McClatchy (MNI) shares were down 17 percent Monday, closing at $1.21 a share. MNI closed at $1.47 a share on Friday.
Some experienced traders who comment on this blog credit the recent increase in MNI to short sellers covering. If the short sellers have finished covering, does that mean MNI will start drifting back down again?
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6 comments:
Hope heading for under $1.00 and oblivion.
Yes, when the stock is driven up by covering and whatever size of lot is unloaded there is still the little matter of of sellers out numbering buyers over 2 to 1 to contend with. MNI having no floor (support level) has no hope of anyone even speculating that they can turn it around, so any rise in price that you see going forward will most certainly be short covering.
The next short interest release in a couple of days and the one following that in 2 weeks should be very telling.
I have been following the stock information here with interest, but I cannot make sense of yesterdays trading.
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Monday
MNI- Late in the day = $1.21
This morning, a note ‘After hours’ MNI = $1.46
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Tuesday
Prev. Close $1.47
Today’s Open $1.47
9:30 AM = $1.21
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If one of our experts has a moment, why was this price jump trade made in after-hours trading, any reason? Did anyone make a 'large' profit in yesterday’s after hours trading, as the price reverted back to $1.21 immediately today?
After hours trading can be a very misleading indicator of things to come. You have to remember that the price of your given stock at the bell is not the closing price for the day. That actually comes 8 minutes after the bell during the settlement period. Often institutional traders will send their orders out in the morning and the floor brokers will sit on them for the entire day looking for the best price. If they don't get it early on they will sell or buy on close, where a specialist will handle these orders after the bell at the end of the day. Often this procedure will work in their favor as the specialist is not looking to increase liquidity or flow, just settle out the outstanding trades. If there is a few cents difference, so be it.
A few minutes after this, the "after hours session" begins on Instinet where certain institutions and traders can enter bids and asks directly without any interference or assistance from the exchanges what so ever. This is true, direct from the seller to the buyer trading and the price spreads can be hugely different. I have actually been involved in trades that had as much as a seven dollar price difference from the close before a couple of major mergers.
While the after hours trading price can at times be an indicator of what the opening price may be, they are disassociated events. In the absence of news, it is usually a safe bet to ignore the after hours price as indicative of the following day. Even when there is news, expect rapid changes in the price once the day begins as large differences on open change the trade dynamics and drastically alter the buy to sell ratio.
Your after hours price is nothing more than if I enter a bid at say 25 cents over the closing price for as little as one hundred shares and someone sells it to me. The after hours price automatically becomes the price I paid.
After hours trading can easily be used to make a bad stock look good using this method, but it never holds water when the orders start to flow.
Anon. 9:02
Thank you, that was excellent information as usual. I do understand what happened yesterday. Someone like me without stocks, or a dime to buy them, is way behind the business curve. I appreciate your ability to take advanced investment knowledge and explain it to a novice like me.
Anon. 9:02,
Market Watch is now listing MNI as ‘Open $1.21’ instead of the $1.47 stated this morning. Good thing you ‘splained’ things, a person could just think their eyesight went bad.
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