Rightyeo, Been off having fun elsewhere again today, but I though I'd drop in to see how everyone is doing here.
Now I have been doing a little maths, checking shortman for today the short drop to 11% seems to be another reporting error because as of Monday we were back up to 14% - 58m shares. So I'll start with that number.
There have been some interesting things going on with GXY and you can see it if you look at the daily chart: Huge volumes in the last few days with no real price movement. This is a good thing for those holding. Lets do some maths... Now for the longs to over ride the shorts on past experience we need shorts down to about 6%. At that level they give us trading volatility but not the power to hold the price for an extended period. That works out to about 20m shares, so we need to see about 38m shares be absorbed from the shorts.
Over the last four days Tuesday - Friday there have been the following volumes:
Tues - 6.8m
Wed - 6.2m
Thur - 9.1m
Frid - 8.2m
Take out the gross short per day:
Tues - 6.8m - 22% = 5.4m
Wed - 6.2m - 8% = 5.7m
Thur - 9.1m - 16% = 7.6m
Frid - 8.2m - 8% (estimate) = 7.5m
Now that gives us a total of: 26.2m
Lets assume, just for fun that 80% of those were bought by shorts...that's 20m over four days, or 5m per day.
Now if this is right - and there are some mighty big assumptions here, it will take another 4 days to clear out enough of the shorts to weaken them sufficiently, but the share would start moving up before then as they will get progressively weaker and the longs selling will start to dry up as we go through, so lets be generous and sy they can hold the line for about 75% of that time.
If, and its a big if, this is all correct we would see the SP start to climb naturally about Wednesday of next week assuming the current long dumping continues at the current rates, barring a re-injection of more shorts.
How can we know if this theory is correct? Firstly the price would hold around this level - say ranging down to 127 and up to 134. Secondly we should be seeing about 5m shares come off the shortman net report per day from Monday - about 1% and continue each day (assuming the shorts report properly). Now the tricky thing here is that I recall being told years ago that the reported shorts are those borrowed, not necessarily sold, so the real shorting level can be a lot less and they can be returned without ever having been sold - so the reported levels can go down in chunks without actually being reflected in the trading, in which case the sell queues would reasonably be expected to reduce in volume, assuming some are used just to provide weight to the queue and this test of the theory may not actually be usable. However, you aren't going to hold the borrowed shares for longer than you need them as they cost money to rent, so if the exit is over the next three days the level might drop in a big chunk closer to the end. Unfortunately we wouldn't see this until +4 days, but I would expect that some shorts have dropped out in the last few days, so there should be some movement in the net during next week's reports about this week.
My 80% number is a wild guess, could just as easily be 50%, could be less. I am guessing that there would not be that many longs buying now given how exhausted the GXY market is, and how miserable everyone sounds, and how much easier it is to make a buck right now on other shares.
So there it is. My current theory. Lets see if it is right. Might see a drift up starting Tuesday/Wednesday and accelerating from there, but might see a another little misery drop on Monday, but it would be half arsed.
Remember, of course, it will not be linear, it will go up like a sine wave but the thing to watch will be the fib lines on the peaks, if they share retraces to 23% or 38% that is fine - it is still a strong climb. The turning points will be bothe psychological (50's and 100's) and previous resistances on the way down, plus any gaps (which act like magnets to attract and glue to escape).
I am looking forward to the next few months. I reckon its going to be fun - particularly if you're a trader.
Now what can screw it all up? A darn war in the middle east, China / US not getting cuddly, an Earth quake in California (watch this - lots of seismic activity being reported there ATM), a freakiin' volcano in Yellowstone, Hong Kong getting a delivery of tanks from their masters and probably a dozen other black swan events all looking for somewhere to land. Hopefully God gives us a few more months before he says "enough".
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