Another Reason To Read The Tape
First off, let me be real clear on the point of
today’s column: it is not a rant about a lame fill which was not
resolved in a satisfactory manner; in fact, it happened to several traders who
were trading at this time. Rather, the column will be an introduction/review of
order handling. In fact, the column will serve two purposes:
1. A heads up on trade execution via the SuperDOT
system (NYSE orders only)
2. How to know when an execution needs to be reviewed to make sure that a
proper fill has been had.
A little background:
Yesterday, right on the opening (9:33:37) I took a trade in
Goldman Sachs (GS), a short sale actually in
order to Fade the Gap. The fill seemed reasonable — 85.82 — which was an
up-tick and within his current bid/ask. GS
traded up against me a little bit, but ultimately came back in for a minor
profit before the S&P futures began a move higher. I placed an order to cover
at the market. My fill (at least as I had seen it) came in at 85.73 (9:37:47), a
meager .09 profit. From there I moved on to the next trade.
One of the guys in my
Trading Room asked me “you got filled at 85.73?” I said, “yeah,
sure did”, then I looked, the fill actually came in at 86.73, a full point
higher. I did not notice it on my confirm since at the time his market was as
follows (if my memory serves me correctly):
85.70 x 86
This has happened several times over the years, and for the most part it is
no big deal. Place a call to my clearing firm, they call down to the floor and
ask what the problem is. For the most part they come back with the proper
price. Problem solved, everyone is happy.
Yesterday was different, and in my humble opinion (based on what I know to
this point) exposed a serious flaw at the NYSE that raises the question
regarding regulation. Do not get me wrong, I am a huge fan of the way the NYSE
does business and still favor that market over the fragmented
NASDAQ. Nonetheless, in the scenario I will describe, one has to wonder.
The response I got from my rep at the clearing firm went something like this
(he was the messenger and equally as miffed as was I):
“Dave, Chris over at ABN Amro. Got a word back on that fill. Our rep went
over to inquire, yours was not the only order to get a bad fill. The strange
thing is that the clerk at the post did have the wrong quote up for a short
period of time, the market was in fact a buck higher. Here is the kicker, they
admit a clerical error, but said that the trades stand. In fact, the floor
governor was called in to make a decision and he too said that the trades are
good.”
I could not believe it, they not only admit the error (I respect that) but
then have the nerve to say, “yeah, our mistake, but tough luck!” And this, my
folks, is the rub. So, from now on, is the fill that I just got the right
fill? Will I get screwed out of another dollar and supposed to just sit there
and say “aw gee guys, hey we all make mistakes, look forward to you taking
advantage of me again real soon.” A good friend of mine is fond of saying:
“Hey, at least if you are going to screw me over, at least buy me dinner
first.”
I encourage anyone who was in this trade to take it to the next level as I
have. The surveillance department at the NYSE is last in the chain of command
and certainly worth making your concern known. Look at it this way, by my count,
approximately 80,000 shares were effected — that is a major breakdown and
unacceptable.
Here is my point, and it ultimately does revert back to something that I
always talk about, tape reading. You need to be aware of all the trades that are
going off in your stock. First, it helps you to gain an edge that someone who
does not tape read lacks. Secondly it gets you familiar with the whole process
so that you successfully catch these problems when they occur.
Now, to the business at hand. Today is Fed day. What surprise is in store?Â
Well, I outlined those scenarios in yesterday’s column, please refer to
yesterday’s piece if you did see it. One thing that I did not mention, it
would appear that the market is factoring in a 1/4 point cut based on everyone I
talk to and read. Remember, we always want to take the outlier trades (the ones
that have the surprise factor). While it is difficult to know how the market
(stocks and futures) will react, at least initially to that type of news, one
thing would be certain, the Euro should
benefit based purely on interest rate differentials which already are
significant. I know my focus is to be stocks, but I thought this would be
helpful.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.
Dave