Wading Pool - for those in over their heads - no ? 2 dumb

[noshadyldy]

Ok, here goes:

What is meant by the term "high short interest point gainers?" This is usually followed by the percentage of the float that it encompasses.

Does this refer to an increase in people shorting the stock, which is what I originally thought (but this didn't seem to fit the particular stock they were discussing) or does it refer to an increase in short term positions?
Also what is the importance of the size of the float. (Hey! no ? 2 dumb, remember?)

Margie

[Dave]

"high short interest point gainers?" This would refer to a stock that has gone up and also has a high short interest, with the percentage of the float being how many shares are currently short. The float is the number of shares generally available for trading. A company may have a total of 2,000,000 shares, with 1,000,000 held by the company and, for example, 500,000 are held by company employees and execs that cannot simply sell their shares whenever they want. That leaves you with 500,000 shares available for general trading, and that would be the float.

So lets say this company with 2,000,000 shares has 10% of them short, or 200,000. Now take into account the float of only 500,000 shares, and you can begin to see why a high short interest can drive up a stock's price very quickly if they all are scrambling to cover their shorted shares. Even though the company has a total of 2,000,000 shares, there is far less available for someone to purchase in the open market.

Now lets say this company releases some great news, and the stock price starts to creep up. All those people that have shorted the 200,000 shares decide "Crap, it looks like this company is doing well, I had better cover my short." All of the sudden you have people trying to purchase shares to cover their short, but their are hardly any available, so now you have what is call a "Short squeeze" happening, which is a very quick uptick for our company's share price.

The float, or number of shares available for general trading, is a very important part of this equation, and there are actually a number of trading methods that are based on the float.

This was probably a lot longer than it needed to be, but I was in a hurry.

-Dave

[MEA_1956]

Grate Job

To some of us the long winded approch is the best. That cleared up a prolonging ? i've had for Quit some time. Grate job.===> MEA

[IIC]

OK...next question...I'm serious about this...

Does news make the market OR does the market make the news???

I'm having a little debate about this with my trading partner and I would like to hear thoughts from anyone interested...THX...IIC

[MEA_1956]

F.W.I.W.

The other day they sold of and said it was the fear of a rate hike. This rate hike is a long time off and has been a long time comming so the market should not be worried about that.

I remember when WaMa made a release about coming up short of analists expection. and the lending rate was getting ready to jump higher. How far has the rate moved.

Back in July there was a sinulare story and NCEN dropped its 20%+ gain and I thought about selling it at that time. Talked to an old banker friend and his reply to my inquiry was it took awhile to get this low and its going to take awhile to rise, and alot longer to make a huge difference. So I held, topped 100% and sent it to never never land.


I personaly think its all a cock and bull story. Monday, Wednesday, & Friday, good news. Tuesday & Thursday are bad news days. To me that makes as much since as news makes the market, or the market makes the news.

I just pretty much close my eyes to the day to day and week to week news and look fore a monthly recap. Then you have a sold base to place your argument and at that time, it just don't matter cause its history. ===> MEA

[Dave]

Hardly anything in the market makes sense now that trades are so cheap. How about "Buy on rumor, sell on news"? Rediculous, but lots of people do it. As for "Does the market make the news, or the news make the market?" I would have to go with "News and Rumors make the market".

-Dave

[noshadyldy]

Dave, I wanted to thank you for that comprehensive answer on short interest point gainers and value of floats. It really cleared a lot up for me.

$MM$ has put a spin on this innocent wading pool idea. so now, do we ask our straight questions here and our naughty ones in the "shady lady" pool?? How racey can stocks get anyway? Let s see, we've got slam plays, peak plays, convergences, oscillators and oh yea... we've got IIC's MO MO

margie