CPHG this past Friday was placed on Regulation SHO Threshold List because shares of the company stock are unaccounted for. Essentially a market maker or market makers sold stock of CPHG that he didn't have, and enough of it to be put on this list.
What does this mean? Assuming this is indeed a naked shorting issue the market maker has 13 days until he needs to buy legitimate shares on the open market to replace the phantom shares he sold. This could create a short covering squeeze and push CPHG much higher than current levels. Considering the Guru sees CPHG heading higher anyway, having market makers covering their short positions will only add to the buying pressure. We saw it happen with RNWF, VCTY and other stocks as market makers are forced to cover their ill-advised share selling.
One could argue these market makers are just doing their job in providing market liquidity, but that doesn't mean they won't need to get legitimate shares in the near future. Maker makers spend most of their days skimming profits away from traders, its times like these when these same traders can effect some revenge, by forcing them to over their shares at a much higher price.
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2 comments:
Jasmine = spammer, can you delete the comment Bob?
seems as though the short squeeze for rnwf hasnt happened yet and the stock remains on the list for 19 days straight now. i'm curious, whats going on with that bob? has the rule just not been properly enforced yet?
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