Absolutely agree that the level of Shorting has become ridiculous, and probably has a possibility of getting close to 30 million Net Shorts in the next couple of days (there are 2 days data to be revealed before a possible pause or reduction on 13th May, before it start to increase again
).
And this level of Shorting is really making me far more bullish about the future price of CU6 - each day I look forward to seeing how high this Shorting can get to before the elastic band snaps!
Funnily enough the bearish views of some commentators about the level of Shorting in this case is IMO seriously misplaced.
As WednesdayChild very clearly emphasised that the 7th April was a key date and turning point for general global market sentiment spurred by trumps tariffs, with an increasingly negative view and likelihood for global recession. Shorters since that date have increased activity and by my estimates at relatively low (out of the money) price of those Shorts.
And guess what? Sentiment has now begun to turn back up again, and positive, particularly on views by economists of reduced likelihood for global recession as reflected in recent days trading in the NASDAQ, S&P 500 and DOW. As commentary on Barchart website points out:
"The benchmark S&P 500 index, which sits at the center of many 401(k) accounts, has erased all its losses since President Donald Trump escalated his global trade war in early April. It has now also erased its losses for the year and is back to within 4.1% of its all-time high set in February."
So are we back to where we were about 5 weeks ago? Yes and no (a very big NO). Explain:
The yes - Whilst the future is (always) uncertain (especially for a world affected by trump) the market's view is now much more positive than it was just 5 weeks ago.
The NO - In those 5 weeks CU6 continued to be targeted by Shorters, which accelerated at very low prices, and unlike sentiment changing, you can't simply write off those Shorts. They are now a REAL liability - not for the Company, not for us Long shareholders, but for those Shorters, whoever they are. There's only 1 way for those liabilities to be removed. At some point in time those Shorts must be closed out, and time is on our side - each day the cost of those Shorts increases:
The costs of Shorting CU6 stock includes the broker's commission, margin interest, and stock borrowing fees - and for a stock already substantially Shorted, as CU6 currently is, those fees are not insignificant.
Of course any Shorter will argue that they can simply cover their position through Index removal, or CR, or when the furure value of a company's share drops even more (I'll get back to this point later, because its critical in the case of CU6). But consider this, and whilst its obvious from the name, many people fail to realise that a Short sold share is a SOLD share. It has effectively been sold at some previous price point, NOT at a future price. ie it effectively "cushions" the effects of any Index removal, or CR. eg if into the immediate future with the likelihood of CU6 being removed from the ASX 200 Index in June. If that happens, being Shorted, then there's no need for participating Index Funds groups to dump huge levels of stock on market - its met by some of those Shorted positions. Thus if CU6 wasn't already Shorted there would be a far greater impact (downward) on the share price in order to allow Index Funds to exit held positions.
So the perceived future value of CU6 value becomes critical, especially currently being pre-revenue. This is where FA is relevant, not TA. (And I'm already very conscious that this is the Chart thread
)
(20min delay)