There are 2 ways to look at the short sales data, and either or both could be completely wrong:
Today and yesterday, the percentage of short sales was dramatically different from what it's been. It's been in the 40+%; yesterday and today, less than 30%.
When you have the big volume like we had in these past 2 days, you'd think the market makers would do a lot of very temporary naked shorting, to fill those orders -- with the big volume, they'd have the assurance that they could go ahead and fill it, and cover the temporary short quickly.
BUT NO.
It's the opposite. The days when there is VERY little volume -- boom -- the shorting percentage is high. Those are days that some of us reported sitting on the ASK for a long time and still not getting filled. So the market makers were not naked shorting so that trades could execute smoothly. Nope, they were just sitting there, waiting until someone actually wanted to sell (at the purported ASK) before the order got filled.
So what do we have:
•Days when stock is illiquid, so logically a good market maker would temporarily naked short something to keep the market trading smoothly -- market DOESN'T run smoothly, orders don't get filled. But FINRA short percentage is high.
•Days when the stock is liquid, when a market maker can temporarily sell short to make the market function smoothly and then cover -- much lower FINRA short sales number.
NOW: it makes sense to draw the opposite conclusion. Big volume days, market maker don't have to short to make trades go smoothly. Low volume days, market makers short a lot to make trades get filled.
That would be very logical EXCEPT:
so many of us have noticed that on those low volume days, our trades do NOT get filled in a timely fashion, which would seem to indicate the market makers are not willing to naked short stock to make a market.
So maybe my theory that yesterday and today there was a lot of short covering is correct.
Comments, please?
Today and yesterday, the percentage of short sales was dramatically different from what it's been. It's been in the 40+%; yesterday and today, less than 30%.
When you have the big volume like we had in these past 2 days, you'd think the market makers would do a lot of very temporary naked shorting, to fill those orders -- with the big volume, they'd have the assurance that they could go ahead and fill it, and cover the temporary short quickly.
BUT NO.
It's the opposite. The days when there is VERY little volume -- boom -- the shorting percentage is high. Those are days that some of us reported sitting on the ASK for a long time and still not getting filled. So the market makers were not naked shorting so that trades could execute smoothly. Nope, they were just sitting there, waiting until someone actually wanted to sell (at the purported ASK) before the order got filled.
So what do we have:
•Days when stock is illiquid, so logically a good market maker would temporarily naked short something to keep the market trading smoothly -- market DOESN'T run smoothly, orders don't get filled. But FINRA short percentage is high.
•Days when the stock is liquid, when a market maker can temporarily sell short to make the market function smoothly and then cover -- much lower FINRA short sales number.
NOW: it makes sense to draw the opposite conclusion. Big volume days, market maker don't have to short to make trades go smoothly. Low volume days, market makers short a lot to make trades get filled.
That would be very logical EXCEPT:
so many of us have noticed that on those low volume days, our trades do NOT get filled in a timely fashion, which would seem to indicate the market makers are not willing to naked short stock to make a market.
So maybe my theory that yesterday and today there was a lot of short covering is correct.
Comments, please?
