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Friday, November 23, 2012

Insider Trading in ELN Revealed Using 3C

There are a lot of articles chronicling the massive fraud one S.A.C. associate is being charged with in what is being called the most profitable insider trading scandal ever.

I've looked at the ELN chart and before I had even known what time of year or what year (other than between 2006 and 2008) the insider trading activity was going on, 3C revealed the selling/shorting side clearly. I read 3 articles, this is the last in the article it makes clear that ELN was sold and then shorted in a period of 1 week, accounting for 1/5 of the trading volume, that's why the 3C daily chart can pick up the selling so easily, as far as the buying, I don't think it was as concentrated and I don't know when, but I suspect an area.

Once again the "Expert Networks" hedge funds used have been revealed to be little more than sources of illegal insider information.

The scary thing is we see this kind of accumulation or distribution in different sizes and different timeframes as well as stocks on a near daily basis; some of this is due to the "Pack" mentality of hedge funds on Wall Street, but we've also caught what we know are specific cases of earnings being leaked and even F_O_M_C policy hours before the announcement-when you see it with 3C, it jumps off the chart.

Here's ELN which we now know saw selling of the entire position and then a short position all in 5 days after the "Expert Network" allegedly gave Martoma information regarding a trial that went badly.

The buying was somewhere between 2006 and 2008 and was likely spread out in smaller size so it wouldn't be obvious on a daily 3C chart like this, but selling and then shorting 1/5 of the stock's trading volume in a week certainly stood out and we were correct as the article confirmed July of 2008.

This is why the usual Technical Analysis tools and indicators are of little interest to me, I want to se what smart money is doing and follow along, if they are acting on inside information  so be it, I don't know anything about it, we can just see many times when they are buying and selling/shorting.


Brandt Uses Worden's TeleChart and StockFinder 5 Exclusively


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