Replies to post #26882 on Capstone Energy Inc (CGEH)

[WaveAction1]

Good Morning. I haven't traded for years. Life got busy, but now I am back part time to trading. I enjoy reading your report. I include it in my morning read. Thanks.

[Wild-bill]

Buy:sell, daily shorts & pps 02/25 2016 EOD

With extremely low volume any prognostication is very risky. That's never stopped me though. All things considered I believe the dead-cat bounce is confirmed and today or tomorrow should see the last of these "elevated" prices. The biggest risk, I think is that shorters might be doing covering buys and hold the price up. OTOH, tomorrow being Friday the volume tends to be low, which can lead to price weakness (see some of the comments below). If shorters are not covering strongly and there's no catalyst I would expect weakness to begin to appear.

There was an order PR: Capstone Secures Follow-On Order From Dutch Distributor for International Oil and Gas Producer.

Unusually, the PR sparked no pre-market trades.

The day opened with a sell of 805 shares for $1.19, b/a went 1:1 $1.20/$1.24 and no more trades were done until 9:35/:36 did 300 shares $1.23->$1.22 and b/a went 1:1.8 $1.20/23. The next trade was 600 shares $1.2299 and b/a went ODD. Two odd-lot bids, $1.18 x 50 and $1.17 x 36 and then a "normal" bid $1.15 x 200 vs. offers of $1.23 x ~5.8K. 9:45 did 1,010 shares at $1.23 and bids held steady while offers went $1.23 x 2.6K. 9:46 did 1K $1.1980, bids held and offers went $1.23 x 4.1K. At 9:51 bids held steady while offers went $1.22 x ~5.7K and at 9:54 we traded 200 $1.22. I'm considering this initial opening period ended at 9:54 with a 200-share $1.22 trade being the last in the day's initial range. Started getting some slightly more normal behavior then, such as bots moving b/a around and slightly more frequent trades, so I'll switch to the slightly less detailed normal mode, for me, now.

09:55-10:31, after a no-trades five minutes, began with 100 at $1.18, bids held steady and offers went $1.19 x 4.2K. $1.18/9 trades followed, on very low/no-volume interrupted by 10:17/:20's 2.7K, until 10:24 did $1.16 (touching our old support/resist $1.15/6), kicking off $1.16/$1.18 no/low-volume and ended at $1.18. 10:32-11:36, after a no-trades two minutes, did 1.4K $1.19->$1.21 and had b/a ~1:2.5 $1.18/$1.21 to begin a halting very low-volume step up to $1.22 at 10:52, quite similar to what happened after yesterday's big one-minute move. As then, it could not hold and today also dropped back slowly to hit $1.20 at 11:06, $1.19 11:10, and $1.18 11:15, after which it clawed back up to $1.21 with a couple minutes having low single-digit K volume. That produced a ~2.9K drop back to $1.18 to end the period. 11:37-15:50, after a no-trades seven minutes, did ~10.5K $1.18->$1.16 and began very low/no-volume (12 minutes later) $1.17/8 and at 12:22 started $1.16/8, 12:53 began $1.16/7, 14:12 began $1.17/8, $1.16/7 14:26 (and b/a went ~9:1 $1.16/7, just like so many times today and other days to push buyers' price up with almost no volume), $1.17/8 on ~9.1K at 15:05, started mostly medium-volume trading at 15:42 (early EOD volatility?), and ended the period at $1.18. 15:51-16:00 continued the EOD volume volatility and added wider price moves by doing 3.1K $1.18->$1.19 the first minute and then next minute 6.8K $1.18->$1.16 and then medium/higher-volume the rest of the period and day at $1.18/9 and closed with a 2.5K $1.18 sell.

At 11:06 I began to suspect we'd see a big flush sometime later as the folks sucked in yesterday realize what's happening and cut and run. Didn't happen!

There were no AH trades.

Excluding the opening and closing trades (didn't qualify), there was 1 larger trade (>= 5K) totaling 7,000, 4.88% of day's volume, with a $1.1800 VWAP.

 Ending  Period  Period  Period Per. Trade_ Period_ % Day_ Per. End 
 Period  Volume     Low    High Dollar Val. VWAP___ Volume Buy ~% 
  09:54    3905 $1.1900 $1.2300   $4,735.89 $1.2128  2.72% 59.80% 
  10:31    3404 $1.1604 $1.1900   $4,027.36 $1.1831  2.38% 68.79% 
  11:36   14009 $1.1800 $1.2200  $16,790.86 $1.1986  9.77% 62.52% 
  15:50   94791 $1.1600 $1.1800 $111,127.87 $1.1723 66.14% 67.42% Incl 11:44 $1.1800 7,000 
  16:00   25309 $1.1600 $1.1900  $29,852.55 $1.1795 17.66% 60.66%

The very low number of larger trades is bad sign. Note there were only 670 trades and the average trade size was 214 shares. This is a very small number of trades and average trade size compared to "normal" days. This is partly an effect of the MMs' bots being the majority of trades I think.

Don't be fooled by those buy percentages - they are not an indication of strength when there's little volume, the bots manipulate the spreads, their range and the b:a quantities in the absence of strong (retail?) trading in activity. They are an indication, IMO, of either careful short covering or hapless retailers being sucked in or nothing more than MM churn as the bots battle each other for fractions of a penny.

On the traditional TA front, movements were:

         __Open_ ___Low_ __High_ _Close_ Volume_ 
 Today      6.25%   9.43%   0.00%  -1.67% -64.85% 
 Prior     -8.94%  -5.36%  -5.38%   5.26%  -0.15%

Be aware that MMs make money on volume and the easiest path to that is to lower prices via the "sell high and then buy low" strategy. Since shorting into a market, as would be the normal MM behavior, tends to drive prices lower it's also the most reliable and a less risky strategy for them to make money. Given this I wouldn't be surprised to see a lower range, near-term, accompanied by rising volume. This latter effect is, however, dependent on the price movement being able to draw in participants other than MMs.

On my minimal chart the most notable thing is the volume being down ~65%, but that's because I believe that it confirms my thought yesterday we had a dead-cat bounce - ego must be served occasionally, after all. :-) Other notable things include we bottomed right on that pesky $1.15/6 support line, had a high that matched yesterday's, and again are "pushing" that lower Bollinger limit.

This all seems to me a clear indication of uncertainty (folks wondering "What next?") and/or we had a very small pool of buyers pulled in and exhausted yesterday. Additionally considering that an order PR couldn't generate even one pre-market trade leads me to feel fairly certain yesterday's move was even worse than the proverbial dead-cat bounce (if you don't get the joke, just ask) and the buyers at these levels, other than shorters doing covering buys maybe, were (near?) exhausted.

On my one-year chart chart the 10 and 20-day SMAs, $1.3165 and $1.3477 ($1.3365 and $1.3528 yesterday), continued the fall began three days past. The 50-day SMA is still falling, at $1.3093 ($1.3113 yesterday). Unless price moves up in the next couple days the 50-day will not be curling up. With the 10 and 20-day SMAs tail dropping higher prices, if we don't get a range rise we'll see the 10 and 20-day SMAs rate of fall increase and likely cross below the 50-day too.

The oscillators I watch, which had all improved yesterday and left only full stochastic still oversold, had very small improvements in RSI and full stochastic (exited oversold), and deterioration in MFI (untrusted by me), momentum, Williams %R, accumulation/distribution, and ADX-related. Everything is well below neutral.

Thinking of those oscillators, keep in mind that many operate on the close and several consider volume. So the changes they show have to be discounted somewhat.

The 13-period Bollinger limits, $1.1281 and $1.5219 ($1.1567 and $1.5364 yesterday) stopped converging and are diverging and moving the mid-point down faster as the lower limit weakens more quickly.

All in, nothing positive here, mostly because of the lack of volume. If there was any volume some of the stuff could be seen as positives, e.g. staying at/above $1.15/6 support, opening higher, etc.



Percentages for daily short sales and buys moved in the same direction, a "normal" indication, but both were excessive and way too high to suggest anything good is near. The short percentage is likely an effect of very few inter/intra-broker trades and the MMs being not short-term long (rational since yesterday offered few "attractive" covering buy opportunities) and an excessively high buy percentage, cause unknown. The cause of the buy percentage could be hapless traders being sucked in by yesterday's abnormal behavior, and today's continuation of it, or shorters doing covering buys. The abnormal behavior was the "dead-cat bounce".

As mentioned above, I suspected a "flush" might appear but it did not. I do believe it will appear when the price weakness following a typical dead-cat bounce begins to appear. Shouldn't take long sans a catalyst ... It would have to be more substantive than today's PR.

The spread narrowed but is still too wide, especially with the kind intra-day action (less volatility) and volume we had today. I won't say this suggests lower, but it doesn't seem to me to offer the chance of upside appearing quickly either. However when volume is this low everything tends to get volatile and this could easily make me look (more!) foolish.

VWAP movement would be a big positive, breaking a string of six consecutive drops, if there had been some volume and normal (as in stocks generally, specifically not $CPST) intra-day behavior. As it is I have to consider this nothing more than an artifact of a dead-cat bounce.

All in, I dast not call anything positive from this due to the volume if nothing else.

As always, much is experimental and should be treated as such.

Bill