Program Buying Stocks
How would you like to know in advance, exactly which program trading stocks will be bought by program buying firms? Sound interesting? Here is how we do it.
Our computers capture every large block trade in every program trading stock in the Dow Jones Industrial Average (INDU), S&P100 Index (OEX), and NASDAQ 100 Index (NDX) every trading day. By capturing these trades (times and sales), whenever our program trading premium execution levels are hit today, we are able to determine exactly which stocks in each index are being bought the most during buy programs executed by program trading firms when our program buying premium execution level is hit; and, what stocks are being sold the most during sell programs executed by program trading firms when our program selling premium execution level is hit.
Since we are constantly tracking all block trades in index stocks, it is very easy for us to turn on our capture files whenever the premium reaches our execution levels. If you would like to know today's exact program trading premium execution levels that will turn on our capture files for buy and sell programs then click here.
Most buy programs and sell programs are run in the next 6 minutes after our premium execution level is hit. And unlike in the old days when most program trading firms did plain vanilla index arbitrage, today's best program trading firms do not blindly buy or sell all of the stocks in the indexes in equal shares. They learned long ago that the plain old arb game makes only a small amount of return. Of course that small return is normal for transactions that have almost no risk.
The best program trading firms now weight their buy and sell programs. They have learned that by taking just a little more risk, they can pick up a heck of a lot more return. For example, if their own in house research determines that a certain stock or group of stocks is going down and therefore not attractive for purchase, they will rarely buy that stock or group of stocks during a buy program, no matter how high the premium goes above the buy program execution level. They will stay focused instead on stocks that their research has determined is going up and weight their buy program heavier in those stocks. We see the results of this weighting every day when large blocks of certain stocks are being bought in the indexes and at the exact same time no shares at all of certain stocks are being bought.
Conversely if these program trading firms determine that a certain stock or group of stocks is going up and not attractive as a short sale, they will rarely sell short that stock or group of stocks during a sell program, no matter how low the premium goes below the sell program execution level. They will stay focused instead on stocks that their research has determined are dogs with fleas. We also see the results of this weighting every day when large blocks of certain stocks are being dumped in the indexes and at the exact same time no shares at all of certain stocks are sold short.
A quick comparison of our capture files from the past few buy programs and sell programs almost always reveals the winners on the long and short side of this program trading game. We almost always find that the stocks or group of stocks that were not sold at all during sell programs, are the same stocks that are going straight up the most during buy programs. And that the stocks or group of stocks that were not bought at all during buy programs, are the same bunch of dogs that are falling out of bed during sell programs.
Since we are constantly tracking all block trades, we can also determine which stocks are being bought or sold for customer facilitations and other program trades, whether our premium executions levels are hit or not. Although these trades are considered by some firms to be simple buy or sell orders, and therefore not related to our program trading premium execution levels, by tracking this information too, we are able to include these stocks in our Program Trading Stock Reports.
Some of the world's best day traders and trading firms subscribe to our reports. By knowing what stocks other program trading firms are buying and selling the most, they are able to incorporate those same stocks into their own weighting for buy and sell programs for the next day. Since program trading now accounts for about 30% of trading volume on average, that is the main reason you see stocks go on a two or three day rally. Or decline.
Now that you how we do it, most likely it is time for you to take a look at those stocks. So if you would like to know what stocks were bought and sold by program trading firms yesterday, send us email with your name, address, and phone number and we will email you a personal URL for that report.