This whole argument is one that cannot be settled
Post# of 72447
(Total Views: 265)
Posted On: 12/08/2017 1:03:35 PM
This whole argument is one that cannot be settled one way or the other, because of the utter lack of data. We could have a LOT more data, but FINRA and the SEC don't think it's important for investors to know the actual daily legal short interest. It's a number that they could easily supply, given modern technology. In the days before computers, it was labor intensive -- now it would only need the click of a button to start a program which could obtain this data quickly.
As far as the somewhat high daily FINRA numbers now, I think that a perfectly reasonable explanation for both the volume and the percentage is that:
1) there was some short covering in the run up
2) when the stock hit some highs, there was some re-shorting
3) when the stock came down from the highs, some of those shorts covered THAT SAME DAY, profiting by pennies, nickels, or dimes.
Let's say there were 300k shares short. The shorts covered them. Volume: 300k shares.
Then the stock ran up to 1.15+. Shorts re-shorted there. Another 300k shares, so volume thus far 600k
Then, near the end of day, shorts covered, for a nickel or dime profit. Another 300k shares. Total volume from one batch of traders: 900k shares. Actual number of shares in play: 300k, 3 times.
Obviously I just picked 300k as a hypothetical number, but as it happens, 300k shares is about 35% of the volume on the day in question. And the FINRA number that day was -- 35%.
I have stated repeatedly that NO ONE thinks that the FINRA daily number means that those shares are HELD short at the close -- that some of those shares are shorted and covered the same day, some shares are shorted temporarily by market makers (although I have on several occasions sat there trying to buy shares at the ASK, and not getting filled for 10 minutes -- so why didn't they short them to fill my order? ? ? ?) -- and some few of those shares might be ones that were actually shorted with the intention to hold overnight.
But in my opinion, it would be crazy for someone to want to short and hold overnight, and especially over the weekend, given that news is expected at any time between now and January.
As far as the somewhat high daily FINRA numbers now, I think that a perfectly reasonable explanation for both the volume and the percentage is that:
1) there was some short covering in the run up
2) when the stock hit some highs, there was some re-shorting
3) when the stock came down from the highs, some of those shorts covered THAT SAME DAY, profiting by pennies, nickels, or dimes.
Let's say there were 300k shares short. The shorts covered them. Volume: 300k shares.
Then the stock ran up to 1.15+. Shorts re-shorted there. Another 300k shares, so volume thus far 600k
Then, near the end of day, shorts covered, for a nickel or dime profit. Another 300k shares. Total volume from one batch of traders: 900k shares. Actual number of shares in play: 300k, 3 times.
Obviously I just picked 300k as a hypothetical number, but as it happens, 300k shares is about 35% of the volume on the day in question. And the FINRA number that day was -- 35%.
I have stated repeatedly that NO ONE thinks that the FINRA daily number means that those shares are HELD short at the close -- that some of those shares are shorted and covered the same day, some shares are shorted temporarily by market makers (although I have on several occasions sat there trying to buy shares at the ASK, and not getting filled for 10 minutes -- so why didn't they short them to fill my order? ? ? ?) -- and some few of those shares might be ones that were actually shorted with the intention to hold overnight.
But in my opinion, it would be crazy for someone to want to short and hold overnight, and especially over the weekend, given that news is expected at any time between now and January.
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