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Post by cybergym66 on Sept 25, 2014 8:16:43 GMT -5
I really do not want to get into a debate on the DTC issue and various opinions but here is my take on it fwiw, it is too simplistic to think that just because volume can spike that it would absorb or shorten the days to cover period. The very nature of the avg. volume used is there for a reason. Think about it this way, in a perfect world, yes if volume were measured as every sale is a long liquidation then you would be correct in thinking a spike in volume would shorten the amount of days the shorts would have to cover. However, that is not the case and an example of just the opposite occurred on the most recent three binary events that caused the spikes in volume: 4/2 Post Adcom vol. = 84.62mill shares traded 6/27 - 6/30 Post FDA approval vol. = 71mill shares combined friday/monday 8/11 - 8/12 Post Partnership Announcement = 97.5mill shares combined So in theory, if the SI had the ability to cover in a day or two we would have a significant drop in SI. This was not the case. In fact, quite the opposite happened, SI increased over the 4 mo. period into the last event of the partnership announcement and as we know through yesterday's reporting has maintained at record levels. So if you think about it not only did it absorb any long liquidations that took place but due to the very nature of events that took place two things happened, new long positions were established or added to and the shorts had to add to their positions in order for the share price to act as it has. Logically, if the events were negative than the shorts would have covered at much lower prices than here and yes the long's would have liquidated into their hands and SI would have decreased. So it is much more than just simply thinking periodic spikes in volume allows the opportunity to reduce the DTC at ratio's of 1:1, yes it does remain a net zero game (assuming you eliminate naked shorting but even those have to eventually be covered at some point). Volume incorporates not just 1:1 share short covered to long liquidation but rather additional shares being shorted to additional long positions being added and I'm not even including the day trading that takes place within that period. That is why they take an average over a period of days as a smoothing mechanism of what the theoretical time or "days to cover" it would take for an actual covering to take place. If I were looking to take a short position in a stock, believe me I would take notice of the days to cover before establishing a position. In a case where the DTC period stood out as 14+ days, I would strongly consider switching my thoughts to going long as opposed to short and do some due diligence for reinforcing why the situation is where it is. I do appreciate you providing your insight! My argument about a SS & DTC is that as volume increases DTC drops. The events you mentioned weren't SS, but high volume days (SI didn't drop due to a SS). So shorts INCREASED to control the upward movement of the price. I think of a SS event as one where buyers and shorts are basically fighting over shares as the price spikes. So when this occurs DTC drops...that's my only point here. I will agree that a high DTC with low volume *could* be an indicator of a possible SS if the shorts are complacent and are caught off guard by unexpected good news. |
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Post by jpg on Sept 25, 2014 13:15:42 GMT -5
Hi JoeyP&P,
I'm an MD and 'maths/ science guy' and not a trader. These 'trading details' have never been high on my lists of interesting things to learn about till Mannkind. The SS and DTC (I am now using the lingo!) argument got the maths part of me thinking there was something illogical in analyze DTC simply by looking at volume. My understanding of the matter would fit well with what you say.
If 2 market participants trade back and forth 10000 shares 100 times in a day you have a trading volume of 1 million shares but only 10000 shares available to cover. Correct?
If a bunch of algos do this over and over again trying to 'out computer trade' each other and the retail day traders you end up with something that looks like very high volume but in fact may be anemic new shares trading. You could actually only have a small fraction of those shares really available to cover. Correct?
On top of all this algos could easily open and close naked short positions all day to give the impression of volume when in fact they are actually trading phantom shares. Correct?
Thank you or anyone else for any insight into this,
JPG
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Post by joeypotsandpans on Sept 25, 2014 13:42:28 GMT -5
Hi JoeyP&P, I'm an MD and 'maths/ science guy' and not a trader. These 'trading details' have never been high on my lists of interesting things to learn about till Mannkind. The SS and DTC (I am now using the lingo!) argument got the maths part of me thinking there was something illogical in analyze DTC simply by looking at volume. My understanding of the matter would fit well with what you say. If 2 market participants trade back and forth 10000 shares 100 times in a day you have a trading volume of 1 million shares but only 10000 shares available to cover. Correct? If a bunch of algos do this over and over again trying to 'out computer trade' each other and the retail day traders you end up with something that looks like very high volume but in fact may be anemic new shares trading. You could actually only have a small fraction of those shares really available to cover. Correct? On top of all this algos could easily open and close naked short positions all day to give the impression of volume when in fact they are actually trading phantom shares. Correct? Thank you or anyone else for any insight into this, JPG That would be correct sir, where did you do your residency? My oldest is finishing up his 4th year and just recently in the last couple of weeks put in his applications for residency (Internal Med.), he was in the audience at Adcom hearing btw. |
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Post by BlueCat on Sept 25, 2014 15:20:37 GMT -5
If I net this hypothesis correctly:
The volume may actually be lower than it appears because of the algos and naked shorting. And hence mathematically - the DTC should actually be longer. And the real trade-able share numbers are really small. So when time comes to cover, there will be no exit doors.
I believe I've seen in various threads people attempting to ascertain this more exactly with the math.
So I imagine there are a fair number of people here with lawn chairs and coolers already set up for this show. Kinda like stock tail-gating.
Thoughts - am I interpreting this right?
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Post by kc on Sept 25, 2014 15:28:04 GMT -5
sadly this type of activity should be illegal. Especially if they are working together to play games with the pricing of shares. There should be some antitrust issues involved and the SEC should put these folks out of business. Hi JoeyP&P, I'm an MD and 'maths/ science guy' and not a trader. These 'trading details' have never been high on my lists of interesting things to learn about till Mannkind. The SS and DTC (I am now using the lingo!) argument got the maths part of me thinking there was something illogical in analyze DTC simply by looking at volume. My understanding of the matter would fit well with what you say. If 2 market participants trade back and forth 10000 shares 100 times in a day you have a trading volume of 1 million shares but only 10000 shares available to cover. Correct? If a bunch of algos do this over and over again trying to 'out computer trade' each other and the retail day traders you end up with something that looks like very high volume but in fact may be anemic new shares trading. You could actually only have a small fraction of those shares really available to cover. Correct? On top of all this algos could easily open and close naked short positions all day to give the impression of volume when in fact they are actually trading phantom shares. Correct? Thank you or anyone else for any insight into this, JPG That would be correct sir, where did you do your residency? My oldest is finishing up his 4th year and just recently in the last couple of weeks put in his applications for residency (Internal Med.), he was in the audience at Adcom hearing btw. |
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Post by jpg on Sept 25, 2014 16:51:48 GMT -5
Hi JoeyP&P, I'm an MD and 'maths/ science guy' and not a trader. These 'trading details' have never been high on my lists of interesting things to learn about till Mannkind. The SS and DTC (I am now using the lingo!) argument got the maths part of me thinking there was something illogical in analyze DTC simply by looking at volume. My understanding of the matter would fit well with what you say. If 2 market participants trade back and forth 10000 shares 100 times in a day you have a trading volume of 1 million shares but only 10000 shares available to cover. Correct? If a bunch of algos do this over and over again trying to 'out computer trade' each other and the retail day traders you end up with something that looks like very high volume but in fact may be anemic new shares trading. You could actually only have a small fraction of those shares really available to cover. Correct? On top of all this algos could easily open and close naked short positions all day to give the impression of volume when in fact they are actually trading phantom shares. Correct? Thank you or anyone else for any insight into this, JPG That would be correct sir, where did you do your residency? My oldest is finishing up his 4th year and just recently in the last couple of weeks put in his applications for residency (Internal Med.), he was in the audience at Adcom hearing btw. Thank you, Joey P&P, I did most of my training in Canada and my second fellowship in critical care at Yale. Now live in Vancouver BC. Matching for residency (your son) is not the most relaxing part of life.That last year of med school is one long stressful year... Good luck to him to match high on his list of choices. My not so useful advice as to choosing a match would be taking into consideration the pace to live almost as much as the reputation of the residency program. JPG |
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Post by joeypotsandpans on Oct 9, 2014 13:14:15 GMT -5
In the spirit of Sonny & Cher..."the beat goes on", a couple of hours to the updated numbers as of 9/30.
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Post by babaoriley on Oct 9, 2014 13:21:57 GMT -5
And we're comparing with approximately 74,300,000 as of 9/15. Not as interested in this number this time around, but still curious.
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Post by bradleysbest on Oct 9, 2014 13:24:40 GMT -5
Predictions? Ill guess 65,000,000
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Post by liane on Oct 9, 2014 15:08:57 GMT -5
SI up 4 million:
Settlement Date Short Interest Avg Daily Share Volume Days To Cover
9/30/2014 78,579,323 5,418,887 14.501008
9/15/2014 74,292,867 5,182,576 14.335123
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Post by babaoriley on Oct 9, 2014 15:41:34 GMT -5
Predictions? Ill guess 65,000,000 Bradleysbest, Shorts are not wimps! Baba |
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Post by bradleysbest on Oct 9, 2014 16:14:11 GMT -5
Apparently not! Lot of guts on those people.....
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Post by mannmade on Oct 9, 2014 16:35:30 GMT -5
Algorithms...
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Post by cretin11 on Oct 9, 2014 23:00:22 GMT -5
Apparently not! Lot of guts on those people..... Agreed. Does anyone have additional analysis of this increase in SI? I'm surprised at it, but what does it mean to the experts here? |
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Post by kc on Oct 9, 2014 23:36:38 GMT -5
That number is amazing as the outstanding float is about 120,000,000 shares. So there has to be many naked shorts in that figure
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