The Art of Tape Reading Analyzing and Reacting to News

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Tape reading is like seeing \he Super Bowl football game live from the 50-yard line rather than reading about it in the paper the next day. You see all the grand action, you feel the electricity in the air, and you experience the overpowering emotion and excitement.

A tape reader is an investor or speculator who spends lime watching both individual stock transactions as they are reported on the stock exchange ticker tapes and absorbing news as it flows over the news wires.

A good tape examiner acquires a feel for the market and can tell you whether stocks are behaving normally or not. Naturally, the number of good tape readers is like the number of football players who are good enough to play in a Super Bowl game.

Tape readers come in all sizes and shapes; many are "board room sitters" gazing at the electronic tape in their local broker's office. Very few of them do well, but you often hear them brag about their favorite stocks or opinions. In time you'll hear one say, "There goes Motors," as they see a stream of trading volume in General Motors stock.

Most stockbrokers peek at the tape, but once again only the minority really have a knack for it. In some cities, the tape is broadcast on daytime TV with a 15-minute delay for home viewers. I think the stock exchange may be wrong in placing the 15-minute-delay restriction upon public home-TV viewing. It could contribute to more nationwide public interest in the stock market and more reliable information if the exchange would reconsider and change its position. How would you like to see the scintillating Super Bowl on TV with a 15-minute delay? TV real time, over-the-counter trading should also be reported by ticker tape.

Institutional traders and some professional money managers also study the tape. Jack Dreyfus was such an avid tape reader that he had tapes put in every office in his accounting department. If he happened to leave his desk to go into the accounting area, he didn't want to risk missing any important trades.

Jesse Livermore and Gerald Loeb of E. F. Hutton always watched the tape. And of course, specialists on the floor of the New York Stock Exchange have tapes all throughout the Main Room, the Blue Room, and the Garage, as the different trading areas are called.

All transactions are supposed to be flashed on the ticker tape about three minutes after the trade actually occurs on the floor of the stock exchange. Sometimes, however, the volume of trading is so heavy even the high-speed tickers can't keep up with the activity, and the tape falls behind. This is called a late tape and it might be a more questionable time to buy or sell because it is sometimes harder to know what the actual prices are on the floor at the time you enter your orders.

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