Trying to make sense of yesterday’s price action in Paris19 Jun 2020 09:30
Yesterday’s price action in Paris followed a similar pattern as last Monday’s (about which I posted Monday evening). It was basically 3 dumps (130k at ~12:30, 70k at ~13:15, and 50k at ~14:00) that in 3 steps beat the price down from 2.90 to 2.70. Like Monday, that was enough to quell buying appetite for the rest of the day, drive many small holders to despair (as manifest on the boards) and, without doubt, turn some of them into sellers.
In my view, such dumps are unlikely the work of small holders, and also not in the interest of larger holders selling to lock in profits (these would rather drip-feed their shares into the market which was happy to pay between 2.90 and 3 all morning long). On the back of a good news release, such dumps, again in my view, can only be intended to demotivate the herd (that’s us) and lower the stock price, and thus serve the interest of those who want to buy in at a lower price level. That would be either shorters or investors aiming to build a larger position, or the two of them working in cahoots.
I haven’t monitored intra-day price action every day, but I suspect action similar as yesterday to have played out on previous ‘disappointing’ RNS-days as well. To me it suggests the recent downward pressure on the stock price is not caused by one or more big holders selling to lock in profits (we even don’t have big holders to begin with), but more likely by players aiming to buy in at a lower price level, be they shorters or genuine position-builders.
A problem so far with this theory is that according to the registers we neither have a serious short-interest in the stock (unless there are multiple shorters active under the 0.5% reporting threshold), nor do we see signs of significant long positions building (beyond Vatel’s). That means I could well be incorrect. Yet, the observed price action combined with the basic idea that all investors in principle want to buy low and sell high, to me suggests something might indeed be brewing. GL to all.
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