A while ago we had discussion here on Farrell's procedure of placing a mkt order--pre-open-on a nyse stock due to gap down hard-to be asurred of getting the opening print-as the specialist will guide it up---There was a difference of opinion whether this method still works. Excluding the past few weeks how do you people feel about this now??Thanks
I too would like to know if anybody has made any money using Farrell's techniques. The specialists, whatever you think of them, are some of the best traders in the world.
As a market maker in listed securities, ill tell you the best way to do this. Dont use a market order. What if the specialist doesnt open the stock low enough. You're stuck buying a low print, but it might go lower. Instead, put a limit order down at a lower level. That way , if the specialist doesnt open it lower, you dont buy the stock. If he does open it lower, everyone participates on the opening print. Here is an example from Friday: EMC was indicating $10-$12 by the specialist, previous close was $12.70. I put down a ticket to buy at $10.50. The Stock opened at $10.30, and the next print was $10.80!! I made a quick 50 cents a share. This time he did open it lower, but maybe not next time. Hope this helps.
Jefftrader-Thanks for a great answer.. How did you know-or maybe better(because you're in the know) -how would I know where specialist is indicating to open a stock? thx again.
I have read and thought much about what will come in the weeks ahead. Simply long term hold(= overnight is very dangerous now. After a fall like this we must have a monster rally and retest the lows once or even twice. Add the recession to the picture and seasonal problems. (November is not a good stock buying month). We have a moster rally missing. Any bullish move will have to be superceeded by these movements - a typical base building for SP and the NAZ. Somone told me that NAZ around 1300 would be a %75 retracement from the top (approxemitely) and that's historically typical. I am not sure as I have not reviewed any numbers or historical data.
if you, or your firm, has a relationship with a floor broker, they can usually get you a look. If your office has access to a Bloomberg, sometimes it has delayed openings. Others news services sometimes have delayed openings. By rule, if a specialist is opening a stock more than 50 cents away from the previous close, he must indicate that on a pre-opening quote message. By the way, being "in the know" isnt as profiable as it used to be! I've been a market maker for 10 years. With penny spreads, it doesnt make sense for us to make the other side of retail trades. Thats why I'm exploring these forums. Im pretty sure I'm going to switch sides and trade my own account. This site has some great info about firms and software. Any advice would be appreciated. Thanks, Jeff
You would short the open of a stock gapping down, knowing that the MM or Specialist will do their best to gap it farther than it needs to be to assure their profit? I hope you were reading fast and meant you would short/fade the gap up and buy/fade the gap down. We all know your better than that!
Thanks Jeff--By the way welcome to the ET site. There's a wealth of infomation here-so just dig away. I'm sure your experience can provide a wealth of info too. I look forward to reading your posts. --------No I dont have a firm to access the information we're speaking of--I'm remote from home. Does anyone else-please-have an ideas what services-free-paid whatever will provide what Jeff is talking about? Also regarding that .50 rule-wow-where can that be found? Again thanks.
Just a thought--I'm with cybertrader(Schwab)-so it's your feeling they should have access to this info.--Hmm.-I'll check this out.