Far prints on low volume

Discussion in 'Order Execution' started by TheStudent, Nov 7, 2003.

  1. I've been trading in AVSR recently and have noticed something interesting. I am a novice at microcap trading, so please excuse with my ignorance.

    On Nov 6 the market cleared 71,000 shares between $2.44 and $2.55.

    It then proceeded to plunge to $2.33 and $2.32 on 400 shares.

    It came back to $2.43 on 5000 shares and opened the next day at $2.62.

    Seems like some poor sucker getting his stop loss order punched.

    On Nov 7, the pattern of abuse continues.

    The market trades at $2.80 until 2pm where it is guided down to $2.50 on light volume before strongly rebounding to $2.84.

    Is this just market makers trying to punch stop loss orders?
    Or is this painting the tape - a bull trying to get in on the cheap?
    Or is this nothing and I am just reading too much into it? :)

  2. That stock was super, I mean SUPER thin until just very recently. My guess is no market maker really has much inventory so it can get pushed around a lot if there is news or a buy/sell imbalance.

    If it is trading a lot of shares at one level it might just be that one market maker has called another and arranged a sale so it is brought up to that higher price (or lower) to get the trade off.

    It might seem like stops are getting hit but basically the market maker is just acting more like a specialist and taking the price to where size can trade because on no volume stocks like that a lot of the larger transactions are negotiated, if they weren't a 71K buy order might move the stock a lot more than 10-20 cents or they would just have to bid for the stock all week long. In most cases its just easier for the buyer to go, its trading 2.45, what do you say you sell me a block at 2.70, stuff like that.

    Where did you get in AVSR the first time? We all traded it to.

    I noticed that Gilder pumped it on his private board the day after it traded 0 shares the previous day and it ramped right after that.


    A few weeks later the polycom news hit and volume picked up again.

    It got a mentioning in the Daily Reckoning when it was still under a buck fifty I think.

    Here is an excerpt from 10/20/03

    "A little bit of excitement is beginning to creep back into the Telecosm Lounge. One day this month, after Mr. Gilder mentioned the Avistar Communications Corporation, a small company that sells videoconferencing systems in the Telecosm Lounge, the stock price doubled over the next two days." And a whole new heard of sheep shuffle off to get fleeced. May we remind you Gilder, in his own words, does neither price or timing."
  3. The stock is super thin as you mentioned, thin enough that I have to carefully watch for volume to come in before I can make a move, and I'm not trading that much! Incidentally, it actually gave me a good insight as to how the gorillas feel when they trade :)

    What I don't get is how 71,000 shares can trade within a few pennies range and the next 500 shares brings the print down 6 cents.

    It could just be that the 71,000 shares were part of 1 negotiation between MMs and the next 500 were unlucky enough to be done with the next limit bid that was 6 cents lower - but maybe my overly suspicious nature is seeking a more insidious explanation!

    I don't pay much attention to Gilder, but Robert Metcalfe and David Solo (former UBS wunderkind) are on the board.
  4. yeah I don't follow him much either but someone emailed me about it, Gilder supposedly mentioned it because of the Metcalfe connection. If the little company "makes it", it could do really well. They have a ton of video conferencing patents apparently.

    Its was up what 17% again Friday. That thing is all over the place but mainly up, up, and away.

  5. Tons of stocks trade like that. No one takes in inventory anymore, the small spreads you see are mostly an illusion, they still trade with fat spreads for any size to be done in a hurry.
  6. Would AVSR be a name in which MMs try to trade their inventory positions?

    Today's tape seemed to be printed to suggest a puke in the afternoon, which shook out a lot of people who were long at 2.90.

    My theory is that the MMs were selling from inventory in the AM. By printing a down tape in the PM, they could cover their shorts at 2.40 and pocket 0.50.

    As evidence, it seems that the morning trading had a lot more NASDAQ double prints than the rest of the day, which suggests that the MMs could have been so short of their own inventory that they had to contact other MMs to source inventory, resulting in a double print.

    Of course, this could just be a hare-brained theory. Anyone who has MM experience care to comment?