Larry, just another viewpoint here, but I have to disagree with you. The ask was controlled by the short MMs, and the bid was the defending MMs. The short MMs tried to turn around and cover from the bid side when the stock turned from the low 4s but were unsuccessful. If you postulate that they bought from the ask, then they were just buying from other shorts.
There was negligible covering by the shorts during the turnaround from the 4s to the 5s, and in fact the shorting was significant by INCA at the 4 3/4 level a few weeks ago.
More importantly, the 'short interest' reported is highly deficient as a measure, since as I've posted previously I think the behavior of the stock this spring indicated that covering of shorts at the low end of the trading range resulted in a pile of long shares that were not used to close the short position. If they had been, the NET short position would have been nearly flat, certainly much flatter compared to this summer.
In short, the NET short position, which is what would be meaningful, is inaccessible to us. Anything else here is just a guess. MY guess, based on observing the level 2 trading, is that the net short position actually was flat this spring, and increased dramatically this summer, even though the REPORTED short interest has it the other way around. |
