Oi. So logically and everything ive ever been taught says that if theres a big order sitting on the level 2 bid lets say 5 cents from NBBO then that would be bullish. And Vice Versa for a big overhead looming order on the Ask. This guy here Andrew from Bearbulltrader says literally the exact opposite at the timestamp linked. Which is it? I confuseld.
Watch the ES for an hour, with the cum BID and the cum ASK on the screen, and you'll see the same thing. *Amazingly* under-recognized/under-utilized indicator, indicating the direction in which the market believes price will go. Market popping? The ASK will get crowded....
I've seen this before and was a bit taken back as well. I don't think there's the "right" answer to this. Here's how I would interpret this behavior. Andrew says that the guy withdrew his order and then would submit it again as price got closer to .80. Why would he do that!? If he simply wanted to get filled at .80, he would have placed the order and be one of the first in the queue with better chance of being filled. Instead, imho, he is sending a message - I don't want the stock to go near .80. Ok, so it's bullish then, right? Well the problem is that this kind of activity is often done by people who try to distribute the stock without depressing the price. So if the guy disappears, it can be interpreted as bullish because he's done selling and now price can advance higher. Keep in mind that the days of manually manipulating the book are mostly over, so for HFTs, floating order several levels away from NBBO should allow plenty of time to cancel it. As Andrew says, it's only a part of the bigger picture and may not be relied upon by itself.
I mean to me thats as textbook spoofing as it gets. Just leave the limit order at fucking .80. Why keep removing it. Not an honest buy order as Andrew claims.
Let's go to an ETF for a *very* S&P-oriented, but only somewhat "outright"..... If you had a timing/transmission and commissions edge, and were making a market in SPY/SPYoptions, and were net long some heavy delta, you might wish to lay off that risk by shorting the ES, which is in a different market, but is *closely* related, movement/risk-wise. You're not working direction, but zeroing your delta, and pocketing the buy/sell spread minus commissions. An olde tale, widely sung, with which we sometimes try to play in tune......