During our AM Meeting the other day I suggested that FAST might be setting up for a nice down move.  The stock was gapping down in the premarket on earnings–albeit on light volume.  It had runup on Friday so I thought a bunch of traders were caught leaning the wrong way and would panic out below 30.  Right on the Open the 30.20 bid bought a lot but when it dropped it went down 80 cents very quickly.  This was further confirmation to me that the short would probably work today.  But then something funny happened when I started watching the tape.

FAST traded up very easily from 29.30 to 30.  There was no significant selling along the way.  Then it pulled back to 29.70 where there was a small ARCA bid for 200 shares.  I was surprised that when I went to hit the bid I was able to sell 1000 shares to ARCA at 29.70.  Then a bunch of other traders hit the 29.70 bid but it wouldn’t drop.

If you are trading a stock and there is a lot of selling on the bid but the stock will not trade lower you should take notice.  This is a sign of a very smart buyer.  They are accumulating the stock but not showing their hand.

In the case of FAST it ended up trading 2 points higher where I finally closed out the remainder of my position.  But what was even more important than recognizing that their was someone accumulating the stock was my willingness to set aside the idea that it was a short.  What I said in the AM Meeting was that it was a great short setup and it certainly was.  But the tape instructed me to get long so I did.  Chop!

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