![\"jll-06-11-09-35-level\"](\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/06\/jll-06-11-09-35-level.bmp\" "\\"jll-06-11-09-35-level\\"")
<\/p>\nWe spotted a trading pattern in AMP and JLL this week.\u00a0 Both traded below important support, their secondary price offering, and had a decent downmove below.\u00a0 Let’s discuss how to trade a Secondary Price, and the pattern we discovered.<\/p>\n
Trading a secondary is a simple trade.\u00a0 Above the secondary price we are long.\u00a0 Below the secondary price we flip our position and get short.\u00a0 For new traders a secondary price should be support for a stock since so many are invested in the stock trading above this secondary price.\u00a0 If the stock trades below the secondary then all those who just invested are under water with their new shares.\u00a0 And these investors will usually defend this price.\u00a0 We expect a nice move off of this price.<\/p>\n
On Thursday we noticed that JLL traded below its secondary price, 35, and never traded above.\u00a0 There was substantial volume done at 35.\u00a0 We were long in front of the large bid at 35.\u00a0 When it was eliminated, then we got short.\u00a0 The stock trended down all day.\u00a0 It was just a intraday longer term Trade to Hold Short.<\/p>\n
During this downmove, large bids got whacked in JLL.\u00a0 There was a dopey program playing with the weaker short term traders on the way down.\u00a0 Short term traders like to hit new lows in a stock that is in a downtrend.\u00a0 So after 35 was eliminated, then there was a huge bid at 34.85.\u00a0 Some dopey algorithmic trader thought it would be cute to place a huge bid there, have the weaker short term traders hit this bid, and then try and make a few pennies on these traders.\u00a0 After the bid was whacked at 85c, the program quickly ticked higher.\u00a0 The weaker hand short term traders covered.\u00a0 The dopey algorithmic program won.<\/p>\n
It did not take much thought to see what the program was doing.\u00a0 So when JLL neared 75c there again was a huge bid.\u00a0 Again the weaker short term traders whacked the bid.\u00a0 Again the first ticks were higher.\u00a0 Again the weaker day traders covered.\u00a0 Again the program won.\u00a0\u00a0 Just for the record I covered the first time and took a small loss.\u00a0 The second time I was already short and not covering when the dopey program ticked higher after the bid hit.\u00a0 Like my partner Steve likes to kid, “You can fool Bella most of the times in almost all of the stocks, but you cannot fool Bella every time in every stock.”<\/p>\n
Fast forward to Friday and AMP.\u00a0 I shorted below the secondary price.\u00a0 There were again large bids just below the secondary price.\u00a0 These large bids got whacked by the short term day traders.\u00a0 The stock ticked up, the weaker short term traders covered.\u00a0 To my fellow short terms traders: Seriously?\u00a0 Come on you are better than that.\u00a0 You failed to decode a very simple trading pattern in the market. \u00a0 I processed the program from yesterday and remained short, as did our desk.\u00a0 We caught a substantial downmove.\u00a0\u00a0 I shared that the huge bid buying program in AMP was exactly the same from Thursday in JLL and that I was staying short.<\/p>\n
Was thinking of heading to AC today with the young lady.\u00a0 Reminds me of the great line from the West Wing spoken to the over-worked Toby Ziegler preparing by himself for the President’s Second Inaugural, “I do not know of anyone in more need of a night in Atlantic City than you.”\u00a0 But for the I Don’t Know How Many Days In A Row it is probably going to rain.\u00a0\u00a0 So I might pass.<\/p>\n
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![\"amp_6_12_2009\"](\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/06\/amp_6_12_2009.bmp\" "\\"amp_6_12_2009\\"")
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