Tuesday, March 13, 2012
THQI - Chart Update
One day after having one of its biggest rallies ever THQI posted modest pull back of less than 2%. I think the rebound is still intact. The $.65 50DMA will present some resistance, but a break will set $1.00 into focus. Over 20% of THQI's tradeable shares are in the hands of short sellers, meaning they sold the stock and are holding for further declines. Should THQI rally from here, there is a chance of a significant short squeeze as those who borrowed shares scramble to either lock in profits, or get out before their losses mount. Unlike buying a stock, when you can only lose as much as you invest, a short sellers loss potential is literally unlimited, which is one of the reason's why short squeezes occur. It's a panic and it can cause rapid moves higher in a stock price.
FFN was at these prices with the same THQI 20% short ratio back in December.
For those of you not familiar with FFN and my call back in December, here is a chart (FFN ulimately traded to over $2.70 a share) and a post on my blog:
FFN Ready for A Short Squeeze?