What I'm about to share with you is an alternate view from most long holders. To all those that hope to read good news each morning followed by a friendly 1% gain on their stock each and every day then this may not be for you so you can stop reading now.
For the LT holders that plan on holding long and strong for years to come then this shouldn't concern you in any way as it's a ST view based around the SPP. You guys may as well switch your screens off and come back after that anyway as its not worth the stress.
If you haven't noticed I like to challenge and be challenged so I'm more than happy to share my opinion and put it up for comment. I have more than enough friends in my life so I actually couldn't care for your opinion of me but I am eager to hear differing views to my own cause at the end of the day thats how we learn.
Last week I put up a post on friday afternoon with a brief summary of my thoughts on what would happen following the SPP ann. I was with my kids so didn't really go into much detail as I'd much rather spend time with them than read anonymous posts. Maybe a good guess or maybe a show of experience but I pretty much hit the nail on the head. I told you there'd be 1-3 days of green and then red days to follow and currently the sp action has played out this way...
Monday morning I went into a little greater detail on what was going to happen and again maybe I'm just lucky or maybe theres something more to it? Guess a bit more time will tell...
Now what I want all of you to do is take your green blinkers off, stop thinking like a retail holder and dive a little deeper into whats currently happening with APT
Its true that the APT chart is a picture of beauty over the last couple of years - so please don't post a pic of it to respond to a ST view, it just shows your inability to comprehend basic information. And definitely don't post the % you are up in your own holding, you're just stroking your own ego and no one cares.
The thing is that even good companies have retraces. These happen for various reasons and if the company has strong fundamentals then its healthy to regress as this will allow bigger players to enter, who in turn will drive the prices up.
These regressions generally don't happen when companies post monstrous profits and growth but certainly have been known to happen when you offer a significantly discounted SPP.
On top of offering discounted shares they have already given out discounted shares to the tune of $317.2 million only 6 months prior at $23 then more recently $28.5 at the end of November.
For those that think these shares have been rinsed already then you need to do some research on how mm's and entities that control the sp work before you make any assumptions.
So lets look at the job of a mm (market maker) in really simple terms.
The mm's main job is to create liquidity but by doing so will also turn a profit for himself.
Say the mm started the day with 2 baskets of shares. At the end of the day the mm will not only have made a profit during turnover but will now have 3 baskets of shares - in an accumulation phase.
But if he were in a distribution phase then he'd start the day with 2 baskets of shares. At the end of the day the mm will not only have turned a profit but now will only have 1 basket of shares.
So how do we tell if he's accumulating or distributing?
Theres a number of ways but lets keep it simple again and think about his end goal - If he's accumulating then he'd want to rinse through the day by buying lots and then sell the sp down at end of the day to finish lower so he can create some fear and buy them cheaper tomorrow. - If he's distributing then he'd want to sell all day then run the price up at the end of the day so he can create some excitement and get a better price selling more tomorrow.
Ok now lets look at APT trading since SPP ann Friday. To (almost) everyones suprise the sp actually finished green. Weird hey? Then the next few days there were lots of shares sold down but it keep getting run up in the afternoon. Must be all those buyers pushing up with demand, right??? Then Wednesday something happened again that was weird. The sp didn't run up in the afternoon... Hmmm, guess they ran out of buyers... Oh no, that means he was distributing, right?
So where to now?
Considering the recent discounted shares there may be a base at $28.5 (or it may be $23) but logic would say that those shares have been dropped already as it looks as though they've run our of buyers so theres only one one question you have to ask.
What would a big player do if they'd sold their shares in a company they want to hold?
They drive the prices down and buy them back of course!!!
(There is also the possibility that they sold their shares cause they thought that was the best price they will get and will not re-enter at all - but I won't say that cause it may upset the delicate ones)
Another factor to consider is the SPP may only be a fraction of a percent of the MC but what the cheer squad fail to highlight is there is no way in hell that the total SOI can ever be traded in the near term. Considering that only 28.18% of shares are owned by anyone outside the T20 and a lot of T20 shares are tied up, I think the shares that are about to be entering the market at a significant discount will have a significantly greater effect on the share price than those with long interests will let on.
What does the chart tell us?
One of the easiest patterns on the chart to spot is the way in which smart money exits and causes a reversal. The pattern is repeated nearly every time there has been a sharp decline and is highlighted by a decent gap up (to create the excitement) and followed by a pretty decent sell off.
As you can see the pattern has turned up again on Wednesday and if you wanted confirmation then all you need to do is check yesterdays price action. My thoughts would be this pattern will repeat and the sp will further decline but thats open to interpretation.
I've highlighted the gap ups (set ups) for those that aren't sure in the below chart. And for those thinking TA is a load of rubbish you'd have to agree thats a hell of a lot of coincidences, right???
Considering there is a high fill rate on gaps here and I would expect the two in the $26 range to fill sometime in the near future. Also the gap at $24 has a very real chance of filling also. Once again thats open to interpretation.
And for those new to charting you may want to be introduced to Heiken Ashi charts. These are a great way to confirm trends. Not that you ever would use one for entries but you would have a had a lot of success buying and selling APT just using a Heikin Ashi chart alone. The green and red candles obviously signal trends but to confirm strong trends look for green candles with a solid green base (strong uptrend) For a strong downtrend look for red candles with a solid red top (like the one yesterday).
I do actually believe APT has strong fundamentals and if I was already in then I wouldn't worry too much as I do believe the regression will be ST. How far it regresses only time will tell but Ive shared my opinions and happy to hear your views.
Today is looking like a very green day in the markets with the phase 1 deal all but over the line. So the sp may get a reprieve but if it doesn't today then that definitely wont be a great sign for whats ahead...
Not be taken as investment advice AIMHO DYOR
Remember markets are here to make money not friends. Equipping yourself with more tools to do so will only help you in the end. Keep an open mind and your head up. Best of luck
APT Price at posting:
$28.87 Sentiment: Sell Disclosure: Not Held
