asx 'short sales' data not meaningful..why?, page-3

Hi Ntivff,

The new rules mean that before you short, you have to have borrowed/secured the stock. Naked short selling is now formally illegal in Australia. And when you short you cant just throw them on and trash the price, which is also helpful when you having a battle.

Yes shorts can cover during the day but the report gives you a very clear idea of what happened the day before with regards to price action, owners selling or shorts removing liquidity. This is clearly seen by the percentage sold short during the previous day, covering is then often spotted during or on the close of trade or the following morning and the report issued one hour after trade often confirmes price action for me anyway. There is actually many occassions in NCM and other stocks where covering begins just before the report is released...

Not sure what you mean by the "professional market" but the short report issued daily by the ASX together with other indicators can give traders a good ideas of what the funds are doing and on occassion I have used it to asolutley nail them, because not everyone in the report covers and sometimes even a small percentage represents 10's of Millions of Dollars.

When the numbers in the report are building daily and in some circumstances very large, long only traders like myself provide as much liquidity as we can, this provides support and often times this forces the shorts to cover and the price recovers. You can also see other data like option information that could show a large open interest in puts, if the price is getting trashed maybe they lent out thier shares which then shows up in the short report.

This style of trading has actually got easier with the report of Daily short sales from the ASX as there are more facts on the table as to what the shorts are doing and why the price was pressured on any given day.

Thankfully Naked Short Selling and regulations to stop most of it have have now become law and the daily report is at least something.

I hope that CFD and Market makers get banned in Australia soon like most other places. "Market makers" were allowed to short/ hedge their bets with third parties in the pysical market even when bans on shorting Financials was in place. This is nothing more than a sanctioned manipulation and one of the reasons they are banned in the USA and UK.

Just like the short report is not 100% accurate, neither is the substantial shareholder notices, this often comes out when the the buying or selling is over and these notices together with the short report can explain alot about a trend that in turn assits a trader to make decisions.

It all evens out in the end, but the report together with all other information a trader uses is helpful..

Before the report we were in the dark, if only it was released prior to the open, then the playing field would be fairer but for the time being its all we've got.