Ryanair shares have spent the morning in positive territory, outperforming a bespoke weighted basket of stock peers. This outperformance has recently accelerated to the extent where the share price change is alerted to as extreme. The OTAS microstructure quickly pinpoints the cause and effect of the reaction….the decision on how to trade next is yours !
At 10.58am an alert fired indicating that the behaviour in Ryanair shares was unusual. The stock had moved 217bps in absolute terms over the last hour. This is NOT typically how the stock would be expected to trade.
Pulling up the intra-day microstructure stack(below) it becomes immediately clear what has happened.
- Buyer(s) were evident from the outset with the stock trading well in advance of its bespoke weighted basket*. No alert fired however, as the percentage move was within the expected historic tolerance range.
- Volume was low compared to normal and slowing, suggesting little in the way of sell side liquidity for the buyers to transact with. This volume then begins to accelerate considerably at 10.52am as the buyer becomes a lot more aggressive. The effect on the share price is clearly visible whilst the alert indicates their impact on the shares is now significant.
The cause is identified in the Traded Volume chart:-
- A large spike in the orange line is visible. This indicates a large print has occurred ‘off market’ or ‘OTC’ suggesting that the buyer became impatient on such a low volume day and took someone out on risk.
The increase in the pink line shows offer side volume traded (or crossing the spread) as the seller who has gone on risk subsequently panics to buy his stock back.
Clearly there has been no finesse in how the market participant has tried to cover back his risk. OTAS Tradeshaper users in receipt of such an alert and the granularity provided by the microstructure may consider this a temporary move and therefore counter the extremely unusual nature of the move.
*Ryanair Basket constituents
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