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sorest2016

447 Posts.

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01/03/24

10:27

Post #: 72689039
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Originally posted by firehawk08: ↑

"Getting closer and closer to the popping. If we get another 10% up day In lithium prices surely we see some panic.

Even the u.s lit players like Abermarle, LAC only have 10% short interest at most, LAC popping 14%. Not out of the question to see the same size move today."

A 10% up day in PLS today would almost certainly generate a decent number of margin calls to short sellers.

This sets up the potential for an epic short covering rally.

It is supported by the following factors:
- the 21% short position in PLS, the current largest short position of any ASX stock and potentially 600 million shares to be bought back if the short squeeze gets underway
- the decreasing volume of shares on the seller side of the market depth over the last few weeks. there has been a definite change in this metric. over the last few weeks, the buyer side has been consistently larger than the seller side, a clear difference to a month or three ago. small numbers of shares for sale sets up a potential large rally
- an early sea change in the price of lithium, as seen in the futures prices over the last week or so. several consistent days of rising lithium prices, a clear change in flavour and direction from the months of downtrending prices. PLS was shorted so much in the first place probably because it was the only proxy in the Australian market for making money betting on a falling lithium price.
- margin calls - already, some less savvy short sellers (who might have joined the short side late, shorting at below $4 per share) might have received margin calls to top up their account, buy shares to cover (today!), or their broker will forcibly buy shares to cover for them. this will add buying pressure and drive the price higher, in a market where the seller side is already relatively thin. higher prices lead to further margin calls for other shorts, leading to even higher prices.

This scenario with the escalating margin calls may take a few days to play out fully. If it does.

There's no stock market rally like a short squeeze rally.

If all 600 million shares sold short end up getting bought back at market prices over the next few trading days, sunnyaus may get his wish for his $8 to $10 price.

I'm allowed to dream big. You should too.

Good luck to all long term holders.

Expand

Who would have thought that having 21% shorters might end up being a bonus for SH. 600M shares having to be bought back at rising prices.
SP up to $4.40 as i write this.

PLS Price at posting: $4.38 Sentiment: Buy Disclosure: Held
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(20min delay)
Last $2.98		Change -0.020(0.67%)		Mkt cap ! $8.972B

Open	High	Low	Value	Volume
$2.92	$2.98	$2.90	$38.78M	13.16M

Buyers (Bids)

No.	Vol.	Price($)
2	15056	$2.97

Sellers (Offers)

Price($)	Vol.	No.
$2.98	89928	9

View Market Depth

No.	Vol.	Price($)
1	11000	2.970
2	5067	2.960
1	7500	2.950
1	10000	2.940
4	11699	2.920

Price($)	Vol.	No.
2.980	31000	3
2.990	28400	2
3.000	113777	14
3.010	8821	3
3.020	135253	6

Last trade - 16.10pm 23/08/2024 (20 minute delay)

PLS (ASX) Chart

Good News & Bad News, page-39635

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