One works off the other and the way in which each has the ability to manipulate the sp reflects itself in the sp and the patterns of trade.
To make this even more complicated you have what we will call medium term traders,which is what you are enquiring about.
Then you can add the small-medium long term investor.
My basic theory on how the market works is not just demand/supply,that is a naive perception of what actually happens.
With a stock such as Aim that has,what we will call a high trading liquidity,combined with high interest due to a strong fundamental project,it allows all types of market participants to interact.
This results in an extremely garbled statistical result when combining all these types of traders.But in certain conditions one type of trader will predominate over the others.
Aim is renowned for being worked by the day trader fraternity on bullish statements.This fraternity tends to work on the basis of the intraday momentum and they tend to be extreme mercinaries in behaviour.That is, some will make profits,some will loose,and it doesnt really matter who does either(except to the individuals eod result)but the intent of this fraternity is to create the critical mass for the momentum to start with the critical mass being initiated by the bullish annmnt,they then move the price up via the momentum created in a strong leapfrog like force.
Now in this type of trading I will discount the effect of the small long term holder as they generally tend to stay out of such violent trade days.Where they tend to come in is early in the piece(low to middle company market capitalisation on low volume days and buy at market) and with an accumulative intent to hold for the longer term to maximise their gain.
The cumulative effect to the chart is that you get violent upswings of heavy volume with those critical mass inducing annmnts due to the day trader fraternity taking up the momentum.This causes the extreme spikes and imo is only common to such high liquidity stocks as Aim has been in the past.
However where the dynamic begins to change is when what I have called "the bigger money"(funds) becomes involved.They must obviously take a position by whatever means and if they are smart they will not do it in one buying spree,as evidenced with North Sounds buying.Initially they took up to 10% at up to 32c(obviously because they feel there is much more upside than this price) but then they consequently took another 3% on the pull back to mid-low 20s,which was bound to happen with the time to full project development.They pretty much dominated the nature of the trade in this initial rise from the low teens to the 30s.
JPM have been much more cloak and dagger about the whole process and have been accumulating between Feb/Jun,at least on the UK market.I am making an assumtion here and I am assuming that a relatively high proportion of the "missing" 42M shares has been accumulated on the asx prior to their significant holder annmnt.You can see the accumulation cycle quite readily from Feb through Jun.
Now this is where it gets interesting and where the funds begin to USE the daytraders.JPM anncs their new significant holder position,critical mass is created on seemingly powerful news and the daytraders take the sp up the pole.
Due to the dynamic nature of the company fundamentals atm you now have a broker prepared to recommend aim to thier clients at 33c which effectively creates a base that the daytraders cannot sell past due to the cumulative nature of the 33c+ buying.
BINGO the funds have just taken the sp to a new level of accumulation basically in co-operation with the daytraders,unbeknownst to them.But what these short term traders arnt totally aware of is the fact that more and more liquidity is being taken out of their hands as the company fundamentals become stronger and the % of buyers accumulating on the basis of holding until the company shows the true return potential.
There are various indicators that show this but probably one of the most reliable is the OBV(on balance volume) of which you might be aware.
A method used in technical analysis to detect momentum, the calculation of which relates volume to price change. OBV provides a running total of volume and shows whether this volume is flowing in or out of a given security. This indicator was developed by Joe Granville.
OBV attempts to detect when a financial instrument (stock, bond, etc.) is being accumulated by a large number of buyers or sold by many sellers. Traders will use an upward sloping OBV to confirm an uptrend, while a downward sloping OBV is used to confirm a downtrend. Finding a downward sloping OBV while the price of an asset is trending upward can be used to suggest that the "smart" traders are starting to exit their positions and that a shift in trend may be coming.
The OBV has had two large swings up in Aims one year chart.These being Nov/Dec 06 and May/Jun 07.
Notice those monthly parameters Punters?
Seem very similar to what D12 was talking about.
Now if I can make the assumption that the OBV IS indeed an effective indicator of accumulation of the stock then interestingly enough we have had two major OBV events where it is now known,via significant holder statements of North Sound and JPM,that the stock has indeed been accumulated.
BUT what is even more interesting is that even with the volatility between Oct 06 and May 07 the OBV trend has continued to support and solidify until the recent upswing.
It PERFECTLY reflects the accumulation nature of the trade over the last year and shows that the dominating underlying factor in this trading,be it volatile with daytrader participation or not,shows that the liquidity in the stock is slowly being strangled.
Now I have gone well and truly off the beaten path re your want to know about these medium term traders havnt I Punters.The thing being that they are NOT statistically significant when one takes into account the strength of the OBV and the potential of the funds to drive the sp in combination with fundamental annmnts.
Expanding on this,add into the mix the combination of the funds with the daytraders and you have the perfect tool for which the funds can rerate the sp of the stock IF JUSTIFIED FOR FUNDAMENTAL REASONS.
And this is why its so important to combine the technical aspects with fudamentals as the major force behind such a stock as Aim.The two funds have taken a major position in Aim due to THE STRONG FUNDAMENTALS as this is what will drive the stock to the next level of buyer via annmnts that reveal the financial strength of Aim on the basis of a successful Perkoa project.
Your technical arguements hold much good information Punters but as this company moves closer to success at Perkoa the pure technical treatment of the stock starts to loose water rapidly due to the successive levels of investor interest.
And this is my basic principal for any good company
That for it to ultimately be successful it must attract
THE SUCCESSIVE LEVELS OF INVESTOR INTEREST that will continually rerate the sp and that directly relates to the strength of the projects they hold in their project portfolio.
There is one huge advantage Aim has in this regard Punters and that is the grade of the zinc at Perkoa in combination with the length of the project.
The simple fact of the matter is that if Aim can bring the requisite cash together to develop Perkoa,and the offtake supports previous numbers that the company has mentioned this project,it will be paid back quickly and returns to shareholders via either dividend or company value will continue to accumulate and thats what the "big money" is really interested in.
d.
AIM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)