Bad (manipulated) Prints

I'm sure that most traders that read my blog know their way around a level II screen and know how a time and sales print works. If you are unfamiliar with it, then you can review this link to an Introduction to Level II quotes. What happens on Level II has varying degrees of importance depending on what type of trader you are, however, if you use alerts or triggers as part of your platform, then the Time and Sales prints are very important.

I'm not a floor broker, or have I ever been, so I'm not sure how or why bad prints happen. It seems to me that at some point in the transaction process, someone has to enter trades into a system. These prints are then the records of each trade. Sometimes there are obvious mistakes and the trade slips through such as entering a 42.05 trade as 41.05, or 36.63 as 36.36. While these prints will not trigger a stop order already in the market, they will cause an alert set to use trade price, to trigger. As platforms become more advanced, more and more traders are using alerts to keep their intentions hidden from all market participants. I don't have experience with automated systems, but I'm sure they also can be affected by a bad print.

Lately, I've had several instances where a bad print triggers an alert and takes me out of a position prematurely. While I'm not a conspiracy theorist, I can't help but notice that in my particular trades, the stock happened to move higher immediately after relieving me of my shares. It also seems to happen more with the specialist controlled stocks found on the NYSE or AMEX. If I was a specialist and needed to pick up some shares knowing the price would runup, it would be easy to trigger some alert based stops with a bad print. Again, I have no idea how easy it is in practice to enter a "mistake", but I'm not naive enough to think it couldn't happen.

Now there are ways to minimize the impact of bad prints such as setting an alert based on bid or ask, but in low float stocks with very wide spreads, it really isn't feasible. I'm not sure there is an easy answer other then to hold your stops mentally unless you will be gone, but I rely on alerts due to the fact that I may need to leave my trading desk and you can't watch every tick for a swing trade. I would be nice if a broker would let you set an alert based on multiple prints at a price. If anyone has any ideas or feedback on this feel free to post in the comments section.

The indices pretty much consolidated all day as called accurately by Brett this morning. If you've ever wanted to see how a pro trades, then you owe it to yourself to check out one of his morning sessions. The QQQQ etf still looks bullish to me on the 60 minute chart holding above the 44.20 number I mentioned last week. It is setting up for a good move as witnessed by the tightening of the bands, and I would imagine bulls still have the upper hand. Here are a couple charts I found interesting.

Infosys Technologies Limited (ADR) (Public, NASDAQ:INFY)
While I'm leaning to the bullish side for the next 2-3 days, INFY may be a nice short candidate, especially if the markets pullback. Looks like a classic trendline break and retest.


salesforce.com, inc. (Public, NYSE:CRM)
CRM is looking oversold to me sitting on a previous pivot low. It could bounce here, but it might only form the right side of a head and shoulders top. Too soon to tell, but it looks like a decent risk / reward setup.


On a lighter side, if you haven't checked out the Ugly Show before, do so. In my opinion, he should forget the whole Automated Trading System and start the Ugly Show Series as a spinoff from WallStrip. Not sure how to monetize it, but that's what Howard is for.


Good Luck,

DT