So for those who have Cherry7 on ignore, he says immediately above:
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Are you confused ?These days there are lots of derivatives, geared trading strategies and HFT in play to confuse the situation."Thanks, C7, I was just about to get to that.
Let me use an analogy. It's not a 100% accurate analogy, but near enough.
The International Space Station [ISS] has been orbiting for years. Even though it is 300-450 kilometres up it is big enough to easily from the ground with the naked eye, sometimes, if you know where to look, before sunrise or after sunset. You've probably seen it yourself. What you may not know is that the ISS, over time, gradually loses altitude. There are still a few molecules and atoms from the Earth's atmosphere up that high and the drag from these gradually slows it and it begins to fall. Eventually it reaches an unacceptably lower orbiting altitude [let's call it Alt 0.2175] and it is then time to boost it back into its correct orbit. The ISS does not carry propellant of its own, too risky to move fuel between vehicles in space, so to boost its orbit it relies on a docked resupply vehicle. Back in the day, that used to be a visiting Space Shuttle. The Shuttle would have about 200kg of extra fuel on board for this and just before it left for Earth, the Shuttle would fire its boosters while still attached and give the ISS a small, gentle push and back the ISS would go, over time, into a higher orbit.
STX is well below its 'normal orbit' now too, in the opinion of most Owners, and could also use a nudge into a higher price point. The good news is, most of the propellant for the STX manoeuvre will actually be supplied by others. E.g. "derivatives, geared trading strategies and HFT" and shorts covering and day traders. Also momentum traders, those looking for sudden price moves, in this case up, who jump on for the ride. These hitchhikers can either be automated programs or humans who look at 'ASX200 biggest gainers today' lists and say "STX is up 14% this morning, WTF?". Whether automated or manual these folks don't often trade against the new trend, they usually trade (with) the trend. Oh, and technical traders, chartists, who will find some convenient pattern to justify buying E.g. "STX has just broken out of a reverse head and shoulders pattern into a new trend".
For existing STX Owners it sets off a Virtuous Circle, or Cycle (same thing). Shorts and others will see it as a Vicious Circle (or Cycle). That's not our problem though, but thanks for playing.
That's the best case, STX is propelled into a higher, more rational price range. What happens if it fails? Say it rises like an Elon Musk rocket, goes out of control and crashes back to Earth. Or STX fails to launch altogether and just sits there on the pad. Well, in that case on Monday morning I will have bought some new shares at a bargain price for a long term hold. Mr $0.2175 might well have my back, so the downside risk I'm thinking is limited.
"Any way the wind blows doesn't really matter to me, to me" as Freddie Mercury might have said.
See you Monday morning.
For complete transparency I'm disclosing that I'm doubling my planned buy on Monday morning. Still won't be big enough to move it on its own; I know that for sure.
(20min delay)