Question: Large Volume Orders & SP Movement

[Redacted]

Hi,

I came across a scenario whilst watching the market where a company released some positive news after the market closed about their organization, news that typically would make the SP rise.

The market opened the next day and the SP didn't move at all, with no volume traded. After doing some analysis, I understand there was a seller next in line at the increment above where the SP was sitting who had an immense volume (something like 90m shares on a 1c stock) on a sell limit order.

Now, my question is, even if the entire package wasn't sold off at once, or even over a few days, wouldn't the price move to the next increment if people were buying small chunks of the order? Or, does the entire package owned by the first person in line have to be sold off for the price to move? Or, does a certain percent of the order have to be bought all at once to allow for a partial sale?

Thanks in advance

 

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Hi,

I came across a scenario whilst watching the market where a company released some positive news after the market closed about their organization, news that typically would make the SP rise.

The market opened the next day and the SP didn't move at all, with no volume traded. After doing some analysis, I understand there was a seller next in line at the increment above where the SP was sitting who had an immense volume (something like 90m shares on a 1c stock) on a sell limit order.

Now, my question is, even if the entire package wasn't sold off at once, or even over a few days, wouldn't the price move to the next increment if people were buying small chunks of the order? Or, does the entire package owned by the first person in line have to be sold off for the price to move? Or, does a certain percent of the order have to be bought all at once to allow for a partial sale?

Thanks in advance

As long as one share remains on the top line of the sell side, the share cannot move higher unless it's been sold. And even if the last of those 90M were bought up, there would be nothing stopping someone else to place another lot up for sale at the same price. That's how the system works.

Also, if the 90M are sitting at a level ABOVE what the most enthusiastic buyer is prepared to pay, the price won't move up to that level. Obviously, the news you read wasn't positive enough for anyone to start buying up.
You mention it's a penny stock. Quite often, people becoming involved in that kind of trade want to see some upside for "a quick buck", If 90M shares are for sale at 1c, they figure it'll take ages for those shares to be bought up before they can hope for the next wave of buyers jumping up into 1.1, 1.2, or even 1.5c. Without a realistic chance to sell higher, I wouldn't risk 1c.

 

[Redacted]

As long as one share remains on the top line of the sell side, the share cannot move higher unless it's been sold. And even if the last of those 90M were bought up, there would be nothing stopping someone else to place another lot up for sale at the same price. That's how the system works.

Also, if the 90M are sitting at a level ABOVE what the most enthusiastic buyer is prepared to pay, the price won't move up to that level. Obviously, the news you read wasn't positive enough for anyone to start buying up.
You mention it's a penny stock. Quite often, people becoming involved in that kind of trade want to see some upside for "a quick buck", If 90M shares are for sale at 1c, they figure it'll take ages for those shares to be bought up before they can hope for the next wave of buyers jumping up into 1.1, 1.2, or even 1.5c. Without a realistic chance to sell higher, I wouldn't risk 1c.

Thanks for the response.

Regarding your first paragraph, if the SP is $0.01 and there is a volume of 90m in a sell order at $0.011. You're saying the SP won't move higher (to $0.011) until there are no shares left on the $0.011 increment & people are buying at $0.012?

Or once someone takes a bite out of the 90m, say 500,000 shares, the SP would then move to $0.011.

I understand the huge order might have turned people away from buying in, as it could have taken quite a while to chew through.

 

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Thanks for the response.

Regarding your first paragraph, if the SP is $0.01 and there is a volume of 90m in a sell order at $0.011. You're saying the SP won't move higher (to $0.011) until there are no shares left on the $0.011 increment & people are buying at $0.012?

Or once someone takes a bite out of the 90m, say 500,000 shares, the SP would then move to $0.011.

I understand the huge order might have turned people away from buying in, as it could have taken quite a while to chew through.

the sp always equals the last trade. If the 90M are offered for 1.1c and someone buys even just one share, the sp on your chart will show 1.1c. If they give up and sell down to the highest bid, the chart will move down to reflect that sale. Share Price equals Price of Last Trade.