Quote:
Originally Posted by Exhibitman
I read and write pretty good but I don’t understand either of these sentences. Something to do with urine and pants?
|
CLCT is a very illiquid stock. It only trades on average just over 55,000 shares a day. The current short position is only 38,570 shares as of the last update so roughly two thirds of the daily average volume. That said there are days where this stock has only traded 13,000 shares.
This is a very small short position but if someone tried to put on a much larger short position and then a fund decided to put heavy buying pressure on the stock they could make it sky rocket and create a very serious short squeeze.
If you look at the stock right now the bid and ask are only showing 200 shares on each so the largest market order you can use and get the inside bid or ask is 200 shares. Nothing. To put that in perspective if you wanted to buy GE you could use a market order and get 45,000 shares.
Low float stocks that are heavily shorted are prime targets to try and manipulate higher with constant buying pressure. When a stock is sold short it represents pent up demand because the only way to exit the position is through a buy order. If someone is pressing it higher the shorts begin to lose and at some point just like in MMA they tap out and have no choice but to buy further exacerbating the scenario. Short squeezes can be violent.
Moral of the story a terrible stock to short because you can't get in or out easily. Even if one doesn't like a company they need to look at the short interest and trading volume to get a feel if it is a good short candidate and CLCT isn't.