CU6 - ASX Charts, page-2226

Thanks for the tag. Hope you got yourself a beverage. I can waffle on occasion !.

Looking at CU6 in round numbers only there are 25M open shorts. There were 11M aggregates added between 1 and 28 April. Gross short turnover was 13M. There were 2M aggregates added between 1 and 31 March. Gross short turnover was 11M. On this small sample alone I would not be surprised to find that 10M of total 25M are secured. Think an Opposite Positions strategy where a trader might buy shares of a stock expecting it to rise while also shorting the same stock to fully or partially offset any fall. Think market maker. Think hedging.

If the CU6 was to be dumped from either or both the 200/300 index I would expect that at least 10M open shorts would overnight cease to exist with nil or minimal positive SP impact. In fact it is quite possible that these shorts help provide a floor that once removed would negatively impact the SP. IMU is a great recent example. PLS another recent example for different reasons.

That leaves 15M shorts unaccounted for perhaps a combination Traders, Speculators and Gamblers. Sure we have the usual uncertainty of all things CR and FDA but we also have patterns in consumer spending and labour markets that suggest that economic weakening in multiple jurisdictions and in particularly CU6’s primary consumer target market being the USA. Does this mean global markets are heading for a recession ? Who would know. A discussion for later perhaps.

Not always possible or allowed to hold opposite positions on the same security within a single account such uncertainty also encourages an environment of cross platform and cross jurisdiction trading or pairing and arbitrage type placement to assist to reduce exposure and to adapt to changing market conditions across an intricate web of financial trading vehicles like puts and call and ETFs and CFDs. It also means possible funding headwinds if required and possibly a reduced target audience if discretionary spending levels continue to fall. Particularly in the USA where the out of pocket cost of Health Care for procedures we take for granted here in Australia are near unaffordable for many.

My best take? Do not underestimate the global flow of money. Respect the short position holder but do not fear them. Do not assume that the majority of shorters seek demise. There are many a strategy for exploiting price discrepancies across different market and different market conditions of which shorts are front and centre purely because their highly uninformed and negative profile. For them there may not be a target or rejection point as such. It may be for some just cross ledger balancing.

On things specifically CU6 ? I do not know. But there is every data based indication however that there is more than one short type player at work here each with a different mode or placement or motivation. I do however have a personal positive bias for CU6 and what they seek to achieve which as a trader is dangerous as perspective can more easily be skewed. Something hopefully however to think about though. But, as always, my opinion only of course.