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What does "closing on an imbalance" mean?



January 07, 2011 – Comments (3)

I have noticed that when my stocks "close on a sell imbalance" or "close on a buy imbalance," they then move the next day to change that.  They may go up or down, but they don't stay put.  I can put together that there is a cause-effect at work here and that I am missing something, but I just don't understand what.  Can some kind-hearted friend Fool out there help me?  And please don't send me to Wikipedia...if I could understand Wikipedia, I wouldn't bother you with the question.  Besides, Wikipedia always gives me "the facts, ma'am, just the facts"  and sometimes that is just enough to get a girl into trouble.  I think I probably need the facts and the cautions as well!  For that, I need friends!

So the question is on the table - What does it mean when a stock closes on a sell imbalance?  Is closing on a buy imbalance the same thing?  Does the stock react the same way in either case or are the reactions completely opposite?  Is there someplace to go on the web or to a company's site to get information that will help me figure out what is happening or about to happen?  If you know answers to ANY of these questions, I would love it if you could enlighten me!

3 Comments – Post Your Own

#1) On January 07, 2011 at 5:08 PM, ChrisGraley (28.57) wrote:

These are posted by the trading specialists at 20 min before market close and 10 min before market close. This happens when they get a large order that they can't fill and ask if individual investors would like the action.

Usually a large buy imbalance will cause a stock to gap up at market close and a sell imbalance will cause it to gap down.

If you see a large buy imbalance, a good strategy is to buy the stock and short the market for a quick trade.


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#2) On January 07, 2011 at 5:36 PM, Mary953 (84.93) wrote:

And I have been simply waiting it out on the assumption that whatever happens, it will be a temporary blip in the price.  That works as long as it is one of the buy and hold dividend stocks that I have for long term yields at "You have got to be kidding me" prices.  On the spec stocks, the "I think this has a good shot at short term profits" types, I knew I was missing a vital bit of information.  Turns out that I am.  Thanks Chris!

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#3) On January 07, 2011 at 7:32 PM, ChrisGraley (28.57) wrote:

No problem Mary.

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