Who cares if you can spot a short? The specialst doesn't mark a short sale and then tank the market. You're a fool if you believe that. If you really want to be on the side of the specialist you have to position yourself for a short sale, incrementally. Take a look at breadth numbers and member/specialist short sale ratios. These figures are two weeks delayed, but you can still profit from them in a big way. check out http://www.marketgauge.com/ for access to short interest reports. good luck
My friend, Supply and demand change many times over the trading day. I can spot the area where this may be happening and capitalize on this imbalance. 2 weeks out mean nothing to me and most specialist go home as flat as possible. I disagree with you post and do not mind being called a fool if my P/L is positive at the end of the trading day. I hope to meet you on the other side of my trades, to show you some real LOVE>
When i see a large short seller stepping, i usually think BUY first. Let it step a few times then buy as it starts to get picked off. You are usually in the money 15-20 cents right away. If it is a strong stock/ in strong sector you want to buy it every time. Basically you want to buy counter trend short sellers. You want to post bullets and short ahead of the short seller if the trend is down. I do believe that market short sellers do show up in the open book. I think this is because it is like a limit order set 1 penny above the last trade. I have defenitely seen them in the book.
I was playing with orders in the open book over the past weeks and I noticed on AZO I can put a SS limit order at the offer or split the spread, and my quote was not displayed in the book. When I have a bullet it obviously shows as a sell order and was displayed. In addition, I hear the specialist is suppose to accommodate and not imitate, so why on the lower volume days (not like the past two higher volume days) would he penny me on many of my limit orders? I go high bid then a new bid becomes a penny above me (same if I offer) with trades going off at the new quote until the spread gets tight. (When I get pennied the quote never shows in the book either). On the low volume days I have to bid offer Isld Inca to avoid narrowing the spread. My two cents.....just sell the rallies in the down trend. If a player wants to sell 30K and shows it in the book, I bet he has more size to sell for the next rally.
I am right there with you on that clean up print, the rubber band effect is beautiful when the conditions are right. I like to play this trade as the underlining is just breaking support and actually takes out the support. Short seller step in, but bigger buyers are present. This "spring" (Similar to Whykoff's springs) can inflict pain on the shorts and take out some great stops, and if no offers are above, a free trade for the specialist to SQUEEZE some balls. If the trade does not work out very quickly, hit eject because the seller still has stock to go and lower prices are highly possible, get flat, bang the bid and go with the supply hitting the market.
jeffgus. I agree with everything you have posted. Looks like we trade the same way. Thanks for responding to Pound...I love it when traders have no idea what you are talking about..... Pound just to clarify what jeffgus was talking about. Look at IBM daily from Wed or Thurs....you will see he opened unchanged had a market short seller that was recognized on the second print, get in after that print, took .45 then buy the squezze with the cleanup print and take it for .25. If for some reason you are too slow and miss the clean up, you still took the trade for .20. Tickerwatcher, my SSLMT always show up on the book.
nitro..... can you elaborate on this point? Over the last 5 weeks, Ive seen the the real volatility of many issues decreasing. Do you think this has somthing to do with the "futures fading" thats goin down lately?????? why do you think the spreads against the "mo" have been reacting the way they have?
Over, Since I wrote this, I have reinvented myself as a trader and no longer trade thick NYSE issues. Today, I am trading very thin issues in between my ES trading. I, like you, noticed that the traders on the other side of my trades on these NYSE stocks were/are good traders, and I found myself sloshing aroung my P/L with no where to go. I suffered this way for two months, thinking things would change, but it only seemed to get worse. I have been watching (and listening) to spoo for so long now (in fact, I was working at the MERC when the SP500 pit opened, and went into the pit during my "bathroom" break from the TB pit,) that I felt that I had gotten a knack for the way they move. Even this summer, when I was doing REALLY well on NYSE stocks, I had been preparing myself to trade spoo. So these days I have been doing 98% spoo trades, and 2% very thin stock issues in between the spoos during the day. So far so good... Over, I really don't know that I feel qualified to answer this question anymore. I have not been following 99% of the stocks that I used to. Today, _ALL_ of the stocks that I watch are MONSTER cap stocks (aside from the very thin ones,) and I only look at them for a clue as to what the spoo is/will be doing. I may return to NYSE trading (one never can tell what the future holds - only prepare for it) and in preparation, I have been doing other research into news plays on the old stocks I used to play (I was taught this more or less from a Worldco trader in the chatroom.) In preparation for that, I recently opened an account with a broker that has given me very good bullet rates. As you may recall, I was 85% a pair trader. When I got into a pair, I always got in to the short side first, as I did not have access to bullets. Today, with access to bullets, I may be able to revive my pair play again. But it left a little bit of a bad taste in my mouth, so I will let that part heal before I go back in to those waters. Also, in preparation, I have been learning swing trading (again mostly from some guys in the chatroom,) and I have thought about combining that with some "sophisticated" ways of using options to strategize around the (multi-day to multi-week) trade. Finally, I have learned of other interesting ways to trade that I cannot go into here... nitro
SD, I am with you brother, let the nimble, skillful traders take their 25 cents down, 20 cents up and let the others (Pound) battle the headfakes, gaps, and chop that these markets have turned into. I know my odds, my edge and will execute this strategy until it stops working. Nitro, NYSE has become cut thoat and the specialist more and more criminal, I have evolved to the thinner issues and if entry is skillful can make a nice profit quick as I take those small offers. I have added the mini to the tool bad and love the action of this market. When the mo mo gets going, my buy stops are hit and am an instant winner on the next tick. That confirmation is nice, and slippage is nil. This market will be the product/tool going forward. Bonds futures are quite interesting and a nice combo to the minis.
I commend you on your change and evolution. That seems to be the hardest things for traders to do once they figure out how to make money. Once their trading style stops working they still insist on doing the same thing because it used to work and they are unwilling to adapt and change. I had to switch around early this year and it looks like it is time to make some more changes again.