https://www.********.au/2020/07/29/short-sellers-are-targeting-th...

https://www.********.au/2020/07/29/...ese-asx-stocks-ahead-of-the-reporting-season/

The recent push down in the SP is due to the shorts targeting EOS and other companies, they will go long when they realise no one is following their lead.

Short-sellers are targeting these ASX stocks ahead of the reporting season

Brendon Lau | July 29, 2020 3:59pm | More on: APT EOS

What is short-selling

For those who are unsure what short-selling is, it’s where a trader borrows a stock to sell on market with the hope of buying it back at a lower price later. This allows the trader, or short-seller, to profit from the difference.
ASIC puts out daily updates on the stocks that are being short-sold, but the data is always a week behind.
The part of ASIC’s report I find more interesting is not stocks that are most shorted at any given time, but the change in the short position (called short-interest). This tells me which are the new ASX targets being stalked by short-sellers.

How short-sellers are playing the BNPL sector

The second most targeted stock is the Zip Co Ltd (ASX: Z1P) share price. The BNPL star saw the proportion of its stock being shorted jump by 245 basis points (2.45 percentage points) to 7.67%.
That’s a big increase in shorts and comes as short-interest in its bigger rival, the Afterpay Ltd (ASX: APT) share price, fell 58 basis points to just 0.87%.
This may indicate that short-sellers are anticipating good results from Afterpay and are using Zip Co as a hedge. It’s a popular trading strategy to go long (meaning buy) on the strongest stock in a sector and short its weaker rivals.
Other favourite short-selling targets

The stock that saw the third biggest increase in shorts this month is the Electro Optic Systems Hldg Ltd (ASX: EOS) share price.
Short-interest in the weapon systems company jumped 221 basis points to 3.98% this month, although total short-interest in EOS is still relatively low.

Other notable stocks that are attracting short-sellers include the Pointsbet Holdings Ltd (ASX: PBH) share price and Webjet Limited (ASX: WEB) share price.
Some brokers believe the Pointsbet share price has overshot on the upside, while the rolling COVID-19 shutdown of parts of Australia will clip Webjet’s wings.