest dives & rips seem to take place after a quick run up/sell spike, as the specialist wants ppl out and knows he can, since a chunk of an order was executed and he can put it on hold in order to get another guaranteed money position. He is not worried about the traders on the wrong side but the ones on the right side since thats the stock he needs. Watch the orders tumble and then all of them sucked up at a certain price level. Also take note, that when a reversal or a longer term pullback takes place, the move is more choppy and slower. Specialists purposely make the stock look ultra weak or ultra strong when the opposite is true. Large speculative buyers & large panic sellers are rare, most of the time it's just traders being run like sheep by the NYSE boys.
This is the thread that is probably the best explanation of how orders are handled by the specialist & the institutional mindset on NYSE. Very insightful.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=3282&perpage=6&pagenumber=5
Take note that the NYSE tape is dying technique, IMO, assuming the Hybrid gets pushed through next year. The skill of reading price and volume on Time & Sales is applicable in any market, but the specifics of reading the specialist will pretty much become worthless as NYSE starts to imitate Nasdaq.
Tape reading is such an art. The last response here about the seller stepping down to hit the bid and getting filled a penny above his order price is right on.......a sure sign that there were buyers waiting. When I see orders come into the NYSE open book and get filled with price improvement, it tips you off as to direction for the stock. I'm a scalper who uses conversions for short selling. If I go to hit a bid because a seller keeps stepping down and I get filled with price improvement......I know I'm wrong and usually cover right away.....there are buyers waiting and most likely my step down seller's stock is going to be taken. I prefer to see the bids being taken out and or cxling.......then I know I have a good trade on and the stock drops like a rock.
Here's a favorite set up............your stock gaps up big time for the open and continues to run with a little pause or two. Then the specialist gaps his market looking for contra sell interest to accomodate his buyer. The block prints 20 cents higher than the last trade. Most times....the buyer is done for the time being and it's time to get short.
Quote from murray t turtle:
============
1] In other words even when you learn some basic things;
2[you have to apply [hard part of these 2] that in market,
real time with money.
3.3]Actually one of the best reads is on elitetrader.com;
top of this page, search ''deeman''
Could have written a book
Wisdom is profitable to direct
Murray is there one specific article ar just all his posts?
If I might impose on the experienced tape readers, Could you please give me your reading on ELOS today?
The stock opened slightly higher and was up over a dollar in the first few minute.
There were 3 prints of interest;
At 10:27; 20,000 share went at the ask of 39.00
At 10.31; 10,000 share went at the bid of 39.05
At 11:11; 29,600 shares went above the bid of 39 at 39.03
Would you consider this a generally bullish sign or is the fact that the price is not rising on this volume showing distribution?
At the time of posting it looks like ELOS will trade just over average volume today.
The stock opened slightly higher and was up over a dollar in the first few minute.
There were 3 prints of interest;
At 10:27; 20,000 share went at the ask of 39.00
At 10.31; 10,000 share went at the bid of 39.05
At 11:11; 29,600 shares went above the bid of 39 at 39.03
Would you consider this a generally bullish sign or is the fact that the price is not rising on this volume showing distribution?
At the time of posting it looks like ELOS will trade just over average volume today.