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Oh Al,
Stop making me think so much. Oh, I see. Trying to keep me on my toes. Good
man.
Ok. As far as the paper work is concerned my brokerage shows buy short covering
but that is not my point. What I am addressing is the supply and demand in the
stock. If the stock is trending higher we say the demand for the stock is
higher than the supply. Vice versa for a down trend.
Looking at the act of sells short we can say it increases the supply of the
security in the market place. When the short seller covers they do not change
the supply - demand balance in a trend. Since they are buying from some seller.
Also the act of short selling can cause a stock to trend lower. i.e., due to
increased supply. Hence the true market price of a stock might be suppressed as
a result. When enough short sellers cover at the same time the price can move
higher. (Back to a less suppressed price level.)
Hope that makes sense. Now how do I know they are short sellers covering their
shorts. Experience? Might be wrong. But that what it looked like to me.
Harley
Al Taglavore wrote:
> Harley Meyers wrote:
>
> "...Well as far as I can tell the smart money was covering their shorts on
> Friday. That is why we had the end of day rally in the DJIA. These were not
> buyers but coverers of shorts. ...
>
> Please explain. When I cover a short, I must buy. When I go long (buy) I
> must sell to collect my profit. Why do you say that a short coverer is not
> a buyer? That is the way it reads on some confirmation slips I am
> reconciling at this very moment.
>
> Al Taglavore
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