Would love the opinion of others on this. He really called the 3pm part of it. OLED and INVN were also up sharply for me, 6% each. Even EBIX one of the most heavily shorted was up 3.54%, most of the climb coming after the 2-3pm mark. EBIX seems like it should have done better being so heavily shorted but maybe today.
One would think that in today’s abysmal tape, where as many have described the market moved in a way that has never been seen before, the most hated, most flawed, and thus most shorted stocks would be crashing far worse than the broader market.
Well, no. Because here, once again, we get a great lesson in practical liquidity management.
As the margin calls start to trickle in - and just wait until 3 pm when it will be a full blown margin call massacre - hedge funds are forced to release margin. They do that by covering all those stocks which they and their peers entered en masse as the most shorted hedge fund names.
End result, the most shorted names are now unchanged for the third day in a row even as the S&P has been in virtual free fall mode, confirming that paradoxically in this broken market, it is the scariest places that end up being the safest. Alternatively, it means that when the real liquidations begin, it will be the highest quality stocks that will get butchered, just as seen in today’s market.
http://www.zerohedge.com/news/2014-10-15/margin-calls-come-m…
Here is a link to an article where KQ on SA discusses the impact the shorts are having on SZYM. Something I guess I should have known is that shorting artificially increases the share count allowing the shorts to drive down the share price.
As of the latest reading, the short interest has since climbed to an all-time high of 22.36 million shares. This now represents 35.3% of the share float. Consequently more than 1 out of every 3 shares available to the public is now being borrowed thereby artificially and temporarily increasing the number of shares in circulation.
http://seekingalpha.com/article/2557055-opportunistic-tradin…