Only the shadow knows, I mean market maker. What I can say is that there is an Art Of War thing going on. You can overwhelm the enemy by sheer force of numbers. I think that is the Russian strategy with Ukraine right now, however strategy and stealth can overcome that. A great example of the latter is Horacio Nelson vs Napolean’s French fleet in the Battle of Abukir (aka the Battle of the Nile) near Alexandria in 1798. The French were to cable bow to stern and ostensibly create an impenetrable line in the Bay of Abukir but the cables were not secured at both ends for all French ships, allowing them to swing freely and Nelson’s ships were able to penetrate and split the French line. Importantly Nelson’s ships also skirted around the line near the shoals allowing broadsides against the port side of the French ships for which they were unprepared and now took fire both starboard and port…strategy prevailed and every proper Brit knows who Nelson is today.
Looking at the last 15 minutes of trade yesterday it’s helpful to note where overwhelming force makes an appearance. Minute by minute during the day you’ll see 5,000 shares, 7,500 or 12,000 listed. Note the following I cherry picked from the last 15 minutes:
Time Volume Range
15:50 129,807 30.01-31.64
15:57 339,520 30-30.99
15:59 227,257 30-31.62
Amidst the other trades during the day you’ll see a spread of, say, 0.0025. When you try to overwhelm with volume look at how wide the spreads are and it can be easier to overwhelm long interests and step on the share price. This is where the market maker is also salivating, taking the bid and selling at the asks. He yawns at a 0.0025 spread and only 5,000 shares but starts spilling his coffee at the volume and wider spreads at the end of the day. BTW, if the market maker had simply taken the ask on the last trade of the day, we would have closed over 5% higher than we did…that was a big spread for this price level.
Whoever is short the stock knows it can leverage a bit of volume (big for my book, small for theirs perhaps) to keep a lid on the situation. That’s where strategy comes in. Two can play at this game. Cyrus is our Nelson. From out of no-where maybe we get the FDA hold lifted and a partnership announcement in quick succession. From out of nowhere the longs (and perhaps a partner) pile on with well above average volume and the tide turns the other way, overwhelming short interests. That’s when Respert spill’s his wine and add’s wagyu filet to his shopping list. Our day is coming, just need to be patient while the strategy unfolds.
Looking at the last 15 minutes of trade yesterday it’s helpful to note where overwhelming force makes an appearance. Minute by minute during the day you’ll see 5,000 shares, 7,500 or 12,000 listed. Note the following I cherry picked from the last 15 minutes:
Time Volume Range
15:50 129,807 30.01-31.64
15:57 339,520 30-30.99
15:59 227,257 30-31.62
Amidst the other trades during the day you’ll see a spread of, say, 0.0025. When you try to overwhelm with volume look at how wide the spreads are and it can be easier to overwhelm long interests and step on the share price. This is where the market maker is also salivating, taking the bid and selling at the asks. He yawns at a 0.0025 spread and only 5,000 shares but starts spilling his coffee at the volume and wider spreads at the end of the day. BTW, if the market maker had simply taken the ask on the last trade of the day, we would have closed over 5% higher than we did…that was a big spread for this price level.
Whoever is short the stock knows it can leverage a bit of volume (big for my book, small for theirs perhaps) to keep a lid on the situation. That’s where strategy comes in. Two can play at this game. Cyrus is our Nelson. From out of no-where maybe we get the FDA hold lifted and a partnership announcement in quick succession. From out of nowhere the longs (and perhaps a partner) pile on with well above average volume and the tide turns the other way, overwhelming short interests. That’s when Respert spill’s his wine and add’s wagyu filet to his shopping list. Our day is coming, just need to be patient while the strategy unfolds.
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