SNSN schreef op 13 december 2013 12:44:
The nature and timing of our “mid-term” trading pattern is based on risk-return optimization at given price/volume distributions. A very schematic picture looks like following (actual evaluation accounting for the probs is much more complex):
Take a look at 2 month daily graph. You’ll see that:
- within 4 trading days (Oct. 17-22) the volume ~180 M was traded, and one could buy ~90 M within the range: ~2.18-2.25
- within 7 trading days (Oct. 23-31) the volume ~120 M was traded, and one could buy ~60 M within the range: ~2.25-2.35
So, the max cumulative volume that could be bought in the range ~2.18-2.25-2.35 was ~150 M
Given that the price range ~2.44-2.50 was the “long-term” (strategic) technical resistance zone, the prob to rise further (after a hard rising from Oct. 17) was low, while the profit for those who bought around/under ~2.25 would be ~10% (within ~3 weeks) if selling within the “resistance zone”. Exactly at that time the market was pumped up by speculations: i) on Nov. 14 - ING gave all of a sudden “buy advice” (at the top of resistance zone!), ii) on Nov. 19 - Credit Suisse gave an “outperform” advice (at the top of resistance zone!), iii) about KPNQwest bankruptcy settlement (Nov. 18), iv) German regulators (all of a sudden) were going to test e-plus deal (Nov. 19), etc., etc.
Following the price/volume distribution:
- within 8 trading days (Nov. 10-19) the volume ~100 M was traded, so that one could sell ~50 M within the range: ~2.44-2.50 (with the top return ~14% within ~3 weeks)
Thus, given that the average traded volume on the way down was ~10-12 M/day, the rest of 100 M (150M-50M) could be sold with some (still reasonable) profit within the ~17-20 days, but not lower than ~2.25....
So, one can easy find that today is 18th day after Nov. 19, and so far not too much space left to go..... Of course, this is a very rough picture/estimation - one should not forget shorters' impact, and many other “trading effects” (like selling and buying by the same parties, etc.) Actual trading strategy by small/mid-size prof parties was a trivial technical risk-reward optimization, that was only partially (!) triggered by speculations around e-plus deal approval (see old writings for details).