One of the most volatile stocks on the board just got an upgrade by Goldman today with an increase in their target to $45 from $41 noting BTU's exposure to the Asia seaborne metallurgical coal markets. An amazing trading vehicle!
With the recent news about Goldman running trading software that is raking tens of million$ a year in profits, I'm skeptical of them raising a target on a stock as it could just mean they are ready to dump their holdings, as they draw the buyers in. http://www.nytimes.com/2009/07/07/business/07goldman.html?ref=business Ed
Hi ed, I'm not following your reasoning here. what does this have to do with their automated trading software that was stolen? seems they have atleast reasonable cause to raise the target for BTU.
Given your "conspiracy" theories I bet it's pretty hard for you to be able to pull the "trigger". And you say that you "compete" with Goldman Sachs? Now that's FUNNY! Oh, and please feel free to show us a reference indicating Goldman's holdings of BTU . . .
Hi Landis, I'm sorry if I have offended you. That certainly is not my intension. The article above indicates that many banks are using automated traders to trade the markets, and also specifies that they are making tens of millions in profits each year. Dealing with the high-volume of stocks that they trade is what moves markets (up and down), not my 1000 shares or less. I see them as my competitor. You hear people ask all the time, "why would someone give you something for nothing?" So if a bank publicly announces they have raised a target of a company by $4, I have got to think they have a vested interest in getting that news out to millions of traders/investors. If you believe they are doing it out of the goodness of their heart, then you are welcome to that opinion. So if 1000 people go out and buy that stock (creating more demand) and raise the price of the stock, I'd say they accomplished thier goal. I have no problem pulling the trigger as my automated traders look at stock movements and make buy/sell decisions based on FACT, not news. Again, I have not posted my comments/feeling on this subject to injure or offend anyone. My opinions on this subject obviously are different than yours. I think that is what makes stock trading so interesting. Best regards, Ed
Ed, Goldman Sachs, Morgan Stanley, Deutsche Bank, and others have been using very robust electronic trading platforms and trading algorithms to execute baskets of stocks via program trading for their own accounts (usually via stock-index arbitrage) and for the accounts of their clients when a portfolio manager needs to adjust his portfolio, or for corporate treasury accounts that are seeking to make a certain risk-free return via stock-index futures arbitrage. This is nothing new. It has been going on for years! In fact, program trading has been around for over 20 years. I see absolutely NO correlation whatsoever with Goldman's research call on BTU ( which has to do with Asian exposure via there metallurgical coal operations in Australia ) and that of the automated trading platforms that you speak of. BTU is no where near $45 per share, $40 per share, or even $35 per share. The stock and coal sector trades off of the weakness in the Dollar. The stock is oversold and wants to bounce. That has nothing to do with Goldman Sachs. By the way, research out of brokerages and investment banks is designed to generate order flow and commissions. Goldman recently initiated coverage on the Coal Sector just a couple of months ago with a NEUTRAL rating, actually favoring the Nat-Gas and E&P sector more (March 26th, 2009). Of all the coal stocks in the sector, the Goldman analyst (Brian Singer) was bullish on Arch (ACI) due to their position in the Powder River Basin and had it as the lone BUY in the sector that he rated as Neutral. The other day, he came out and downgraded ACI to Neutral and Upgraded BTU to a Buy. BTU has just as much Powder River Basin exposure as ACI, but also has the caveat of seaborne met-coal exposure out of Australia to the Asian markets. He's simply following the economic trends that he sees and the demand for met-coal (for steel ) from Asia. To say that his change in the ratings of Arch Coal (ACI) and Peabody (BTU) is tied to Goldman's automated high-speed electronic trading programs is absolutely ridiculous. The programs in the article that you cite are designed for "execution" purposes.
Hi Landis, No argument here. I'm not disputing that they do research on the companies that they recommend. However, when I sit in professional daytrading houses and see the games being played by even a handful of traders, the thought that the large banks are using computers to play those games too (and as the article states, raking in tens of millions in profits each year), it obvious (at least to me) that we are in competition. Whether you agree or not is irrelevant. You can continue to trade based on "their advice" and I will continue to do what works for me and that is "let my automated traders make the decisions based on the technicals, and not follow anyone's recommendations." Happy Trading! Ed
Ed, I'm not sure if you are able to comprehend what I posted previously because you continue to try and "link" two entirely separate entities . . . 1.) Goldman's research. 2.) Electronic automated execution software programs which EVERYONE (not just Goldman) has on the Street. They are "apples" and "oranges" my friend. It is puzzling why you are unable to comprehend this. Your logic, and attempt to make a connection between the two is quite faulty. And for what it's worth, I don't trade off of anyone's research. I am a former floor trader that trades off technicals. And if you really think that you are in "competition" with the likes of Goldman Sachs ( or any other I-Bank trading desk using automated execution software ), you must not have ever seen a bug get squished on the windshield of a car traveling at 60 mph. Cheers!