Dark Trading Pools and HFT explained

Ever since the change of major North American stock exchanges to a for profit model they have all become infected with High Frequency Trading as the emphasis has changed from quality of trade executions to quantity of trade executions and there is only one winner. An algorithm trading machine.

Need a deeper explanation on the effects of Dark Pools and HFT? Skip on over to BNN and watch this segment with Doug Clark from ITG Canada.

 http://watch.bnn.ca/business-day/business-day-am-may-2013/business-day-am-may-24-2013/#clip933397

DHX Media being groomed for the alter

My regular Sunday MAMIL ride got me into a conversation about DHX Media (DHX.TO) on the long weekend. I picked up 1800 shares of DHX recently at $2.80 on the back of a string of announcements regarding their massive library of kids shows. And as any parent knows, a TV channel full of cartoons has become the baby sitter of choice these days. Plop junior down in front of Caillou episode and you just freed up an hour or two in your life.

From what I gather from my buddies in related industries is that DHX Media is really looking for a take out candidate as an exit at some point. When, where and at what price, I do not know nor am I privy to any  insider information, it seems the consensus is that this is the game plan for DHX.

On thing that is for sure is the chart is going the right direction.

Now back to watching The Adventures of Paddington Bear.

Reigning in the trading

It appears that fund outflow is still prevalent in the PM sector as the price of gold has stabilized for the time being but the mining stocks continue their downward path.

I have been looking for trading opportunities in the sector as there is usually volatility to profit from but the bounces are not manifesting themselves. In fact any news is now a liquidity event to sell off more stock.

I have found myself a new type of mining company, a company that mines your bank account with service fees because you are too lazy, drunk or inconvenienced to make it to your own financial intuitions ATM machine. And it pays a 5% dividend! (Listen to me, crikey mate, have I changed from being a risk on cowboy riding the bucking bronco of the Venture Exchange to seeking out dividend growth stories. My, my, my how this market has changed me.)

I have been plucking away at Direct Cash Inc. DCI.TO ($25.00/share) and if you ever see one of these machines around and used it, thank you, you have just been docked another $2.50 service fee.

The story at DCI is that they are consolidating the fragmented indpendent cash machine business in Canada, England and Australia. I can live with a company that profits from people that are lazy or inconvenienced and are willing to be docked a service fee.

Corvus Gold finds the power but keeps looking for bids

Corvus Gold gave out this news release today that mixed a non material change in corporate affairs with a material change in corporate affairs. When ever I see these two mixed into one news release I always feel the Company has something to hide. These are two separate events and credibility is better preserved by announcing the resignation in one news release first and then a few days later letting the world know you got hooked to the grid.

CORVUS GOLD SECURES ELECTRICAL POWER AT THE NORTH BULLFROG PROJECT, NEVADA, ANNOUNCES DIRECTOR DEPARTURE
Corvus Gold Inc. has made significant progress in securing electrical power for the North Bullfrog project near Beatty, Nev. Valley Electric Association of Pahrump, Nev., will upgrade its existing electrical facilities, on the eastern portion of the project, beginning in mid-2013 and complete the necessary upgrades by 2014. This upgrade assures that adequate power will be available for all future mining operations at the project.
Carl Brechtel, chief operating officer of Corvus, stated: "An adequate and economical power source is a key infrastructural component to this project, which already has excellent access, favourable topography, a low strip ratio, good heap leach gold recovery and a talented local work force. These improvements to the power supply infrastructure represent a significant benefit to Corvus Gold in the development of the North Bullfrog mining project."
Director departure
The company announces that Daniel Carriere will be leaving its board of directors effective today to focus his efforts on his primary business interests. The company would like to thank Mr. Carriere for his important contributions to Corvus Gold over the past 2.5 years during its start-up phase and wishes him well with his current and future endeavours.

As per IWNATTOS post on my prime view of Corvus's backside view, I might as well pull up the comfy chair, make some popcorn and  get the snugglie out, as I am here for awhile. Oh, and that $0.75 share I was hoping for, well I have had to take my expectations much much lower and hope pray beg ask for divine intervention to get off this position at $0.65.

Judging by the chart above and the market depth below perhaps some bids might be found in the $0.40/share range and I do stress perhaps. At this point it looks like one or more of the funds that got on board this deal are selling at any cost.

 

Wait, what was that  Mr. Market?

" you think you bought something on the cheap? I'll really show you what cheap is".

Thank you sir, may I have another?

Silver Bullion Selling for $100 ounce.

The Canadian Mint is not to be out done by some legend like McEwen Mining over pricing an one ounce silver bullion coin.

No, no, no, the mint has stepped up and issued an one ounce silver bullion coin with a face value of $100 and a melt value of what ever spot is today.

Call now as strict limits of 3 coins per household are enforced. Only 50,000 are available to suckers investors.

Think $100 for one ounce of silver is too much, then skip on over to the McEwen Mining site where silver is on sale for $50.00. But wait there is an AGM special on where you save 15%. That is a low low low price of $42.50 an ounce.

 Or if I was going to keep stacking why not just pay $27.00 an ounce over at First Majestic.

Besides a lottery ticket this has got to be another great way to tax stupidity.

Daniela Cambone at the New York Hard Asset Show

Probably the best thing that happened at the New York Hard Asset Show is Daniela Cambone doing interviews.

Watch how everyone can not stop smiling in the presence of Daniela as they spell doom and gloom for the industry.

BTW we are not there yet. We will be there when the sell off in the PM's is not amplified threefold by the miners. (Example: Silver is off 3.59% and First Majestic is off 9%) When the PM's drop 5% and the miners are flat then you know they have hit bottom.


Brent Cook says we are not there until Stan Bharti starts doing tech deals.

So put on your Daniela Cambone rubber boots, makes some popcorn, sit back and enjoy the doom and gloom.

Mr. Market by Benjamin Graham

A little something to think about.

He is your eternal partner in investing. He is patient if somewhat bipolar fellow. Subject to wild mood swings, he is always willing to offer you a bid or an ask. If you are a buyer, he is a seller - and vice versa. But do not mistake this for generosity: He is your opponent. He likes to make you look like a fool. Sell him shares at a nice profit, and he happily takes the prices so much higher you are embarrassed to even mention him again. Buy something from him on the cheap, and he will show you exactly what cheap is. And perhaps most frustrating thing of all, Mr Market has no ego - he does not care about being right or wrong; he only exists to separate the rubes from their money.

What I wrote about on Surge Energy yesterday...Well never mind

As I posted yesterday I was looking to play Surge Energy from the $2.80-$3.00 range up to the $3.20 range. Well it looks like the management infighting is all but done and the stock has gapped big time.

There is a long winded news release but he broad strokes are changes in the board of directors, an asset sale and a private placement by the new President. If you really want to read the details head on over here.

I'll just be on the side lines for the time being.

How far the knife fell

Now that I know how far the knife has fallen I have started to dabble again in a few plays, but I am going to exercise patience and not chase any stocks.

Timmins Gold found support in the $2.20-$2.25 range and I made a small trade yesterday, in at $2.25 out at $2.36. I am back on the bid at $2.28.

Rio Alto seemed worth a kick today at $3.55, I am up at the close and it looks like $3.75 might be the short term trading range.

I got out of Surge Energy too soon but I am back bidding at $3.00 even though $2.80 is a better price.

Last but not least is the position I am probably most fucked on, Corvus Gold. Just to be a sucker for more punishment I have picked up 10,000 more here at $0.61/share. I would be happy to see the back side of the 10,000 shares at $0.74.

I have sold off my Puts on the CIBC, Royal Bank and BMO. I did not maximize my money on this trade as I held on to long and the stocks seem to be melting up with the balance of the crazy market, but I did profit over all.

Hindsight on Osisko

Now that a few weeks have past since the nearly 50% jump in short positions on Osisko I can clearly see with hindsight.

This weeks short report came out and it looks like of the 17 million shares sold short up to April 15th, 6 million have been covered by April 30th, still leaving a substantial short position.

Judging by the gap down and spike in volume it looks like a large position was put on at the $4.50 and under mark. There is still 10 million more shares short on April 30th. than on March 31st.

The open call interest for May has the largest contracts at $4.00 with 2405 contracts worth 240,500 shares. To buy one contract will cost $455 or about $4.55/share. There is also 509 $4.50 May contracts.
The next largest open contract is July $7.00 contracts with an open interest of 10,214. Someone has a 1 million short position with a stop loss at $7.00 good till the 3rd week of July.

Although our favorite gold narcissist openly commented on not liking Osisko or large low grade gold miners for that matter, it is looking like $4.00/share is a support level that I can start trading off of again.