Most every broker (except F.Yap, Macquarie and Wealth) has been caught wrong footed in the LC/B run up this round.
A quick check in historical broker transactions from the period of Nov. 17, 2011 to Dec 2, 2011 (Starting from the strong breakout in volume and average true range in the 1.30 area for the LC A shares) shows the following price action.
Notice that most of the brokers have sold at the 1.50-1.58 areas, and had to buy back their shares bidding up the prices higher last two days (Dec 1, 2) as the price broke the new line of resistance which turns into support at 1.60 level.
The past two days has seen LC rising from the break of 1.60 resistance to a run up of 1.72, confirming the momentum strength to deliver further. Checking the broker transactions show that BDO, UBS and CLSA are accumulating. Notice that Macquarie and CLSA has not sold a single block in the past two days and have been buying the shares higher. Notice too that their price averages are between 1.57-1.63 levels (Consider this to be strong short term supports).
Abacus Securities and Larrgo Securities are selling shares to the public, and being chomped up quickly by other market participants.
From the nature of F. Yap Securities buying 207 Mil worth just past two days, “eating” all the offers of Goldstar, Larrgo, Deutsche and Abacus combined. I don’t know what it is, but LC’s bound to go higher, and possibly even to new highs.
For any trader who’s sold their shares thinking initially that 1.55-1.60 would be a resistance, the fact that it was so easily broken, means that there’s no wall holding off the forces of the main LC buyer- F.Yap.
Trade accordingly. I know nothing else, except to see that this price action is way too powerful. That’s all.
For any sellers, you have to buy back. At least respect the price action for what it’s worth.
(Chart wise the B shares are called a one day reversal or 180 degrees, the Dec 1 chart is called a slingshot if I remember my Jeff Cooper setups correctly. A slingshot’s definition is to take out the lows of the previous day, and to close above the open or near the highs of the day. The next day continuation of the move affirms the strength of the character of this one/two day reversal. These short term patterns are high probability. Do not fight the tape.)
– Faceless Trader