THES - An Explosive Reverse Merger

Late day trading for THES turned into a frenzy as market makers scrambled to fill orders amidst increased demand for the stock.  Why is demand increasing for THES?

THES, Thermal Energy Storage Inc, was recently reactivated at its Secretary of State.  Along with this reactivation came a new company address and a brand new CEO.  The company coming into THES is a Property Management company with experienced staff at the helm.  This is indicative of a reverse merger and in a nutshell means that THES is finally getting value back into the stock.  There is nothing better in the penny stock arena than having a stock that had zero value for 8 years finally get a company rolled into it.  Instantly the value of the stock increases, and in this case the increase could be 10 to 20 fold.

Wait it gets better...

THES was dormant for 8 years.  On its best day this stock traded 667,000 shares.  Today THES traded 6 million shares of stock.  Yesterday THES traded 3.1 million shares.  On Friday volume was at 3.5 million shares.  That is 13 million shares.  Where did these shares come from? 

I think market makers, whose main directive is helping to maintain an orderly market, have sold shares they simply do not have to keep up with the demand for the stock.  In doing so they anticipate being able to cover these shares when the stock price drops.  We all know what happened with CMGR when market makers tried the same tactic.  The stock went from $.003 to $.225!  These market makers will aid in the buying pressure as this stock heads higher.

Shorters also jump in when a stock has risen for no reason, at least they see no reason for the rise, and they short the stock with all of their firepower.  Unfortunately for them THES is rising for a reason and I think they have been caught off guard.  Margin calls can come quickly for a penny stock trader as a stock rises 100's of % in a violent fashion.

These are the ingredients for a short squeeze and this is exactly what I think started to occur late in the session today and should follow through right into tomorrow.

What is worse for the shorters and market makers is the limited supply of stock.  Remember this is a stock that over 10 years never traded more than 667k in one session.  If the demand continues shorters and market makers alike will be scrambling to cover.  This could create an explosive situation.

Just looking at this chart you can see the demand for shares of THES.  In my view market makers have been matching this demand with phantom shares, essentially naked shorting the stock.  It is this type of action that leads to a short squeeze.

After 8 years THES has come alive again.  With limited shares in circulation, market makers selling shares that don't exist, and shorters trying to find the top of this stock, things could get very interesting in the days ahead.

If you haven't already add THES to your watch list.