I was intending to ask this question in the weekend thread, but since you brought it up, I might as well ask now. Not specifically cornering you btw, anyone else here who has an opinion please do share if you are willing to.
If you see a strong PA and an excellent chart and rise, would a strong broker data sway you one way or another? I'm interested in what you meant by smoke and mirrors.
1) If you see one or two brokers accumulating heavily and retail selling out, do you see this as a positive?
2) If you see lots of churn but there is no one clear buyer (especially) or seller, do you see this as a negative?
3) Or, simply ignore #1 and #2, and don't care about broker data and just follow PA?
Here is a scenario that I noticed recently in IOU, which kind of falls into #2 above
When the first breakout happened (first arrow on the 3rd Aug), the PA was mental with 2-3mil orders pushing the bid side up and up clearing lines. But the broker data wasn't strong...looked as couple of instos taking big positions and distributing one or two pips above.
Out of 40mil volume churned, the largest net buy volume was only 1.3mil by CS. And you can see that UBS, Barclays, 3P all were churning volume for a pip or two. I initially thought that these guys are setting the book up for further runs, but the subsequent rises (the other two blue arrows on the chart) on the 13th and 19th Aug also followed similar pattern.
If I remember the PA of all these three days, they cleaned up couple of bid lines, put a large 2-3mil bid as a prop/sometimes even take half or even full hit on that prop, and re-load sells to distribute. Is this what you meant by ..."very 'pronounced' in their approach to ensure SP doesn't slide but at the same time ensuring they don't blow it up and get a haircut".
I totally understand that none of this is out of the ordinary, and run of the mill stuff for brokers that you've seen time and time before. I'm just interested on whether traders in this forum care about broker data in making their decisions or not.
BTW, for any newbies like me, here is a link that would help you map broker data with retail/instos.
btw, anyone else here who has an opinion please do share if you are willing to.
