I was interested to see what the year-to-date trends were with the short positions in BDR. I have taken the table from the ASIC and graphed the daily short positions outstanding for a sample of gold producers on the ASX and see what trends emerged.
My logic is that once a short position trend changes (reduces) this could be a signal to start buying into a particular company as you're no longer fighting against well resourced, professional institutions and the buy-sell dynamics will be in your favour.
The graph is enlightening (IMO):
First of all - the graph is backwards (due to the way ASIC tabulate their data) so the most recent dates (Oct 14) are closest to the vertical axis whilst the Jan 14 is furthest away.
BDR is the dark red line.
The graph clearly shows that 5 shares are targeted by shorters - MML, EVN, BDR, KCN and RRL.
You will also notice that each of these 5 companies is in an uptrend indicating that shorters are adding to their short exposure. This means that more shares are being sold than the "natural" dynamics would otherwise be so the SP's will remain under pressure whilst this trend continues.
I will do some more work and overlay a share price and USD POG line for BDR at some stage and see if there are any lead indicators or correlations.
My logic is that as soon as I can identify a change in trend (i.e. shorters are beginning to cover their positions) then it will be a good entry point. Until then, it is best to sit back and watch.
Cheers
John
BDR Price at posting:
33.2¢ Sentiment: None Disclosure: Held
