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Black Box Trading of Foreign Bank is Okay (LYG, BCS, RBS)

Lloyds Banking Group PLC (ADR) (NYSE:LYG) is down again in the last two days, but looking at a chart pattern, that makes perfect sense while Barclays PLC (ADR) (NYSE:BCS) and Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) move along a steady line.When looking at a two month chart for Lloyds Banking Group PLC (ADR) (NYSE:LYG) what will pop out at you immediately is two things: 1) the near-perfect, consistency of a spike and dip pattern which is text-book in its length between the two; almost like a sawtooth audio wave designed on an oscilloscope, and 2) the variation of the price on spike and dip ranges from approximately $1.88 to approximately $2.28; a $0.40 swing.This near-perfect trading pattern can only be achieved by “Black Box” or computing in my opinion; and I’m only guessing here. But multiple tops and multiple bottoms in near-perfect sequence and always in the $0.40 swing range could only come about by stop loss orders and other “set’ parameters that are automatically activated and controlled.  Individual investors may play their “free-handed” role, and some institutions may also “freely” buy and sell accordingly; but their effect in the last two months hasn’t been much of a plus or a minus in pushing the established trading pattern high above or far below the multiple highs and lows.I’m not a big fan of Black Box trading, because it happens first and in big volumes, and individuals fall in line behind in general. But in the specific case of Lloyds Banking Group PLC (ADR) (NYSE:LYG) during its ‘current cycle’ I understand the benefit because I think the computers have set, in essence, an ‘enforced bottom’ that has kept the stock from plummeting.That could be an enticement to individuals, but since one can’t study the computer orders, it could be a false enticement; not knowing when an institution will cancel orders and let the stock just drop. This seems more like a ‘speculators’ betting game. There are virtually no short sellers here (0.07% of the float) to play into the equation. It is however an interesting trading anomaly to keep a stock so succinctly in a fluctuating price range.I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.

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