Trading Analysis - 6th Nov 2018


6 November 2018


Buying pressure at the opening was not as strong as in previous days. Perhaps the message is getting across now.

As a result the usual spike up and walk down turned into only a walk down. Something seemed to happen at around 8:50 - perhaps a largish buy behind the scenes - but from that point on the behaviour is strikingly similar to the afternoon behaviour seen in many previous days. 

The price of Sells moves steadily up, whilst the price for buys tends to move up in sharper jumps as the MMs try and sting the reflex buyers, those who buy just as soon as they see a tick up, for a higher price than they could get later if they exercised a degree of patience. All looking good for a finish up a couple of percent, as per yesterday.


Not a lot reported that changes the pre-10am report - there are so far no large Sells that have been reported that change the steady rise in excess Buys over this period.

This trend continued with the price paid for Sells increasing steadily up past 38.5p. A couple of step ups and the Ask is 40p for the first time ever recorded. There was a series of 3x 150K Sells (highlighted) just before this, which do not appear to be in a triplet pattern - thus are counted as the full 450K shares sold - this knocks the nett trading position back to c. +350K. Buying was spiked up to 39.8p and a little further selling was uncovered at 39.30p dropping the nett trading position back to close to zero.

A brief drop in the Bid, seemingly for not other reason to allow someone to conduct a Bed & ISA at 11:08 - the sudden drop in Ask feel straight into the hands of a buyer of 160K shares and the Ask again returned back to 40p. 

Circa 400K more Buys than Sells I fully expect the MMs to assume that people will be choosing 40p as a price to sell shares at, so may well employ a shake or two to try and release these into their hands at somewhat below 39p.

End of Day

The RNS detailing the exercising of all the remaining 6,257,309 Atlas warrants arrived at just before 2pm. The assumption on these occasions is that such warrant shares will have already been pre-sold into the market so it may not be any coincidence that most of the significant sells today arrived before that time.

The SP dynamics after the RNS announcement also seem rather different to that before - after 2.45pm, for example, the Ask was nailed to 39.50p - so much so that the price paid for Sells moves up and crashes into it at around 4pm - Investors are able to sell at 39.45p whilst also being able to Buy at the lower price of 39.44p.

At the end of the day the nett trading position of the MMs ends up being almost perfectly zero. This may be a remarkable coincidence, or it might be by design.

What also seems rather surprising is that at noon the nett trade position appears to drop to more than 1M more Sells than Buys, at which point the SP is up 2% or so.

Looking in more detail at how the SP trading levels respond as the significant Sells are dropped in reveals more conundrums - why when 500K is dropped in at 9:33am do the prices for both Buys and Sells continue to rise as if nothing had happened. The same again at 10:13am - another 500K arrives, taking the days nett trading position to -500K yet the Bid and Ask continue to go up - again completely illogical.

It is as if these trades have been sprinkled into the trading post-hoc, at the end of the day. Of course both of these trades were actually reported after the end of trading.

This begs the question of whether it would be a crime if these trades were simply chucked into the pot throughout the day after-the-fact to produce a nett zero end of day trading balance - this of course would give significantly lower price points for these sells that would have been obtained at the end of the day. I believe that ripping off your sellers like this is not just bad ethically it would also be illegal.

It would appear that the only situation in which such behaviour by the Market Maker might be considered acceptable to the Seller is if they are perhaps one and the same.

We must therefore consider the hypothetical possibility that one of the Market Makers had purchased the Atlas warrants and was using them to back a persistent shorting activity - when this failed they were forced to call upon the warrants, and were happy to chuck the warrants sales into the pot at pretty much any time or price  - they are selling them (as share-owner) to themselves (as Market Maker) so the precise transfer price is somewhat moot. 

We have for some time been monitoring Market Maker positions, and found some rather persistent shorting activity. If this now disappears then we might conclude that there is perhaps something in such a hypothesis.

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