Over-the-counter (OTC) or off-exchange trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading (i.e., exchanges), such as futures exchanges or stock exchanges.
Well, it doesn't matter where the stock is listed, what we are looking for are big operators activities generated from the trading session which we can profit from.
See the big operators starts selling way before the market even opens? That's normal since a substantial amount of money could be made with the amount of shares owned by the big operators. However there are many other reasons for big operators to sell. They may need money to buy a new cat or house, or to send a kid to college. For some founding executives, the stock holding in the company they helped build may represent the vast majority of their net worth. In such cases it’s just prudent for them to diversify assets.
See the above chart. See the red circle on the left. That's mostly big operators selling to make fast money since the big operators are able to get a good price before the market even opens. There is no buy/sell signals here and we wait. Most individuals buy and sell their stocks in the open market with the bid and asked price for the shares and execute the trades in the open market. But big operators have numerous other methods for acquiring or disposing of shares such as private placement, exercise of options. Some of the transactions are not in the open market and therefore aren’t registered in the trading volume and other statistics. This is just common sense that if big operators can buy their company’s shares at certain percent below the market value directly from the company without paying commissions and trading costs, they can still make a nice profit even if the stock price moves only sideways over the next year. Such an advantage obviously influences big operators’ risk/reward calculations and their decision of whether to buy.
Next, see the green circle. That's where supply and demand are in equilibrium, the bulls and bears have yet to determine who is going to be the winner. The psychology here is this, since so many big operators are selling, the trading range resembles absorption. What this means is selling is still taking place however the buying power is stronger to hold the stock and not let the stock fall further. The activity here is dull, there is no excitement in terms of price movement. This is created to depress the public and make the stock look weak. Remember the stock market is insidious, it is not created for you to make money. It is created for the greeds and fears who will rush in at the last minute to lose their money. The big operators are not here to benefit you, instead they are here to make you to remove this stock from your watchlist. The general public are herds and have no relationship with the big boys, so why should they let you benefit from them?
Lastly, look at the red circle to the right. That's buying! Finally the big operators are showing their true colors. The are in to push the stock higher. Although the price have not breakout of the trading range or breakup of the first red circle selldown bar, we should just close one eye and buy as this is the lowest risk with the greatest return. Remember the lowest risk is always at the danger point. Why buy at breakout when you can buy near the low at support? If this stock did indeed breakup, your profit is locked in already compared to those who will be buying at breakout price. Some may ask, how do i know if that's real buying, and the whole trading range is buying as compared to selling. I can only tell you i look closely at the activity of each bar and their actions. Of course i might be wrong, but based on my experience, this is accumulation.
In my opinion, this stock should fly soon and breakout of the trading range. Once that happens, the big operators will then make this stock look active with lots of activity/noise generated to attract the general public to buy and that's where the big boys starts unloading bits by bits.
Ronald K
