MESO Nasdaq update, page-1300

Thought I'd share some thoughts on how the larger traders are using currency for inter-market plays and perhaps offer an explanation on the movements the last couple of days. Mind you, this is based off my rather simplistic understanding of things to help some us get into the ballpark.

FAQ Before we begin
Q: MESO? MSB? Aren't they the same?
A: Long story short, they are very much the same company, just traded on different exchanges.

Q: How come MSB is at $5 and MESO at $18? Shouldn't they be the same price?
A: Not quite. Long story short, a quick way to convert (thanks @ddwn for the reminder!) between MESO and MSB would be:

MSB (equivalent) = MESO / 5 / prevailing AUD/USD exchange rate

MESO (equivalent) = MSB x ex.rate x 5

So the 'dollar value' of MESO will always be higher on the NASDAQ, just think "5-to-1 in local prices".

Now.

Here's where we're at, in terms of the AUD and USD. The USD has been strengthening against the AUD over the last few days.



By and large, over the last few days, it was roughly at..

21 Sept - 0.73
22 Sept - 0.72
23 Sept - 0.71
24 Sept - 0.70
24 Sept - 0.71

So, an "overall-ish" strengthening.

Let's take the situation over the 23rd and 24th, where we saw a bit of dip from MSB retesting some old highs at $5.20 on the 23rd and closing out at $4.94 on the 24th.



Just on volume alone, its very interesting that as it was falling, buying volume remained very high in this period, but I digress. (for a bit more information on this, head over to the >>Charting Thread<< that @FullMoonFever periodically updates, and you'll see the overall picture and sentiment of the market towards MSB)

Let's have a look at the MESO chart for that period.



Over that 23rd -24th period...

23rd -> Open = 18.30, High = 18.30, Low = 17.55, Close = 17.55

24th -> Open = 17.03, High = 17.32, Low = 16.86, Close = 17.20

IMO, here's how inter-market traders would take advantage of the USD strengthening.

If I bought MSB at the close at 4.94 on the 23rd, it would be have been worth 17.53 in terms of MESO ADR.

But look at where the price of MESO was on the 23rd! Well above the range of what it was valued at. An easy 50-70c gainer.
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Now where it gets interesting is what happens on the currency front. Remember, that prices are quite dynamic.

From the 23rd to the 24th, the USD strengthened from 0.71 to 0.70.

You might think, that's not a very big move, but when you're talking larger sums of money, values get amplified very quickly.

Remember our hypothetical scenario where I bought MSB at the low of 4.94 on the 23rd, which was worth 17.53. But on the 24th due to the rise strengthened USD, using our conversion, our 17.53 MESO is now worth $5 MSB equivalent!

Look at the action on the 24th! A whole bunch of selling, but a big volumes of buying as well.

So in the space of 1 day, just on a currency front, we see a 6c gainer just like that when we convert it back to the MSB equivalent.

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The bottom line is, I think inter-market traders would take advantage of the dynamic relationship of the SP movements and the forex movements to make money, which is potentially we we've seen quite a bit of a sell-off over these last couple of days.

The longer bullish bias still remains, but from a trading perspective, there is money to be made at the margin between the two markets.

Note: This is purely just my opinion, please DYOR.