Here's one of my favorites...
Everyone know what "level 2"is? It's basically a term used for reviewing the market depth on a stock. Like how many bid's and ask's are lined up by price.
You see this one all the time - some poster will say "hey look at the level 2" and then follow it up with something like "31 has been buying all day" or "Anonymous has been hitting the bid all day".
Basically the poster is saying "wow, this stock is in huge demand and this one institution seems to be taking a big interest". They must know something we don't, they are smarter than you....They might as well just say it: "get in now for huge, supersonic returns...wowowoweeee"
Before you get all excited about this kind of supposed endorsement, break it down...
First, look at the volume and the share price of the stock. The other day, this happened on the ERI.V board. "Wow, Anonymous is buying all day..." Yes Anonymous was buying all day....60,000 shares of a 10 cent stock. 6000 bucks....wow that's big interest. Sell the farm, back the truck up, we're moving to beverly hills.
There is about $20 trilion in combined market cap on just the NYSE. Google is worth $181 billion, and even ERI.V is worth about $7 million....$6k is NOT big interest. $60,000 is NOT big interest. $600,000 might be getting big. so 100x what was being noted... Think about it...when you buy a spec stock you are looking for return in the multiple's of 100% range...ten baggers. A ten bagger means that the market cap of ERI has to end up being $70 million. $6k is like spit in the ocean and will not contribute to a big move like that!
And, why did one investment house "sit on the bid" all day? Because they had a limit order in to buy 60,000 shares at 10 cents and there was no movement in the share price. So they chipped away at it all day.
This kind of posting is made all the time...posters do it with dead names, like ERI, and in brisk traders like PTV.V. Why? I guess to get other people excited. To try to suggest that certain investment dealers have a secret interest in a stock...if they like it, why shouldn't you? When, really, investment dealers are usually acting on behalf of individual investors putting in trades, just like you and me. A 60,000 share order with a 10 cent limit is no big deal....it's one investor buying an initial stake...or maybe she's averaging down after getting in on ERI's last NR at
I try to ignore these comments...Don't get me wrong, I like looking at Level 2. And sometimes you can see some trends in buying or selling. You can certainly evaluate support and momentum. But it so often used incorrectly or ignorantly (or deftly twisted?) that the newbie should beware...
Now what would be more exciting? If many investment dealers were hitting the bid, that's good. If none of them had to "hit the bid" if they were paying the ask all day, that would be good. And if the total volume on a wee little spec stock like ERI.V was 10-20% of it's float...thats what I would call quite nice.
I'm just sayin.