save the barry, page-25

Barry, Its hard to say. But I agree with you that the huge rise was contrary to expectations and was not due to ordinary investors bargain shopping. It is uncommon for the volume to increase as the stock goes up. I thought it was a short covering rally, but it cant be because hedge funds are loaded up and are sellers. So it could be a ramp job. IMO hedge funds are under stress and are using various strategies to extract more from the market. I will explain.

Judging by the volume you would think a lot of accumulation has been happening. Not necessarily. Ramping a stock up or down can be achieved by robotic trading without altering your position on a stock significantly. It works like this.

RobotA places a sell order at a premium price. RobotB takes out RobotA's sell order at the higher price. The robots then switch roles. ie RobotB places a sell order at a premium price. RobotA takes out RobotB's sell order at the higher price. So no net change in position and the price goes up. The parcel size varies and is usually small. Bots are fast so it can look like orders are getting machine gunned out. But it is well controlled. They usually do this in steps and may sell surplus stock at the top of steps for a small profit. Psychology, is used to trick traders into buying so they can offload surplus stock at a profit and keep the sp going up.

Soon other holders commence taking profits and shorters may decide to short thinking the rally is over. To keep the stock going up the bots now have to buy more than they sell and the volume increases. However they know, the shorters will get stopped out and profit takers will reenter if they keep walking the stock up. So what they accumulate (if any) is only a small fraction of the volume.

It is difficult to say what happens next. Hedge funds are loaded up with stock and have to sell trillions to cover redemptions. So down? But they will probably continue to ramp in order to keep the sp up. So Sideways? Who knows? But I don't think they will become panic sellers. I think they would prefer a recovery more than a crash, even if it is an artificial one. (Just my opinion. DYOR.)

See here: U.S. hedge funds anxious