I just looked at hrb, i guess is entry even though intraday didnt look all that hot as it was setting a new low for the day, but on the daily's it looked like a possible swing up to bounce off the 50 day moving average, ok, maybe a little bit bellow that, i guess a 55-45 shot at it. thats probably the only thing that stands out to me. but then again what do i know.
the_dude, I don't know how long you've been trading NYSE stocks but things like that happen all the time. Did you check to see if there was any news on it around that time? If not, then most likely more sellers came out at that time since it had been in a down trend all day. Check out UNP today around 11:15am it went from 61.80 to 62.50 in one print and yes, I was shorting it. How can you justify that? Of course if I go complain about the specialist he'll always come back with some "legit" excuses. It's getting tougher and tougher to trade now....
Looking at the tape, the bid dropped at 14:05:34, and the offer was suddenly 100x45.90, which was pretty weighty, considering the quotes before it. Check out all the big prints that followed in the next couple minutes, all at 45.50 and below. It looks like what happened was there was over 100K shares suddenly for sale, and no bids to soak it up. So the market drops. Simple. Why would you, or any of the followup specialist-bashers, think there was anything unfair here? Was the specialist supposed to step up and buy 100K+ at 46, and get reamed for 0.50-1.00 (i.e. $100K), just to be nice? That's not really their job, at least not to that degree. I'm not a specialist, nor do I know anyone that works at, nor do I have any financial interest in, a specialist firm. It just occurs to me that when people are constantly "crying wolf", it's very hard for those in enforcement to hear the real problems when they occur. They just get numb, jump to conclusions too quickly, and think all retail traders are idiots. Same thing used to happen with MMs on NASDAQ. Look how long it took for any real change to happen there. The NYSE is much, much cleaner. "Pick your battles"
So far, so good. Looks like you read it right. Huh? Why was this situation any different? There was suddenly 38000 shares to buy. In this case, it looks like someone (maybe the specialist) stepped up and took the action, shorting the guy the stock, up 3/4 (1%, rounded up - pretty standard). It looks like he was able to buy it back for about a $0.20 win, which was probably somewhat worse than he expected. Would you have done it for any less? If your answer is "yes", consider what happens when the buy order you just got was only the tip of the iceberg, and the buyer is just "feeling things out" to see how the market responds. What if he's got another 500K to buy? Having moved the market up 3/4, the specialist would _still_ get reamed when he then had to move it up another couple points while already short 38K shares. Hopefully (for him), this doesn't happen too often, and he makes enough on the other trades to compensate for the risk. This is just stuff that I (and lots of others) know from trading and making markets myself. Has anyone seen anything like "confessions of a specialist" in print maybe? I think it would prove to be pretty interesting reading.
I don't have the access to the AT quotes from home so I just assumed that there were more sellers came out by looking at the chart. Oh, Alanm, I totally agree with you that specialist is not there to lose his money all the time. I was just pissed that my 3000 shares got stopped out. My average price was around 63 when I started shorting and I put a stop at 62.40 after it broke 62. Things were looking really good and then bang! Thought my stop was far away enough not to be triggered. Instead of making one and half point on it I only made 50c. I can't remember all the prints at that squeeze but I bet you at least half of them were short sellers who got stopped out. But the questions is HOW MUCH squeeze is fair and reasonable? Half point? 70c (like UNP)? A point? Does SEC have a rule that caps the max squeeze for certain amount of bid? NO, so the specialists can do whatever they want. Notice that after printing 62.50 it went down immediately so I'm sure the specialist was smart enought to start covering his short. Even if the buyer is not done, by the time he/she starts to show big bid again the specialist had already covered his positions. A lot of specialists just don't maintain "fair and orderly market".
Thanks for your insight, everyone. Just checking to make sure there wasn't something I didn't know about HRB at the time, like a news item. Usually I am pretty good at reading these things as they are happening, but I definitely did not see this downside move being as big as it was. On wed, there was a good move on JBX to the long side that was pretty obvious to me at the time. JBX went to .40 x .75 when the specialist got himself into trouble on two big buy orders. That I can understand, since it happens all the time, but the HRB move seemed exaggerated, even for a specialist (ok that is an oxymoron).
the_dude and others, maybe I can help out a little bit. I strictly trade NYSE stocks and have seen actions like what you are describing all day long. Now, on to HRB. The thing about the NYSE is that NO ONE is gonna screw the specialist. Someone had to have put in a large offer for the stock to drop. More than likey, it was some moron that sold it under the bid and that is why the stock dropped like the Titanic. At this time, did you see a "print out" or a flurry or orders get cleared at the new quote? Usually, the stock will gap down, print out the seller and then run back up. But, not all specialists are fair and they will do whatever they want with the stock. For this reason, do not trade those stocks. If you get screwed in a stock take it off your screen. Also, listen to what other traders are saying throughout the day about their postions. If they are always complaining about a specialist, like ITW, then stay away from it. Here is a small list of some bad specialists: MU, BBY, ITW, COF, GS, MER, KSS, DNA, BRL, WLP, RYL, and the rest of the homebuilders like CTX, LEN, TOL, PHM, BZH (you have got to see this guy work BZH...unreal!) NVR, etc. The homes are crazy volatile because every mook out there is jacking these stocks around now. ALso, I saw that someone traded "the GeM"...aka GM. Dow components are a major screw job waiting to happen. All the big money flows into the Dow components and if some idiot at Vanguard thinks GM is overpriced he will dump 100,000 on GM's head and you will never have a chance. Remember, the specialist does the screwing and he does not get screwed. So, he will gap the stock down to screw over Vanguard on 100,000, then run the stock back up to squeeze some shortie balls. Mid caps are teh best plays on the NYSE. Play the stocks that you have the advantage of screwing rather than being screwed. What has made me extremely profitable via trading the NYSE is being able to read T&S and using the open book. It is critical that you understand why a stock is printing .01 below the offer continiously or .01 above the bid. Pay attention to what the bids and offers do...are they refreshing, moving up, moving down, is the stock offered on a minus, is the stock on a plus tick bid, etc. Although we NYSE trades do have the openbook, it is by no means a L2 screen like the Naz. Basicly, you can tell if a specialist is screwing around by what the book will show. The bid might have 600sh on it, but the quote will display 10,000sh, then once some mook sells 600 onto the bid the bid drops out like a rock. You need to really be on your game when you trade on the NYSE. The market is difficult and people have lost a lot of money in both markets in the last few years. They are pissed off and will take every opportunity to screw you out of your position.
I think, in the two cases I posted about earlier, the specialist's actions were reasonable. Did I miss something in those? Even if you trade a stock day in and day out, the specialist will _still_ know more about the market for that stock than you will, because of his unique view of the order flow, and exposure to the floor traders. When he moves the quote a certain amount, it's sometimes simply his subjective judgement as to what the impact of the orders will be on the price. If he has to fill in the imbalance, he's going to have to gauge the risk involved, set a price (or simply report what he sees happening) and hopefully not get reamed in the process. Can someone post some more examples of where the specialist appears to have acted inappropriately, so we can discuss and analyze the tape? If you don't have T&S, I can get it, but only for the last 5 calendar days.