>Yesterday the GTCB trading pattern was bizarre. Much of the time the spread between bid and ask was only .0001 cent. For a long while in the morning the bid was .6101 and the ask was .6102, with a trade of 100 shares at the bid about each minute. After several minutes there would be a trade or two at the ask (to reload maybe), and then the pattern would repeat. Discounting the final tape painting trade at .59, this went on almost all day.<
One explanation of this would be dynamic rebalancing by
index funds. Retail traders witness some friction but
the top down truth is that trading is essentially free--big
traders have to spend some money because they rely on
intermediaries to work their intent (I think I saw $70B
as estimated needless expense incurred by mutual funds
in service of hothanditis annually). But those little
trades likely involve only one or two cents per ticket.
Clearly you can't work both sides with single lots and
profit from infinitesimal spreads, so the conclusion is
the counterparties were distinct.
Our volatility has collapsed over the last few days but
I think what that means is that everybody who has
an opinion has already placed their opinion-driven bets
(looking forward to very near-term stuff like the earnings
release, so that the only players left are working small-
signal noise.)
My take on STG's rumor is that it's merely titillating and
so there is no point in weighing its credibility. Whether
he is right (by accident or otherwise) or wrong really makes
no difference at all--it's not tradable information.
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