Tape Painting

When I was exclusively a stock trader back in the golden days, one of the most surefire ways of making money was to short small cap stocks that surged in the final hour of trade on the last day of the quarter.  A lot of fund managers would gun illiquid small cap stocks higher by 30-60% on the final day of a quarter.  This would bump up their portfolio return for the quarter.  Usually, they would wait till the final hour to start running up the stocks, sometimes waiting for the final 15 minutes of the trading day to buy.  This way, they wouldn't have to buy as much stock or support an inflated price for too long.  It cost them money to paint the tape, as they would have to sell the inflated stock at lower prices later.  The stocks would promptly trade lower after the close, even at 4:02 PM.   They would end up gapping down the next trading day and drift lower. 

I set up a screener tracking any stock that went up more than 10% in the past hour and kept them on my watch list.  It would be total chaos in the final 15 minutes, as I tried to short as much of the tape painted stocks as I could get my hands on.  I would close out the short position either the next day or a few days later for a good profit.  The tape painting was especially extreme in 2000, and has gone steadily downhill over the years.  Technically it is illegal to manipulate stock prices, but it was the wild wild west back in the bubble days.  It still happens, but the number of stocks is fewer and the magnitude of the manipulation is less.  Watch for stocks that are being manipulated higher in the final hour tomorrow.  It is almost a riskfree way of making money.