3.4 as expected?Yes AZL lost 6 pips to finish on 4c. Our volume...

3.4 as expected?

Yes AZL lost 6 pips to finish on 4c. Our volume was very high, just over 143m shares traded. A weak open at 3.6, reached 3.8 and 3.3, and finished around the CR price.

So what did we have a big drop? It may seem surprising to some, but today's trading happened as it happens after many CRs. I had anticipated this play, of course based on probability as there is nothing certain.

So why was I anticipating this play? Last few days I have been writing a number of posts and trying to explain what this CR is about - raise to Canada and buy price for end buyers. We got 5.1c, using the funding/tax structure of Canada. Most companies raising money for using in Canada use this structure. Its more money for the company. But what we forget that the price to end buyer is different. I was repeatedly writing (although got some flak as well for putting up the right thing), providing links to GT1 etc to emphasize that the end buyer (Aus sophs and professionals) will get at 3.4c heads with free 1 for 2 oppies - so roughly around 2.9c or so. I knew many buyers would look for easy money and try to get out 10 to 20% profit - which is not bad for 1 week play. And that is what is happened. A large number of sophs/professionals may have been here to make a quick 10/20% profit and go away, rather than being committed investors. Although it may not look right, but its not unusual. Markets have been terrible in risk-on assets, and for many, a profit is a profit, there is no emotion involved with AZL.
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So what happened today in terms of trading? We broke 3 of our key supports - 4/3.8 and 3.5. Based on my thinking where the raise had been (3.4 for heads with free oppies), I expected that our previous big support of 3.5 will have most play. It was close. I missed by a pip - most play happened at 3.4. Maybe also 3.4 was a number in mind for head CR price. It was nearly all sell today, unlike other times where we also get some good buys. Nearly 90% were sells. Though we cannot be certain, but there is a good chance a majority of the sells today may have been associated with new shares issued today.

How was the oppies play? What was surprising is that oppies were not sold today. Don't know why but think there could be two reasons. One, many may have sold their heads at buy price of 3.4 and now free carrying the oppies - nothing to lose game but you are also in. Secondly, I feel that punters were busy today with their heads, and once that is sorted out, may look to cash in the oppies and make profits - there is a good chance of this happening, but may not happen. Last time we reached 3.4 level, oppies were playing at 0.4/0.5 around 8th Nov - I was buying heaps of oppies and writing at that time (although I had sold out everything - oppies gave me 2 bags). Today at same price of 3.4, they are fetching 1/1.1 - more than double. Such is the way oppies play. Now we have reached 5.8 - punters feel we can reach there again as they have seen it, so want to hold it. Last time we reached 3.4, we only knew head play around 1.4/1.6 (and had not seen 5.8)- so previous play reminds punter more of where it could possibly go because they have seen it before. So a lot of it is perception, human behaviour - we tend to do based on what we have seen rather than prediction or even sometimes logic.
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So only a few days left for PFS. As I wrote couple of days back, I was hoping that Paul has told something good to new CR buyers around PFS. So they would hold rather than look for exit. Not sure now whether he told or if he told, whether the soph/professional believed him. Other thing is market is very volatile. Even if PFS is good, if general markets are tanking big time, there is a big risk - and many would not want to take that risk even if Paul gave a positive outlook, rather get some easy money out for Christmas spending.
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Personally, yesterday I switched for Not Held to Held first time after selling out completely last week. I was anticipating a decent drop to happen today as I have mentioned above, so why was I buying yesterday? I was buying oppies yesterday and picked a majority of what was sold yesterday, including a 3.5m hit which someone posted over here, picked up that one too. I did not buy any heads. So why did I buy oppies? I was thinking that today we will drop around 3.5 (+/-) today. So I was thinking oppies could drop to 9, but not great chance of 8. I know I can't pick the bottom, so I started buying yesterday, mostly at 1, a small number at 1.1. Today I picked up the heads, average 3.4 - and have bought a fair few. I may buy more heads tomorrow if it plays around here. Reason being if heads reach 5.1, its 50% profit. To buy more oppies at 1.1, it has to reach 1.7 to make equivalent gain. I think oppies may find it difficult to reach 1.7 at head 5 level. So for short term, heads looking good. Oppies are great, if we go to 6 or 8 or 10c - then the gains double from oppies, and greater if we go higher. But chances of reaching 5 is much higher than 10. so its individual risk/reward. Of course, PFS has to be positive, markets at least stable, Li sector at least neutral - otherwise we have to start thinking of reverse numbers - It comes to my mind but I am really hoping I don't have to go there.
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Everything I have written here is just my opinion/feelings etc and not based on any science. In writing I have made some assumptions and it may not have happened that way or may not happen in future. Stock is volatile. Stock is in a downtrend. So please dyor and check your risk/reward.
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So what may happen tomorrow? 3.4 has held like a rock today. My feeling before today was that if 3.5 is not held, a touch of 3.1 may come into play. That did not happen today, but if there is weakness tomorrow for whatever reason, it may happen. Oppies I feel the sell may happen at some stage and will not be surprised to see a touch of 0.9 at some stage. But it all depends on when we get PFS. Once that comes, it takes over. Around 143m shares were sold today, so roughly I am thinking around 100m of 333m shares issued has been absorbed. I am thinking half of new CR buyers will sell and half may hold. So another 66m to sell, that means we need another 100m volume day to overcome CR sell. Today punters absorbed the sell. The punters are in another test to see if they can withstand another decent sell tomorrow. Will that happen? lets hope so. All the best.