Sure rocket. I was quite curious to see where all this selling from coming from. As you can see below a big part of it was from Argonaut and also GS, with Citi and Macquarie but to a lesser extent. Basically instos selling the pump that resulted from the news.
In the case of Argonaut I rarely see them on Galan and if I look back at the monthly data (see below) I can see that they almost never buy, its always selling. This probably means they are getting shares through placements. I suspect we have a lot of dead bodies (especially as a result of the price action since the May 2023 placement) which will provide resistance on the way up. I guess we will need to just grind through it - a change in the direction of lithium price/sentiment will speed up this process.
As far as the day before the offtake announcement is concerned we have Morgan Stanley buying quite heavily. Their average buy price was 64.7c which means they did a big chunk of their buying in the early part of the day - they may have been responsible for the gap up. We also know that the majority of the short position on Galan is held by MS so I was interested to see whether this was short covering activity.
Sure enough the accumulated short data which came out this morning shows a significant drop in short open interest (OI). You can see this on shortman if you want to look it up yourself:
This is the 4th biggest drop in short interest we have seen since I started tracking this data in May 2022. The drop in short interest in May 2023 (yellow) was a result of the May CR, the drop on 22/12/2022 (blue) could have been because we were about to start drilling at GB (and maybe this was too much risk for the shorts) or maybe it was just because the share price has dropped 45% from the highs getting close the end of a fairly obvious ABC correction:
Let's just say that Morgan Stanley's timing on reducing their short position was impeccable (not that it was a huge reduction but in a relative sense it was big given it hadn't changed materially for some time). It's possible that traders were alerted to the volume and price increases which then caused the afternoon flurry (it was WealthHub Securities, which I think is NAB retail, who had the highest average price on the Wednesday before the announcement).
Hope this helps. The price action is hugely frustrating but hopefully with the derisking that has occurred (with respect to a binding offtake) we can start to grind higher - cleaning out the dead bodies as we go. A change in lithium price/sentiment will be a huge kicker (when it occurs).
(20min delay)
