This is my attempt to balance all this subjectivity with some objectivity, and what’s more objective than numbers?
Geez Louise, where do I begin?!
I suppose I should start by explaining what the point of all of this is. Basically, I’m trying to quantify the existence of God. Ok, maybe not God, but the concept of the unexplained and the idea that there is a bigger force controlling the things out of our control, which is just about everything. Wouldn’t life be easier if we could tell what God was up to and anticipate his plan? Well, if that’s what you’re looking for, you’re shit out of luck. However, I do believe we can hone in on what the stock gods are up to and can possibly anticipate their plan.
So, that’s the point of this. Not so much to commit stock god blasphemy, more like to expose the Wizard of Oz. These last couple of weeks have been stressful on ones patience. I get it, I’m human too. If nothing else, knowing what’s up will help alleviate that stress and give patience when patience is really hard to find. I have tried to figure out a time table of when to expect things to happen, but all I found was that’s an exercise in futility.
This may get a little hairy, so I decided to break it down into parts. Maybe then it will be easier to digest.
Part 1: Does god exist?
If you want to figure out god’s plan, it seems logical that the first step would be proving there is a god to begin withl. To do that, I went to the FINRA site where they post dark pool data. It took a bit, but I found where SGYP had been traded in the dark pools. Since dark pools are to manipulators what heaven is to God, this activity pretty much proved that manipulation does in fact exist. Everyone says it as if it’s fact, but have no proof of such things. That includes me, so I wanted the proof. I compiled all the available dark pool data and made the chart below:
First off, you should know, dark pool data is aggregated on a weekly basis and then reported to the FNRA. Unfortunately, the FNRA doesn’t post it to the public until about a month after that. So, there is a bit of lag time and the most current data is the week of 2/5/18 to 2/9/18.
This char shows 100% of volume at each reported interval. 100% means public volume and dark pool volume together. The blue bars in that chart show the percentage of public volume and the orange bars show the percentage of dark pool volume. On average, dark pool volume accounts for 33% of the total actual volume traded. This makes sense because if you read about dark pools, you will find that one of the most alarming things about them has been there growing popularity. When they were first started in the 80’s, they may average 7% or something insignificant to the public markets. The problem is, over the past 30+ years, the volume they trade is on average 33% which is now enough to effect public markets. So, our SGYP falls right in line with those scary statistics.
Before moving on, I want to make clear the relativity of dark pool volume. In other words, on future charts I will be showing you, dark pool activity is more than the 33% average, it doesn’t mean you will see a big jump in dark pool activity on another chart. It may mean there is above average dark pool activity, but if the total volume is low, that above average activity doesn’t really amount to much. Here is the same data as above shown in a different way.
Here are the volumes individually side-by-side. Before we said that dark pool activity averaged 33% of total volume. Looking at it this way, dark pool activity averages 49% of the public activity. My point about relativity is made around Christmas time. The dark pool volume in that week looks like about 50% of public volume. You may expect to see some spike in dark pool activity there, because 50% is a pretty significant number. However, the public volume is so low, that 50% doesn’t really amount to much. In fact looking 3 weeks prior to that, the dark pool volume looks like it’s only 33%, but because the public volume it is relative to is so much more, that 33% is bigger than the Christmas 50%.
That all seems plain and simple, but the reason I bring it up is for later. I’m looking for above average dark pool activity, places where manipulators are likely making some move. I may point out dates of above average activity and then show you those dates on another chart where, despite the above average activity, they look pretty inconspicuous. Now you will know, it’s not just because I’m an idiot, it’s because those were low volume days and the actual amount of activity is relative to that over all volume… and because I’m an idiot.
Part 2: What is he doing?
Again, there are lots of subjective statements made concerning “what’s up with that”. I’m going to try and objectify some of that subjectivity. However, unless you are god, you can never complete know what he’s thinking 100% assuredly. But, we can make a best guess based on more than just guessing.
I’ve made it pretty clear that the only numbers I’m concerned with is short interest. I believe the manipulators have large short position made over the past year to drive the price down to where it is today. Using my Wyckoff magic wand, I believe the manipulators are now in a trading range of accumulation. However, they’ll be damned to let this go up before they’ve covered those short positions. They are called smart money because, unlike me, they are in the business of making money, not losing it. With that in mind, it would be smart of smart money to accumulate at the lowest prices, then cover their short potions at still low prices and realize some significant gains.
I believe the irony here is that the biggest detriment to SGYP is also its path of bread crumbs, or actually loaves, to lead us out of the pit of misery. The thing that has brought us into the depths of hell will be the same thing that leads us to the heavenly fields of grandeur. That being the short interest.
Before I post the chart, I should clarify something. This is a relationship between dark pools and short interest. It is not a relationship between short interest and price. The thought is not that the price will go up as short interest goes down. In fact, if the manipulators are covering short positions in dark pools, then by the nature of dark pools, it will not effect the price. The idea is that if the manipulators are covering in dark pools, then in fact, they are gearing up for a mark up and its only a matter of time before their efforts do result in a price ascension. From the perspective of a manipulator, which is a perspective you should be trying to see this from, they would want the price to go down, or at least not up, as short interest goes down. That is why they use dark pools, then they can cover and accumulate while maintaining a low price.
So with that in mind, I came up with the chart below, and despite what I just said, I added the price. The point of adding the price is another way of telling what is an affect of public data and what is an affect of dark pool data. That may not make much sense right now, but I’ll show you what I mean in the next part.
The issue with this one is the time line. Short interest is aggregated from the first of the month to mid-month, then mid-month to the end of the month. The dates don’t necessarily fall on the beginning or end of a week, where as dark pool data is aggregated weekly, from a Monday to a Friday. So, the time frames don’t always line up exactly right. Also, I’ve put the most current data into the chart, but because things are reported after the fact, the charts don’t end at the same time.
I’m going to cover this chart in more detail in the next part where we put it all together. For now, look at the two spikes in dark pool activity. They are spikey because the public volume was high on those days, and as I stated earlier the dark pool activity is relative to the public activity. I’m going to cover those two spikes because they are important, but here you can see on the first one the short interest went up and the price went down. That’s because the shorting going on there was done in public, not so much dark pools. Again, I’ll show you why that’s important in just a few. Look at the end of the dark pool data where the activity is spiking again. This time the short interest is coming down, but the price is staying low. You would expect the price to go up as shorts are being covered, but it’s not. Why? Because the covering there is being done in dark pools, so it’s not effecting the price. That’s a good visual that the manipulators are indeed covering covertly to prepare for an eventual markup.
Part 3: Putting it all together
Now that we have some objective data, how do we apply it? Fortunately, I found a new friend whom I introduces in my last post. His name is Balance of Power, or BOP for short. I came across this really good article that describes how the Balance of Power can incorporate dark pool activity. It’s short and sweet and totally worth clicking that link to read it. It will also help you follow along with this next part. In short, the BOP isn’t like other indicators. It doesn’t show any price or volume driven end points, though it does use a moving average to smooth out the chart and help show trends. But. it’s not a price moving average, its the average of the BOP indicators over the amount of bars you tell it. In my case, I use the same value I use for may fast moving average for prices. I use the 50DMA and 200DMA on the daily and the 10WMA and 40WMA on the weekly. Therefore I set the BOP to 50 on the daily and 10 on the weekly. Whatever value you use is strictly personal preference. Whatever works best for you to understand it is the correct value to use.
Anyway, as I was saying, the BOP measures the pressure applied by the bears and bulls. When it is red its bearish, when it’s green it’s bullish. Adding that MA can help you find trends in the flow. So, as in this case, there is lots of bad red, but it is getting less and less red trending towards green. If you’ve read that article I linked to, you will see another use of the BOP that is very relevant to this discussion. Because of the way it works, it can incorporate dark pool data, which you can not see with other traditional indicators. However, it takes some doing to determine what part of the indicator is dark pool activity, so here is where we will be doing that doing. Here is our weekly with the BOP laid over it.
Time for the meat and potatoes where we put all this together. On this chart I highlighted 3 areas of interest. The first and last blue areas are those big spikes in dark pool activity due to unusually high public volume. The one in the middle is peculiar because I think something was up there, but nothing special happened during that week to justify it. I will go through each of those areas and describe what I’ve ascertained.
Here are the dark pool volumes for the first highlighted area. Each horizontal line is 10%, so count from the top of the first chart and you see the dark pool volume was about 40% of the total. We’ve already determined that dark pool activity was on average 33% of total volume. So, both these weeks were above average dark pool activity. You can see the higher dark pool activity again on the next chart. Use the horizontal lines again and you can see the dark pool activity is more that the average 49% of public activity. The higher than average activity is a clue that something was up in the dark pools.
Here is our dark pool/short interest relationship. You’ve probably noticed the dates are different. This is what I was talking about earlier. The dark pool data, used in the volume charts, is aggregated weekly and the short interest, used here, is aggregated twice a month. Anyway, 11/7/2017 to 11/21/2017 was a big spike in dark pool activity due to the big spike in public activity as shown on the fist 2 volume charts.
Guess what happened right in the middle of that time frame? Yep… secondary! That’s right, 11/13/2017 is when the shit officially hit the fan and produced the huge volume. Consequently, news events are good cover for manipulators to make moves. Big news causes all types of hysteria and volume in public markets. Manipulators can use public markets and dark pools on days like this.
After the most recent earnings, I remember reading comments that the restructuring of the loan would have meant that the secondary to get the loan wasn’t necessary. If I were a conspiracy theorist, I’d say the loan was suspect and that secondary was suspect. As if the whole thing was a set up and the company was in cahoots with manipulators to drive the price in their favor, all based on pretty significant events that were really unnecessary? Kind of like, the company was in some pretty serious desperation for cash and one, or some, of the manipulators told them, “Sure, we’ll give you the cash… if…” and the company was in no position to turn it down. Oops sorry I got on a little rant there. Moving along.
Also, on the second chart, you can see the relationship between the price and the short interest. The short interest is going up while the price is going down. That’s how we would expect the price to react when there was a high volume of shorting and selling in the public market. However, we now know there was above average activity in the dark pools during that time, so what was going on in there? Here is when it starts to get interesting.
I’m showing the weeks on both side of the blue area here for a reason. The week starting on 11/6/2017 had above average dark pool activity. If you just looked at the volume and price, you’d never know it. Per those indicators, it looked like a normal week. But, the BOP indicator shows a little increasing bearish power. Now, all that alone wouldn’t have raised an eyebrow. The increasing bearish activity was only marginal. What would have gotten my attention was that on 11/9/2017 an earnings beat came out, but the bearish activity still increased? It seems something may be up. Why the increasing bearish activity on good earnings? Manipulators sure like their news to get things done.
Now for the real trick. The Monday of 11/13/2017 was the day of wreckoning. No, I didn’t spell that wrong. I meant “wreck” because that’s what it was, one big train wreck. The surprise secondary is announces and all goes to hell. Perhaps the week before was slightly more bearish with higher than average dark pool activity, despite the good earnings, because someone knew what was coming the next week? Here is what you would expect to see after the secondary announcement:
- Monster volume… check.
- Total collapse in price… check.
- Complete and utter control by the bears as shown in the BOP… Wait!… What?… no check.
Hold on a minute! WTF! For such crap news and hellacious draw down in price with huge volume, how can the bearish control actually be less than the week before???????
This is something I suspected at the time. I even marked that as the selling climax (SC), or BUYING climax by manipulators. According to Wyckoff, that is where the manipulators make large accumulations and absorb a shit ton of supply. Back then it was a best guess based on study and experience, but it was still a guess. But now, we can see it objectively with the BOP.
The BOP is determining the flow of bears and bulls, including dark pool activity. So, as retail longs were panic selling and retail shorts were so happy they could put their own weenies in their mouths, manipulators were in the dark pools buying it up and pushing back all that bearish power, which is why the BOP doesn’t indicate as much bearishness as the other indicators imply it should.
You may be wondering, if that is the case, why did the short interest go up and price go down as shown previously? Remember, dark pool transactions are hidden and don’t effect the market. So, even though there was increased dark pool activity, which was mostly accumulation, there was still overwhelming shorting and selling in the public market which does effected the price. You could also imagine a manipulator with smaller block trades in public markets manipulating the price down, while having much bigger block trades in dark pools buying it up. But, that would be speculation, so forget I said that.
I could stop right there. That’s all you need to know. There will be ups and downs along the way and it will resolve in its own time, but that is telling you, barring nothing unexpectedly catastrophic, that smart money has shifted gears and its time to start building a long position along with them Be excited that we closed back below 2 this week, see it as an opportunity, not as the “man” holding you down. However, you need to know what kind of trade this is. If this is a longer term position trade, then buy these dips. If you are short term swing trader, I cant guarantee any of this will shake out within your patience threshold or that there won’t be more drawdowns, so I’d be more cautious.
Even though I could stop there… hell no! But, before I move on, I want to bring something important to your attention. I said earlier I was showing the bars outside the blue area on purpose. Actually, just focus on the last week shown. I know this is just one week, but looking at the rest of the chart, this occurs often. The price and public volume on the last week shown don’t move much, but the BOP shows very bearish. By now you are probably thinking, dark pools are selling or shorting. Nope, they aren’t. I didn’t show it, but if you look at one of the earlier dark pool volume charts, you will see their activity that week was back to average. So, the conclusion is that the long bearish BOP is mostly retail. That makes sense, a surprise secondary was just announced and the retail and smaller operators, not in dark pools, are pretty pissed off. The point is, from here on out, when you see long bearish bars on the BOP, that is mostly retail. When they get short, that is manipulators in dark pools accumulating and/or covering secretly. You are literally seeing in the BOP how smart money plays retail. Smart money is manipulating the price to keep retail unhappy and bearish, indicated by the longer bearish bars. Then, while they are pissing, moaning, selling and shorting, smart money ramps up in the dark pools and covers or accumulates at the low prices retail has driven it down to, That’s when you get the shorter bars which indicate the dark pools are bullish and pushing against the retail bearish keeping the bars short.
Ok Ok, this is taking forever, but I want to show you one more thing to be happy about. This is going back to my Wyckoff magic wand and using the BOP to prove what I suspected.
Back when I shifted gears to using Wyckoff, I plotted out those candles I have annotated. See the first one that says PS? That’s where I guessed the preliminary supply was. Per that Wyckoff tutorial I’ve link several times, in accumulation, “preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling the down-move may be approaching its end”.
There has been some big changes since Wyckoff, one being dark pools. Back in his day, he would have seen that big volume buying, which would have produced that increased price spread. However, as you can see, there really isn’t anything special about the volume or price spread where I have the PS. But look at the BOP. There is a big change of character there. It rose significantly. That indicates that the big buying Wyckoff talked about actually occurred in dark pools. From that point on the BOP started trending up as the accumulation started.
OMG! I can’t believe I’m still writing this.
Ok, the second blue area. I’m going to mention this one quick and not even post any charts. It is noteworthy because of all the weeks that I have data on, this week had the most above average dark pool activity. If you do look at that last chart I posted, you can see a significant rise in the BOP. There seems to be a good bit of bullish activity there bushing back against all the bearish sentiment. There was nothing in the news then that I know of. It was, however, the first week in six where the short interest decreased a little. All I can imagine is dark pool activity taking advantage of low prices to accumulate more and cover some short positions. I do think it’s more accumulation than short covering. That is useful to know because between the selling climax and that, we can conclude that they are accumulating in the $1.80 to $2.10 range. Now knowing that, is it any wonder we have such a hard time getting much over $2.10 and have found solid support at $1.80?
As a matter of fact, that tidbit of information explains a lot of things. Look at that last chart again. See two bars after that AR? We were on the verge of breaking out of that trading range right there, but then came the Oppenheimer NOT downgrade, downgrade fake news bullshit. The response to that farce was way more extreme than it should have been. I said it then and I especially say it now, that was blatant manipulation. The price was rising too much. Manipulators needed to reel it in, so here comes the fake news and a manufactured over reaction to keep it from breaking out. I’m certain the reason they haven’t come back and re-upgraded it after their downgrade reason was debunked, or Citi hasn’t chimed in with an upgrade, or no insiders have bought, is because the manipulators aren’t done accumulating and covering yet. They want it to stay in this range to do so, and any of those things would be positive and push it out. When they are done, I do believe, then you will see all those things happen.
Whew! Ok, last blue area. This one needs charts. I won’t post the volume charts. I will tell you that the dark pool activity was only slightly higher than average on the week of 1/22/2018 to 1/26/2018. I was actually surprised it wasn’t more since out FDA approval was announced in that week on 1/25/2018. Even though the average activity was only slightly higher, the public volume was high during that week, so it was still active in the dark pools as seen below.
So, right there between 1/16/2018 and 1/130/2018 we had our PDUFA date on 1/25/2018. I expected a sell the news event after getting approval, but quite frankly I didn’t expect the extremity of the draw down. Looking at this chart, I can prove what I suspected and why.
What I’m hoping, but can not prove, is that the bulk of accumulation is done. The charts,up to now, have shown increased dark pool activity, but no real drop in short interest. If I’m in the ballpark, then perhaps they have accumulated what they want, but now have to contend with their short position before moving it up. This is why I say the short interest is more important than any other number that’s hyped on the message boards. It’s the only number I care about right now. All the others will work themselves out naturally, but this one is being moved by design.
So, we have PDUFA, we have big volume again and an overreaction to the downside taking us back to the lows of the trading range. During that overreaction, we have that big spike in dark pool activity relative to the public volume, as you can see on 1/30/2018. At the same time we have our first ever significant decrease in short interest. Again, look at the price. There seems to be no reaction to the covering there, in fact its still drifting lower. That’s because the covering is done in private so it isn’t effecting the price like you’d think it should. They are letting the bearish retail sentiment, they helped to create, let the price fall while they are in dark pools covering at those low prices. The overreaction to the sell off is likely cause by the manipulators helping it go down in the public markets to the lows of the range.
The problem is, even if I’m right and they finished accumulation and are now in covering mode before the eventual mark up, I have no idea what the size of their total short position is, or how much of it they plan to cover. So, we are on their schedule. Another number I’ve mentioned before, is the daily short percent. The daily short percent is derived from the public volume. Don’t be surprised to see that above 50%. First of all, you have retail shorts taking positions because they think its got a lot more downside to it. Manipulators want them to think that because their shorting is helping maintain a low price while they cover in dark pools. Also, manipulators may be shorting some in the public to ensure that the price stays down while they cover in dark pools.
So, this is why, contrary to what I said about the price in the beginning, I have added the price to this short interest/dark pool relationship chart. Basically if we see a change in short interest that effects the price, it was a change made in public markets. If we see a change in short interest that is not reflected in the price, it was a change made in dark pools. Now that you see this in action and objectively, I can summarize all this in a list:
- The retail perspective: Secondary is announced. Public volume is huge, price plummets and short interest goes up. Sentiment is scary as hell and fear runs ramped.
- The Smart money perspective: Price is at all time low on huge volume. Time to go to the dark pools and start buying up as much as we can so that our buying doesn’t stop the retail selling.
- How do we know?: Because the BOP is not nearly as bearish as you would expect. Dark pool buying is pushing back against the retail selling making the BOP less bearish when everything else is like king kong bearish, if king kong were a bear instead of a monkey.
- The week of 11/27/2017
- The retail perspective: Gary is a piece of shit, management should be in jail, my life is phucked.
- The Smart Money Perspective: Now that we have retail sentiment as low as ever, let’s hit the dark pools hard and buy up more of their fear. This is too easy! We can buy ass loads in this $1.80 to $2.10 range because we’ve practically picked the retail’s pockets. BWAHAHAHAHAHHHAAA.
- How do we know? The BOP, though still red, got really short. The price wasn’t effected and short interest went down slightly, so it’s dark pool buying and maybe some covering.
- Two weeks of 1/22/2018 and 1/29/2018
- The retail perspective: YAY! We got FDA approval! Wait! We are dropping like a rock. WTF! AHHHHH next stop bankruptcy. I have one gun and one bullet. Will it hurt?
- The Smart Money Perspective: Hey Jim what’s the number of that Tokyo massage place, you know, the one with the happy endings. Oh, and by the way, now that we got retail contemplating suicide again… as if that was hard to do… let’s use their fear to start covering in the dark pools. In fact, keep your foot on their throats so they keep selling and maintain the low price so we can keep covering.
- How do we know? The BOP again got shorter than usual and had slightly above average activity. Also, short interest made a considerable move down. Meanwhile the price was not effected by the covering. Therefore, the covering took place in the dark pools. Hopefully this means the accumulation has taken place and now the covering has begun. Once that’s complete, then we can start moving up. That’s just guessing/hoping though.
Now that I have blisters on my finger tips and my eyes are bleeding, lets finish this off with what I expect going forward.
Bad news is, there could be some more down side. According to Wyckoff and the characteristics of phase B, which is where I think we are, we should start making a series of higher highs and higher lows as we move up to the top of the range, around $2.40. However, it looks like we are just in the process of making the first higher low (hopefully). The previous low was $1.73, so we still have room to go down and maintain that higher low from here. I don’t know if that will happen, but it’s possible. Again as I mentioned earlier, it all depends on when they finish covering and accumulating. Prior to the big sell off after the original FDA approval last year, the short interest was around 38 million. If that’s where it was when the mark down campaign started, I’d think its reasonable to think that’s around where it will need to return before the next mark up campaign starts. But no guarantees on that either.
I pointed out last time the big divergence in the 10WMA (the cyan line) and the BOP uptrend, as pointed out with the big orange arrow. In fact, the 10WMA is flattening out after falling for so long as a result of that divergence. I think my next post will be focusing on that. The BOP is still bearish, which is an effect of the retail sentiment being bearish. However, the bearish control is getting less due to the smart money using the retail sentiment to accumulate and cover. Not to mention that the bearish retail sentiment is being created by the smart money to suit their purpose. This is exactly why doing all of this and following the smart money is so important. Otherwise, you are amongst the orchestrated negative sentiment in retail and making bad decisions based on misleading information.
For instance, you may be selling and taking a loss out of frustration and lack of patience, or because things are too confusing or look too bleak. Maybe the price looks cheap so you are buying without realizing the manipulators still have purpose to take it down further before achieving their goals. All those reasons are manufactured to entice you to do just those things at exactly the wrong time.
Back to the chart one last time. I annotated those two BOP bars with the yellow arrows. Something happened there. Remember I determined that the longer BOP bars was retail’s heavy bearish power due to negative sentiment? And the shorter BOP bars were manipulators using dark pools to take advantage of that retail sentiment they created? Well, those two bars the arrows are pointing to are really short. It will be a while before we get the data to determine what happened there, but I’d suspect its some good short covering,
This past weak was strong bearish power. So, it was probably just silly retail falling for all the same old tricks.
P.S. You will have to pardon bad grammar and typos. I’m only going to proof read this one time because that’s about all the juice I have left to do.