ALK chart, page-486

Nice price increase today. We have started to see some reduction in short positions since 26 May and with todays upward movement many shorters must be starting to feel some pain. Nikolia - maybe you should reach out to your shorter later today.

Since the 25 May shorts have fallen from 6.24% to 5.82% (a fall of 0.42% or 2.5m shares) with the SP rising from 84c to 96c on 4 June when the SP finished at 96c. Since 4 June SP has finished at 98c to over 100c and with the SP today around 105c I expect more reductions in short positions. If we see the SP consistently above 105c and move to over 110c I expect there will be a lot more short covering with the SP moving even higher perhaps to as high as 120c over next few weeks (unless POG falls well below $1,900). Volume is still around the 3m per day and today (double what it has been this year (excluding the spike around 3 May Boda announcement) it volume looks like it may exceed 3m today.

I expect further reduction in short positions since 4 June especially today (we may see then fall to under 5.5%). If we see the SP move above 115c I sense we may start to see some significant short covering. If that happens, and any drill results in July are good, then we may see a significant increase in SP over the next few months.

Here is some analysis on major movements on short positions so you can assess my comments above. I have looked at when shorts increased and the SP at the time (this ignores position changes during this period which can have a major impact on my analysis eg if any shorts at prices higher than today were closed and re-established at a lower price then they would also be feeling pain):

- between 10 and 30 November an additional 0.77% (ie 4.6m shares) of shares were shorted - the SP during that time ranged from 94c to 103c. These shorts will be starting to fell pain from recent SP performance especially today
- on 19 June 20 the short % went up by from 0.08% to 0.84% or 0.76% (ie 4.55 m shares) in 1 day - the closing SP on that day was 93c - given the surge in SP after this date until November it is plausible they closed out these positions subsequently - if not they will be in pain at current SP
- any additional shorts taken up since 30 November 20 will be feeling real pain as the SP was consistently below 100c and mostly lower than 80c except for early Dec 20 - shorts % have been going up and down within a range of about 5.75% to 6.25% during that period (except for 29 April when they dived for 1 day to 5.5%)
- between 17 September 20 and 6 October 20 short positions increased by 2.5% (ie 14.9m shares) from 1.65% to 4.15% and price range during that time was 137c to 150c - unless they closed their short positions before the recent SP rise they are still profitable
- During July 20 shorts increased by 1.1% (ie 6.5m shares) and SP varied between 114c and 131c.