“Painting the Tape” Evolves to “Rolling The Tape”
In a Bull market this particular fear tactic has been known as several different names such as dips, shakes, back filling, you name it to induce sells or shake out shares. But in April of 2000, I watch a methodical “Rolling the Tape” of a 500-share blocks drive a stock down from $9.75 to $6.25 on 3,500 shares in a matter of minutes. Those 7 trades came on a 90-second interval. You could have set your watch by the action.
When this is happening common sense says, "Who would be selling this amount of trades instead of just one and thus paying all the commissions?"
I referred to it as a back breaker used to kill a momentum of buying. Typically “Rolling the Tape” is associated with or complimented with the “Boxing Tactic” (same MM is on the “bid” and the “ask” at the same time before and after a Roll) and a 30% - 60% gap in the “bid” and “ask” to stop momentum in buying. As the market is now turning bullish again the bears are desperately attempting to keep stocks from moving. Not only do they use the small 100, 200, 500 block trades at the bid, which are automatic book fills or rather stock calls, they can set a Rolling the Tape” with a particular amount of shares to come into the market on a set time derivative.
How this “Rolling the Tape” tactic works is simple. Create air shares of say 5000 and sell them to another MM on the bid at a set time of say 90-seconds. The bidding MM buys them thus that MM just bought low. Now the bidding MM steps up on the “ask” to sell them back for a solid 20% gain and sells them back to the other MM (who just created the shares and sold) at the bid on a set time interval. Once the MM at the bid buys all the “Rolling” block trades back, he steps off the bid and the bid drops. Sometimes a block trade to cover the roll will go off and the swapping of a Roll is short term.
Typically, the average trade on the bid is around 850 if effective. Also ridiculous number of bid trades also. Using 10 trades of 500-block shares would equate to 10 trades per 5000 shares traded at the “bid.” So if the “bid” had say 30,000 shares at the bid the trades could be something like 35-38 trades made. But this trading activity does affect the technical analysis of a stock and thus the charting.
Now this is so noticeable that a Time & Sells sheet will show a “Rolling Run” of small block sells at the bid. Then a large block trade at the bid to cover and instantly another same size block right behind it to start the process all over again. However, if the market makers can get a sell then that is to their advantage thus fueling the fire and covering the air shares. When a stock suddenly gets buys then the Rolling pauses and even stops. Someone just got “bagged.” (Market Maker is now naked short)
The MM has filled stock on the ”ask” they do not have plus they’re unable to fill the Rolling side of where they where in the time derivative. Typically, the “bid” will remain and the “ask” goes even higher, increasing the spread. Now they really need to get sells to get the price back down, but sometimes the bidding MM will take the price of the last “ask” as the bid. This is an attempt to at least break even for the trading.
Rolling the Stock is becoming very popular especially since technical analysis has been growing in the due diligence process of a stock. “Painting” and “Rolling the Tape” are nothing more than to show weakness and plays on the fear that someone is bailing out. Also by doing the “Rolling the Tape” instead of just “Painting the tape”, the Market Makers can effectively affect the relative strength indicators to show weakness.
Another limit to Rolling is to not do it too much or the false volume will go up too much and set off public interest alarms, which will bring in buying. That would shoot themselves in the foot basically. Most of the time to avoid this increased volume, the set share block and time interval will happen first right after some buying interest so the bidding MM and the rest of the line up can clearly see the “Rolling” is beginning to start.
Just another tactic to attempt to keep a Bear Market by stimulating fear that someone is bailing out, when in fact, if you look at the Time and Sales you discover it is merely another tactic of impression management.
Hey, just an observation and I could be wrong.
Gary Swancey
:=) Gary Swancey
