SHorting Stocks: Education/strategies/techniques Message Board

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Strategies & Market Trends : SHorting Stocks: Education/strategies/techniques

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To: Early Bird who wrote ()	2/22/1997 7:29:00 PM
From: Early Bird	of 99

The SHORT SQUEEZE ! WHAT IS IT ? From Avid.com: Another risk to shorting stocks is commonly called a short squeeze. In a short squeeze, a high-volume buying wave drives prices higher. This euphoria sparks even more buying by new participants wanting to establish a long position and by existing shareholders who want to increase theirs. It may also "scare" those who are short the stock into covering their positions. This event may be triggered by an unforeseen news announcement or simply by an important resistance level being broken. Another characteristic of a short squeeze is that many of the buyers demand delivery of their shares, or that they be placed in safekeeping, and therefore not allowable for lending to short sellers. Since their is a finite number of outstanding shares issued, your broker may force you to deliver the originally borrowed shares back to the brokerage house so that they can be delivered to a buyer. The effect is that you must cover your short position regardless of your desire to maintain the short.

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