- Taylor Collison have issued a research report on AtCor Medical Holdings (ACG) rating it as a speculative buy.
- Report dated 19/02/2010
- 12 month price target: $0.43
- ACG last trade: $0.155 (26/02/2010)
- Research report link
Sunday, February 28, 2010
AtCor Medical Holdings Research Report
Tuesday, February 23, 2010
Industrea Limited Research Report
- MadisonWilliams and Company have issued a research report on Industrea Limited (IDL) with a buy recommendation
- Report dated 19/02/2010
- 12 month price target: $0.54
- IDL last trade: $0.375 (23/02/2010)
- Research report link
Sunday, February 21, 2010
Liquefied Natural Gas Limited Broker Report
- Southern Cross Equities has recommended Liquefied Natural Gas Limited (LNG) as a speculative buy
- Report dated 18/02/2010
- 12 month price target: $1.58
- LNG last trade: $0.69 (19/02/2010)
- Research reports link
Wednesday, February 17, 2010
Focus Minerals Buy Recommendation
- Hartleys has issued a buy recommendation on Focus Minerals (FML)
- Report dated 17/02/2010
- 12 month price target: $0.086
- FML last trade: $0.063 (17/02/2010)
- Research reports link
Monday, February 15, 2010
Brockman Resources Valuation Report
- Arrowhead Business and Investment Decisions have released a Due Diligence and Valuation Report on Brockman Resources
- Report dated 11/02/2010
- Fair share valuation bracket: $5.04 - $25.21
- BRM last traded $2.98 (15/02/2010)
- Research report link
ASX 200 down slightly
The ASX 200 closed down 16 points today in what was light volumes and rather boring trade. The US market on Friday night didn't provide much of a lead and the considering that Asian markets and the US market are closed tonight I don't expect much better trading conditions tomorrow. Results season is in full swing with Bluescope Steel (BSL), West Australian News (WAN) and Crane Group (CRG) all disappointing today.
Sunday, February 14, 2010
Algorithmic Trading on the ASX
I often read on stock forums traders and investors complaining about automated trading, trading robots or 'bots' manipulating the share price of a company that they are following. I also see questions such as "Why would someone buy only 10 shares? It hardly seems worthwhile" raised.
The technical term for the practice of computers trading shares automatically is ‘Algorithmic Trading’. It involves a set criteria being established and then deploying a computer to carry out trading abiding by the criteria to meet a goal such as buying or selling a certain amount of shares within a price range. One of the key advantages of algorithmic trading is it allows a party wishing to buy or sell a large volume of shares to slowly trade small parcels of shares every few minutes (or seconds) without significantly affecting the share price.
Last July the ASX undertook a review of this type of trading and has released the findings on 08/02/2010 in the report ‘Algorithmic Trading and Market Access Arrangements’. The report can be heavy going at times and full of jargon but does make interesting reading.
If I observe algorithmic trading there are some aspects that I like to take a close look at. Is the trading robot a net buyer or seller? If it is a buyer than there could be a new investor coming on to the share registry which is positive. I would keep an eye out for any new substantial shareholder notices or changes in substantial holders to identify who the party is (such as a competitor that may launch a takeover etc.). I would also monitor for how long the trading lasts.
Finally, one other thing that I use to assess trading opportunities is the ‘number of trades’ (not volume) executed on a stock. If the number of trades is increasing each day I can see that interest in that particular stock is increasing and an opportunity may be presenting itself. Should there be algorithmic trading on a stock than the number of trades is amplified substantially. I.e. there are a lot of trades but they are all tiny, the dollar value small and thus the ‘number of trades’ value is not meaningful. In this case I would progress with tracking the overall volume traded per day on the stock that I am following.
The technical term for the practice of computers trading shares automatically is ‘Algorithmic Trading’. It involves a set criteria being established and then deploying a computer to carry out trading abiding by the criteria to meet a goal such as buying or selling a certain amount of shares within a price range. One of the key advantages of algorithmic trading is it allows a party wishing to buy or sell a large volume of shares to slowly trade small parcels of shares every few minutes (or seconds) without significantly affecting the share price.
Last July the ASX undertook a review of this type of trading and has released the findings on 08/02/2010 in the report ‘Algorithmic Trading and Market Access Arrangements’. The report can be heavy going at times and full of jargon but does make interesting reading.
If I observe algorithmic trading there are some aspects that I like to take a close look at. Is the trading robot a net buyer or seller? If it is a buyer than there could be a new investor coming on to the share registry which is positive. I would keep an eye out for any new substantial shareholder notices or changes in substantial holders to identify who the party is (such as a competitor that may launch a takeover etc.). I would also monitor for how long the trading lasts.
Finally, one other thing that I use to assess trading opportunities is the ‘number of trades’ (not volume) executed on a stock. If the number of trades is increasing each day I can see that interest in that particular stock is increasing and an opportunity may be presenting itself. Should there be algorithmic trading on a stock than the number of trades is amplified substantially. I.e. there are a lot of trades but they are all tiny, the dollar value small and thus the ‘number of trades’ value is not meaningful. In this case I would progress with tracking the overall volume traded per day on the stock that I am following.
Saturday, February 13, 2010
Metals X takes stake in Jabiru Metals
Time Price Volume Value Condition
02:46:46 PM 0.340 136,738,240 46,491,001.60 XTOS
The above reported trade started tongues wagging yesterday and pushed Jabiru Metals (JML) to a high of $0.425 before it closed at $0.40 for the day. At 3:50pm it was announced that Metals X (MLX) had taken a 19.99% stake in the company. In the announcement it was quoted that "Metals X believes JML is a quality emerging base metal miner with excellent longer term growth prospects. The JML assets fit well with the diversified portfolio of assets and investments already held by Metals X."
It is rumoured that the other 26 million shares of the 136 million were picked up by a Hong Kong investor. JML is at least one to put on the watchlist - for now. Anybody that takes a 19.99% position in a company is either attempting to take a blocking stake should a takeover eventuate or setting up for launching one themselves (a company cannot have a stake greater than 20% without lauching a full takeover). It's probably just what JML needed - it will at least put a bit of a floor in the share price and arrest the share price slide recently considering commodity prices have been weak this month.
02:46:46 PM 0.340 136,738,240 46,491,001.60 XTOS
The above reported trade started tongues wagging yesterday and pushed Jabiru Metals (JML) to a high of $0.425 before it closed at $0.40 for the day. At 3:50pm it was announced that Metals X (MLX) had taken a 19.99% stake in the company. In the announcement it was quoted that "Metals X believes JML is a quality emerging base metal miner with excellent longer term growth prospects. The JML assets fit well with the diversified portfolio of assets and investments already held by Metals X."
It is rumoured that the other 26 million shares of the 136 million were picked up by a Hong Kong investor. JML is at least one to put on the watchlist - for now. Anybody that takes a 19.99% position in a company is either attempting to take a blocking stake should a takeover eventuate or setting up for launching one themselves (a company cannot have a stake greater than 20% without lauching a full takeover). It's probably just what JML needed - it will at least put a bit of a floor in the share price and arrest the share price slide recently considering commodity prices have been weak this month.
Placing Orders and Market Integrity
Have you ever placed an order and wondered why it was mysteriously cancelled or rejected by your broker? It can be a source of frustration for traders especially when they plan to buy a stock, the order does not execute and then the stock price takes off with the trader scratching his head at the lost opportunity. This article hopes to clarify the valid reasons for these rejected orders and also to suggest ways that traders can possibly avoid the scenarios explained.
Each market participant (or broker) has a responsibility to the ASX to ensure they assist in maintaining fair and orderly markets. In doing so, online brokers will have a system of filters or vetting rules that will refer orders to a Designated Trading Representative (DTR) should an order fail a filter. A DTR that is trained in this area will have the order show up on their screen and ultimately decide if the order is acceptable and sent it to market or reject if it is unacceptable. Traders may have noticed that sometimes their order may not hit the market depth right away or that it is showing up as a ‘referred order’ online – this delay is probably the case of the order failing a filter and it being forwarded to the DTR who is in the process of reviewing it. Traders may find this irritating if they wish for their order to be executed immediately on a quick moving stock.
So what are some of the filters and what are they designed to do? Online brokers can have up to hundreds, most of which are setup to maintain a fair market but some also to protect their clients. I will now proceed to list some of the reasons filters are established:
*Unmarketable parcel – The ASX specifies that an investor must buy at least a $500 minimum parcel of shares should he/she not already hold shares in that company. This filter is setup to ensure that buy trades with a consideration of less than $500 are not executed. It must also be noted that brokers must not allow a client to enter a trade knowing that it could possibly result in the client having a holding of less than $500 worth of shares. For example, if the client has a $1000 holding and wishes to sell $700 worth of shares.
*Traded too much of a particular company on that day – I’m unsure if there are filters to prevent this from occurring however there are situations when a DTR must monitor this type of situation. It obviously does not affect companies that are highly illiquid and may have a few small trades a day, however, if a company trades for example $200,000 worth of shares and of that one trader trades $100,000 worth and over numerous trades than it is something that the DTR and compliance department may have to discuss and monitor.
*Data entry error – There are occasions where we all make a ‘typo’, suffer from ‘fat fingers’ or simply put the decimal point in the wrong place. For example, a trader may wish to place an order to buy stock XYZ at $0.30 but instead enters $3.00 which is clearly an error. These orders are easily picked up by the filters and rejected by the DTR.
*Padding/Stacking the market – This occurs when a client enters numerous orders on the same stock on the same side (either buy or sell side) of the market. For example a client may place orders to buy stock XYZ at $0.40, $0.41, $0.42 and $0.43. All of these show as separate orders in the market depth and give a false sense of there being numerous different buyers for that particular stock. It is for this reason that many brokers will have a limit of 3 orders per client per stock on the same side of the market.
*Trading with yourself (user crossing) – This one seems a bit unusual but the filters do sometimes prevent this from happening. An example of when it may occur is when a trader has an existing order in the market to buy or sell shares which they may have forgotten about and then enter an order on the opposite side that would match their existing order (thus resulting in the trader trading with themself). Also, at the end of the financial year traders may attempt to trade with themselves to crystallise a tax loss especially if the market for that stock is illiquid and they cannot trade with another trader in that stock. At the end of the day, a trade cannot be executed if there is no change in beneficial ownership of the shares.
*Overlapping by too much – Your order may be rejected if it is overlapping the opposite bid/ask by too greater margin. For example, if the bid of a stock is at $0.40 and you place an order to sell your stock at $0.30. Overlapping the market can be a tricky game and a useful tactic when a trader is attempting to get price priority during a pre-open period (whether this be before the market has opened or whilst an announcement is about to be released). Rather than attempting to get at the very top of the queue with your bid/ask during the pre-open phase it is probably more wise to place your order at the same price as that of somebody already at the top of the queue. The reason for this is because your broker will be happy to place the order for you if another broker has already set a precedent rather than take on the risk of being the first broker to approve such an order.
*Too far from market – Orders which have no chance of trading as their bid or ask is too far from the last traded price can be rejected. Those orders which the DTR deem as okay and places may still be purged from the market by the ASX overnight. An example includes submitting a bid at $0.03 when the stock is trading at $0.20.
*Moving stock too much – One trade cannot move a stock price by a too greater margin. Brokers will usually have filters that refer any order that will move the stock price by over 10%. An example may be if a stock last traded at $0.60 and you place an ‘at market’ buy order which will execute at $0.73. There is a legitimate way to get around this and that is to place a ‘limit order’ at say $0.64 and slowly increase your bid every so often until you meet the seller at $0.73. Brokers will look more favourably upon this as it is giving the market time to respond to the change in conditions.
*Artificial closing price/Marking close – The last traded price at the end of the day is the price that is quoted in the newspapers or will be the price that the change will be calculated on the next day. For this reason sometimes traders (holding the stock) will try and make the close quite a bit higher then what the stock really has been trading at on average on that day. Marking the close is more critical at the end of the month or quarter as it will be when fund managers, company directors or top shareholders are reporting share prices for those stocks they are holding. The higher the stock price than the better the performance of their investments they can report.
*Wiping out the market – On a stock that has a thin market depth one order cannot wipe out many price steps in one hit. For example, if a stock last traded at $0.42 and a trader wishes to execute an order to buy 50,000 shares at $0.50 with the following market depth:
ASK
5,000 @ $0.43
17,000 @ $0.445
20,000 @ $0.45
3,000 @ $0.48
40,000 @ $0.50
This is a type of order that would be cancelled as the trader would be wiping out numerous price steps at $0.43, $0.445, $0.45, $0.48 and pushing the price up to $0.50 (the final 5,000 units of the order would trade at $0.50)
*Duplicate order – Sometimes a trader will receive a message that states ‘You have placed a similar order within the last few minutes, do you still wish to place this order?’ This message is attempting to ensure that an order isn’t duplicated by a trader in error. It is useful if the trader’s internet connection is failing during placing the order and he/she thinks the order did not go to market (when in fact it did) and thus attempts to place another one.
Each market participant (or broker) has a responsibility to the ASX to ensure they assist in maintaining fair and orderly markets. In doing so, online brokers will have a system of filters or vetting rules that will refer orders to a Designated Trading Representative (DTR) should an order fail a filter. A DTR that is trained in this area will have the order show up on their screen and ultimately decide if the order is acceptable and sent it to market or reject if it is unacceptable. Traders may have noticed that sometimes their order may not hit the market depth right away or that it is showing up as a ‘referred order’ online – this delay is probably the case of the order failing a filter and it being forwarded to the DTR who is in the process of reviewing it. Traders may find this irritating if they wish for their order to be executed immediately on a quick moving stock.
So what are some of the filters and what are they designed to do? Online brokers can have up to hundreds, most of which are setup to maintain a fair market but some also to protect their clients. I will now proceed to list some of the reasons filters are established:
*Unmarketable parcel – The ASX specifies that an investor must buy at least a $500 minimum parcel of shares should he/she not already hold shares in that company. This filter is setup to ensure that buy trades with a consideration of less than $500 are not executed. It must also be noted that brokers must not allow a client to enter a trade knowing that it could possibly result in the client having a holding of less than $500 worth of shares. For example, if the client has a $1000 holding and wishes to sell $700 worth of shares.
*Traded too much of a particular company on that day – I’m unsure if there are filters to prevent this from occurring however there are situations when a DTR must monitor this type of situation. It obviously does not affect companies that are highly illiquid and may have a few small trades a day, however, if a company trades for example $200,000 worth of shares and of that one trader trades $100,000 worth and over numerous trades than it is something that the DTR and compliance department may have to discuss and monitor.
*Data entry error – There are occasions where we all make a ‘typo’, suffer from ‘fat fingers’ or simply put the decimal point in the wrong place. For example, a trader may wish to place an order to buy stock XYZ at $0.30 but instead enters $3.00 which is clearly an error. These orders are easily picked up by the filters and rejected by the DTR.
*Padding/Stacking the market – This occurs when a client enters numerous orders on the same stock on the same side (either buy or sell side) of the market. For example a client may place orders to buy stock XYZ at $0.40, $0.41, $0.42 and $0.43. All of these show as separate orders in the market depth and give a false sense of there being numerous different buyers for that particular stock. It is for this reason that many brokers will have a limit of 3 orders per client per stock on the same side of the market.
*Trading with yourself (user crossing) – This one seems a bit unusual but the filters do sometimes prevent this from happening. An example of when it may occur is when a trader has an existing order in the market to buy or sell shares which they may have forgotten about and then enter an order on the opposite side that would match their existing order (thus resulting in the trader trading with themself). Also, at the end of the financial year traders may attempt to trade with themselves to crystallise a tax loss especially if the market for that stock is illiquid and they cannot trade with another trader in that stock. At the end of the day, a trade cannot be executed if there is no change in beneficial ownership of the shares.
*Overlapping by too much – Your order may be rejected if it is overlapping the opposite bid/ask by too greater margin. For example, if the bid of a stock is at $0.40 and you place an order to sell your stock at $0.30. Overlapping the market can be a tricky game and a useful tactic when a trader is attempting to get price priority during a pre-open period (whether this be before the market has opened or whilst an announcement is about to be released). Rather than attempting to get at the very top of the queue with your bid/ask during the pre-open phase it is probably more wise to place your order at the same price as that of somebody already at the top of the queue. The reason for this is because your broker will be happy to place the order for you if another broker has already set a precedent rather than take on the risk of being the first broker to approve such an order.
*Too far from market – Orders which have no chance of trading as their bid or ask is too far from the last traded price can be rejected. Those orders which the DTR deem as okay and places may still be purged from the market by the ASX overnight. An example includes submitting a bid at $0.03 when the stock is trading at $0.20.
*Moving stock too much – One trade cannot move a stock price by a too greater margin. Brokers will usually have filters that refer any order that will move the stock price by over 10%. An example may be if a stock last traded at $0.60 and you place an ‘at market’ buy order which will execute at $0.73. There is a legitimate way to get around this and that is to place a ‘limit order’ at say $0.64 and slowly increase your bid every so often until you meet the seller at $0.73. Brokers will look more favourably upon this as it is giving the market time to respond to the change in conditions.
*Artificial closing price/Marking close – The last traded price at the end of the day is the price that is quoted in the newspapers or will be the price that the change will be calculated on the next day. For this reason sometimes traders (holding the stock) will try and make the close quite a bit higher then what the stock really has been trading at on average on that day. Marking the close is more critical at the end of the month or quarter as it will be when fund managers, company directors or top shareholders are reporting share prices for those stocks they are holding. The higher the stock price than the better the performance of their investments they can report.
*Wiping out the market – On a stock that has a thin market depth one order cannot wipe out many price steps in one hit. For example, if a stock last traded at $0.42 and a trader wishes to execute an order to buy 50,000 shares at $0.50 with the following market depth:
ASK
5,000 @ $0.43
17,000 @ $0.445
20,000 @ $0.45
3,000 @ $0.48
40,000 @ $0.50
This is a type of order that would be cancelled as the trader would be wiping out numerous price steps at $0.43, $0.445, $0.45, $0.48 and pushing the price up to $0.50 (the final 5,000 units of the order would trade at $0.50)
*Duplicate order – Sometimes a trader will receive a message that states ‘You have placed a similar order within the last few minutes, do you still wish to place this order?’ This message is attempting to ensure that an order isn’t duplicated by a trader in error. It is useful if the trader’s internet connection is failing during placing the order and he/she thinks the order did not go to market (when in fact it did) and thus attempts to place another one.
Wednesday, February 10, 2010
Samson Oil & Gas Surges
The market opened reasonably strong this morning on the back of reports overnight that the Euro countries were considering bailing out Greece from its sovereign debt problems. Despite this and better than expected profit results by Commonwealth Bank (CBA) and BHP Billiton (BHP) the market closed only 0.2% higher losing most of it's early gains and showing that market sentiment is still poor.
Samson Oil & Gas (SSN) proved to be the star performer today with the shares closing up 87.5% or 0.014c higher to 0.03 on massive volume of 509 million shares. The company announced "Oil and gas shows are also being recorded as expected, with gas shows typically 1,400 units over a background of 450 units. Oil shows are continuous with a typical description being “abundant brown spotty to even oil stain with a fast, strong milky white cut”. Not unusually oil has been noted from time to time on the shale shakers." in relation to it's drilling on Gene #1-22H well.
Samson Oil & Gas (SSN) proved to be the star performer today with the shares closing up 87.5% or 0.014c higher to 0.03 on massive volume of 509 million shares. The company announced "Oil and gas shows are also being recorded as expected, with gas shows typically 1,400 units over a background of 450 units. Oil shows are continuous with a typical description being “abundant brown spotty to even oil stain with a fast, strong milky white cut”. Not unusually oil has been noted from time to time on the shale shakers." in relation to it's drilling on Gene #1-22H well.
Sunday, February 7, 2010
Iron Ore Holdings Research Note
- Foster Stockbroking have released a research note on Iron Ore Holdings discussing the maiden resource announcement made to the ASX on 02/02/2010.
- Research note dated 02/02/2010.
- Rating: Buy
- Price target: $3.50
- IOH last trade: $2.13
- Research report link
Royal Resources Research Note
- Patersons have issued a research note on Royal Resources (ROY) rating it as a speculative buy.
- Report dated 29/01/2010
- No target price given
- ROY last traded 0.175 (05/02/2010)
- Research report link
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