BOT WARS AND ACCUMULATION
The screen shot posted by Fozza from the Bloomberg trading platform gives reason to pause and consider.
We do not know the net position of the big players, nor do we understand their intentions,
strategy and tactics, nor their objectives (other than to make profit), nor their programs.
So it is not sound to make too many conclusions about specific action taken over limited time frames.
But there are a few observations and conclusions one can make.
- The sheer number of institutional players in CLQ is bullish. This indicates that CLQ is widely recognized as a legitimate entity that merits attention to a degree that far exceeds CLQ’s public profile.
- Their very presence at this stage of CLQ’s development indicates aggressive accumulation. I’ve been wondering when people would notice CLQ. Seems like the big boys already have.
- The points above are supported by the general lack of public coverage on CLQ by the same institutions that are taking large positions. They are not promoting the company because they do not want the public competing with them as they accumulate. There are a few exceptions…the guys with the largest positions, like Macquairie.
- The financial power of any one of these participants is enough to move the stock price on a given day. If they want to, they can blow the price around like fallen leaves on a windy day. They have to be careful on entries and exits, they are whales and can move the price.
- There are limits to the long positions…they must stay under 5% or 6% of the float, otherwise they must disclose their position publicly. Thus a potential selling motivation is provided…These guys may have an aggressive positions but may need to sell, to stay under reporting guidelines. They may swing trade with a long bias.
- The resources of these institutions is considerable, thus we are probably safe to assume that many or most of them have proprietary trading analysis and programs which they apply based on their outlook and objectives. They have access to brainpower, computing power, analysis, and trade execution that are far suoerior to what amateurs have. This is not to say they are infallible, but it sure is something I would consider if I were a trader.
Scalping is a lot more profitable when you have zero commission to pay.
CONCLUSIONS….BOT WARS
A lot of the price action on CLQ has nothing to do with fundamentals, or even sentiment.
Short-term price action has likely been mostly a function of these guys trading with each other, trying to screw their opponents and outwit them. The winners in this “secret bot duel” are unknown to us. But we know they are net accumulating. The net acquisitions by UBS since January as reported by Bomber 78 is greater than the holdings of Robert Friedland or Jiang Zhao Bai !
Obsession over daily price fluctuations are futile and a waste of time because we do not know the parameters of the bot programs or whose program is kicking in and “winning” at any particular moment.
Normal ideas of chart analysis are of uncertain value, because we do not know how the big boys have made their programs and what technical parameters they have built into them.
It becomes a question of whether the Giant Squid Trading Algorhythm, devised by their MIT hotshot ,can beat the Credit Suisse Trading Algorhythm, devised by their Ecole Polytechnique hotshot. They may or may not have your ideas about technical analysis incorporated into their programs. How the heck would we know ?
When the elephants fight, the mice get trampled.
The transaction register gives a different picture to the institutional maneuvering. Us little people are “collateral damage”, we are largely irrelevant to the intentions of these big players. They are dueling and maneuvering between themselves, trying to outwit each other as they accumulate. May the best bot win.
My algorhythm can beat your algorhythm.
At some point when they all have their positions, they will promote the stock to their retail clients.
Long-term investors: We have to be patient and not get blown out while the bots are fighting. The short-term price moves are indecipherable, and the reasons are not visible.
If our position sizes are too large for us emotionally or financially, we are dead ducks. This is why informed conviction Is important…we need enough of it to withstand the emotional and financial swings.
If we believe we are right about the company, we have to be patient until the Bot Fight of the Month is over. Eventually the stock hops up to a new levels; probably in a sharp move; at which point, we can expect the Bot Fights to resume at a the higher price levels.
Short-term traders: Good luck. If you are on the right side of the dominant algorhythm of the day, you win. If you are on the wrong side, you lose.
It’s Algorhthm Daily Roulette. Not a game I am interested in playing, though some people may have a knack for it.
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Thanks to Fozza for posting the Bloomberg screen shot. It changes my outlook.
GLTAH
(20min delay)