It's amazing how traders tend to argue with the market when it doesn't move their way.
Without wishing offend anyone, it seems that when prices fall (or stop rising) the HC crew blame it on "downrampers" or manipulation, or market ignorance, or loose registers, or bots, or crooked brokers, or ....
When prices rise, well, that's because the stock is not "fully valued" (if we own it), or the market is wrong (if we don't own it).
If we think along these lines, it becomes very difficult to read the messages that market is giving us.
The purpose or function of the market is to establish a fair price for a scarce commodity. Economic theory refers to this function as "price discovery".
So is the market giving us any messages?
If we look at the price of the oppies, we will see that the discount has narrowed, and is now close to the exercise price. This COULD indicate that AT THIS STAGE, the market is more comfortable with MAK's price.
Why do I say that?
When oppies are close to expiry, such as MAKOs, long term buyers will be happy to buy these with the intention of converting. Speculators will tend to prefer the heads because there is less risk. So when the oppies sell at a discount above the exercise price, this often indicates that the serious players are not participating in the run.
This could indicate that the buyers in the range between $1.80 to $2.08 may have been mainly speculators, not long term holders, because at these prices the oppies were discounted by as much as 45c.
If this observation is correct, we are likely to see a trading range develop, similar to the range that developed from early January to early Feb. If MAK is not "fully valued", pressure will build as the market shakes out the weak hands and the speculators. We are then likely to see a 3rd attempt to take out the $2.08 level.
Just some observations. I am not saying this is gospel. Just a suggestion to keep an open mind and listen to the market. Sometimes we'll be right, sometimes we'll be wrong, but you will find the best way forward is to respect the market and let it call the shots.
Cheers
ST
AEV Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
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