Young Leo was chirping ANW and its PMKT action.  We laid out some prices that were most important for the Open: 9.50, above 10, at the PMKT low.  ANW leaked higher to above 10 which caught our attention.  Now let me take a step back.

We use the Level 2 to help us make trading decisions.  We combine our Reading the Tape skills with intraday fundamentals and technicals.  A Held Bid in a stock above an important technical resistance level, or above an important support level gets our attention.  In this trading matrix of HFT fights HFT fights other HFT we rarely see held bids.

Now some will then conclude that Reading the Tape is a now unnecessary because HFTs manifest an order flow too difficult to read.  This is the mindset of  the lesser trader.  Others will find patterns even in this new world.  And one pattern we see repeat is the clean held bid foreshadowing a big move.

Think about it.  With algos omnipresent and the bots a battling, the same price rarely repeats.  But what if it does?  What might this mean?  For us it could mean a very large order has entered the marketplace.  Why would someone keep buying ANW at 10 and then at 10 and then at 10 during the Open when he can buy down to 9.85 accumulating with a passive buy algo?  Perhaps because he has a huge buy order at the moment.

So we saw a clean held bid at 10 in ANW on the open.  It never dropped.  There was no 99c 98c 95c, rebid the whole, drop out to 99c 93c, rebid the whole that dominates our key levels.  It was bought on the bid at 10, bought on the bid at 10, bought on the bid at 10, etc.  These clean held bids matter most in this market.

Mike Bellafiore

Author, One Good Trade