STSS is not a squeeze with its tiny float. Here’s why.
$Sharps Technology(STSS.US$ I’m also tagging other tickers people talk about synthetic shares with in an effort to help retail understand how things actually work. $AMC Entertainment(AMC.US$ $GameStop(GME.US$ $Meta Materials(MMAT.US$ $Vinco Ventures(BBIG.US$
There’s a HUGE difference between $Cortexyme(CRTX.US$ and STSS. STSS just started trading less than a week ago. A short squeeze means the excess demand that drives the price up is from shares being bought to close open short positions and because 85% of all traded volume, both long and short, is from the institutional side who can string out having to be forced to buy shares on the open market for over 35 days, there is no squeeze that will be happening. Here’s the good news. Most parabolic price action DOES NOT come from squeezes. The old fashion way it happens is tons of buying demand with buyers not selling. So ironically, misinformed retail THINKING there is a squeeze when there actually isn’t one can create parabolic price action and from an observational point of view from the outside, the price action appears the same. A squeeze is only when it is buying demand coming from open short positions being forced to close that causes the jump in price.
So with STSS, Why would institutional shorts buy shares to close at sky high prices when they don’t pay any interest on borrowed shares and the shares have only traded for less than a week. Although technically against the rules except for the MM, the non-retail side opens short positions without actually having the shares. Which brings us to the topic of “synthetic shares”. Read this carefully to understand why there is no distinction between shares sold that were borrowed by a retail trader and the shares that were sold by a hedge who sold shares he didn’t actually possess at the moment of sale.
Let’s cover the basics and just talk about a share of stock that’s going to be shorted by someone that is retail and someone from the institutional side. The retail shorter is required to borrow shares before they can sell to open their short position. And although the institutional side with the exception of the market maker is not supposed to sell shares they don’t have, they do it with impunity realizing there is no SEC oversight.
So consider the retail and institutional shorter after they have open their short position. Both of them do not own any shares and they need to purchase shares on the open market to close their short position. The person that bought the shares from the retail person and the person who bought the shares that were naked shorted aka synthetic are identical from a trading standpoint. As far as they are both concerned they both own shares and there is nothing that differentiates the buyer’s shares from the naked short and the buyer from the retail person shorting. They both appear identical in both buyers accounts. It doesn’t matter if you bought synthetic shares from the institutional side or you bought shares from the retail guy that borrowed them there is no difference between either from the purchasers standpoint. Now back to the shorters. At this moment of the process, the retail and the institutional shorters don’t own shares and need to buy them on the open market to close their short position. A short, both retail and hedge, are never “trapped” unless there is not enough traded volume for them to buy shares. That’s why ”days to cover” is the only metric that can “trap” a short. although purchasing the shares and closing the position might mean taking a loss, as long as there are enough shares traded, they have the freedom to buy shares on the open market and they aren’t stuck in any short position. That’s the irony of when retail piled into a stock thinking there is a “squeeze”. If there were 20 mil outstanding short interest shares in a stock trading only 2 mil shares, that stock has a 10 day to cover number. When that stock gets 200 mil in volume instead because people think there’s a squeeze, that means every short position could be closed on that day IF THEY WANTED TO. A hedge that doesn’t want to buy high priced shares and take a loss can choose to not buy to close, but they aren’t ”trapped”.
So retail and hedges both start the process of closing their short in exactly the same way namely buying shares on the open market (again provided sufficient volume) to be used to close their open position and they only difference is to whom they deliver those shares. The retail person returns those shares to whomever they borrowed them from and the institutional side delivers those shares to the broker. And after they’ve done that they are again identical and that they don’t own any shares and they don’t have any open positions. This preoccupation with synthetic shares is actually a synthetic make-believe issue I believe the institutional side has planted in retail to confuse them.
Related to this campaign to confuse retail is the preoccupation of retail with ORTEX and FINTEL data that gets posted constantly. Those numbers regarding availability and the cost to borrow apply only to those who borrow shares to facilitate opening a short so they do not apply to the institutional side. I have asked many times for someone to give me a reason why an institutional shorter would voluntarily choose to be subject to the constraints of availability and pay a cost to borrow when neither of those limitations and costs exist if they just choose to naked short.
So that 0RTEX data basically only applies to retail investors choosing to go short. Because only retail is going to be borrowing shares to open short positions and that retail makes up only 15% of all traded volume every day, even if half of that 15% is short, that would mean all that data everyone obsesses over only applies to seven or 8% of the total traded volume every day. In reality, way more retail investors go long than go short and it’s probably more like 3 to 4%.
Back to this idea of synthetic shares. When a hedge needs to buy to close, he’s buying shares from the same pool as retail. In fact, he can be ahead of retail in the line to buy shares to close and buy them, close his position while retail then doesn’t have shares to buy. There is no pool of ”synthetic shares” and a separate pool of shares sold to open a short after first borrowing those shares.
In summary, Retail and a naked shorter are identical as people with open short positions who need to purchase shares on the open market from the same pool to facilitate closing their short position. There is no separate pool of synthetic shares that are the responsibility of the hedges to close.
What I just shared is the reality most retail with a squeeze fetish don’t want to accept. I’m expecting confused retail to make angry comments talking about CUSIP and other stupid shit.
I will conclude with this picture. If the squeeze is technically when the price shoots up because of buying demand that comes from purchases made to close short positions, not even GameStop last year was technically a squeeze. If you look at this chart only the orange color was buying demand that came from purchasing shares to close short positions. The dramatic jumping price came from retail thinking there was a squeeze and buying without selling and that’s the truth. For it to be a squeeze the majority of the buying volume can’t be aqua, it must be orange.
There’s a HUGE difference between $Cortexyme(CRTX.US$ and STSS. STSS just started trading less than a week ago. A short squeeze means the excess demand that drives the price up is from shares being bought to close open short positions and because 85% of all traded volume, both long and short, is from the institutional side who can string out having to be forced to buy shares on the open market for over 35 days, there is no squeeze that will be happening. Here’s the good news. Most parabolic price action DOES NOT come from squeezes. The old fashion way it happens is tons of buying demand with buyers not selling. So ironically, misinformed retail THINKING there is a squeeze when there actually isn’t one can create parabolic price action and from an observational point of view from the outside, the price action appears the same. A squeeze is only when it is buying demand coming from open short positions being forced to close that causes the jump in price.
So with STSS, Why would institutional shorts buy shares to close at sky high prices when they don’t pay any interest on borrowed shares and the shares have only traded for less than a week. Although technically against the rules except for the MM, the non-retail side opens short positions without actually having the shares. Which brings us to the topic of “synthetic shares”. Read this carefully to understand why there is no distinction between shares sold that were borrowed by a retail trader and the shares that were sold by a hedge who sold shares he didn’t actually possess at the moment of sale.
Let’s cover the basics and just talk about a share of stock that’s going to be shorted by someone that is retail and someone from the institutional side. The retail shorter is required to borrow shares before they can sell to open their short position. And although the institutional side with the exception of the market maker is not supposed to sell shares they don’t have, they do it with impunity realizing there is no SEC oversight.
So consider the retail and institutional shorter after they have open their short position. Both of them do not own any shares and they need to purchase shares on the open market to close their short position. The person that bought the shares from the retail person and the person who bought the shares that were naked shorted aka synthetic are identical from a trading standpoint. As far as they are both concerned they both own shares and there is nothing that differentiates the buyer’s shares from the naked short and the buyer from the retail person shorting. They both appear identical in both buyers accounts. It doesn’t matter if you bought synthetic shares from the institutional side or you bought shares from the retail guy that borrowed them there is no difference between either from the purchasers standpoint. Now back to the shorters. At this moment of the process, the retail and the institutional shorters don’t own shares and need to buy them on the open market to close their short position. A short, both retail and hedge, are never “trapped” unless there is not enough traded volume for them to buy shares. That’s why ”days to cover” is the only metric that can “trap” a short. although purchasing the shares and closing the position might mean taking a loss, as long as there are enough shares traded, they have the freedom to buy shares on the open market and they aren’t stuck in any short position. That’s the irony of when retail piled into a stock thinking there is a “squeeze”. If there were 20 mil outstanding short interest shares in a stock trading only 2 mil shares, that stock has a 10 day to cover number. When that stock gets 200 mil in volume instead because people think there’s a squeeze, that means every short position could be closed on that day IF THEY WANTED TO. A hedge that doesn’t want to buy high priced shares and take a loss can choose to not buy to close, but they aren’t ”trapped”.
So retail and hedges both start the process of closing their short in exactly the same way namely buying shares on the open market (again provided sufficient volume) to be used to close their open position and they only difference is to whom they deliver those shares. The retail person returns those shares to whomever they borrowed them from and the institutional side delivers those shares to the broker. And after they’ve done that they are again identical and that they don’t own any shares and they don’t have any open positions. This preoccupation with synthetic shares is actually a synthetic make-believe issue I believe the institutional side has planted in retail to confuse them.
Related to this campaign to confuse retail is the preoccupation of retail with ORTEX and FINTEL data that gets posted constantly. Those numbers regarding availability and the cost to borrow apply only to those who borrow shares to facilitate opening a short so they do not apply to the institutional side. I have asked many times for someone to give me a reason why an institutional shorter would voluntarily choose to be subject to the constraints of availability and pay a cost to borrow when neither of those limitations and costs exist if they just choose to naked short.
So that 0RTEX data basically only applies to retail investors choosing to go short. Because only retail is going to be borrowing shares to open short positions and that retail makes up only 15% of all traded volume every day, even if half of that 15% is short, that would mean all that data everyone obsesses over only applies to seven or 8% of the total traded volume every day. In reality, way more retail investors go long than go short and it’s probably more like 3 to 4%.
Back to this idea of synthetic shares. When a hedge needs to buy to close, he’s buying shares from the same pool as retail. In fact, he can be ahead of retail in the line to buy shares to close and buy them, close his position while retail then doesn’t have shares to buy. There is no pool of ”synthetic shares” and a separate pool of shares sold to open a short after first borrowing those shares.
In summary, Retail and a naked shorter are identical as people with open short positions who need to purchase shares on the open market from the same pool to facilitate closing their short position. There is no separate pool of synthetic shares that are the responsibility of the hedges to close.
What I just shared is the reality most retail with a squeeze fetish don’t want to accept. I’m expecting confused retail to make angry comments talking about CUSIP and other stupid shit.
I will conclude with this picture. If the squeeze is technically when the price shoots up because of buying demand that comes from purchases made to close short positions, not even GameStop last year was technically a squeeze. If you look at this chart only the orange color was buying demand that came from purchasing shares to close short positions. The dramatic jumping price came from retail thinking there was a squeeze and buying without selling and that’s the truth. For it to be a squeeze the majority of the buying volume can’t be aqua, it must be orange.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
I block accounts with no name, pic, trading history or posts that try to follow me. Sorry hedges
1640Followers
221Following
10KVisitors
Follow
70156386 : This is great, Mike. Thank you!
小小刀锯大树 : what has to do with MMAT?
STD0313 : You make a great point. But also a sad reality. Institutions are allowed to rob retail traders at will. They operate with complete impunity to the regulations that the rest of us are forced to play by. And as long as there is money to be made and enforcement officials willing to look the other way, we will never have a fair market.
But I believe we may be at a turning point. Never before has the average retail investor been so aware of the system that holds them in place. But we need a catalyst. Just knowing doesn't seem to be enough.
Take for example the options market. By now most retail traders if asked would tell you they know it is a manipulated gamble. But does this knowledge slow them down. Not at all. Market Makers dangle a golden nugget and pull it away week after week. But the options market continues to grow.
With easy access and free trades the market as a whole has become nothing more then a casino to the vast majority of retail traders.
The money being "handed over" to these institutions is the reason why they don't care about CTB or covering any positions. They are getting paid no matter what. Are we continue to feed that system.
IMO