True enough - short covering can drive a stock up. And short covering here makes sense - anyone short GBT cannot expect to make much more from the short position here - the majority of short gains have already been made. And shorts need to re-deploy capital just like anyone else. So, a short might look at this market and say: any further gains from my GBT short are likely to be limited, but this market is hot, so I'd like to use my money on some other stock. So, he covers.
But once the shorts cover, what provides further fuel for a rise? It is also true that the big cap, or beaten down blue chips recover first, and then the second and third tier stocks do next. But that is assuming a sustained rally and confidence in the market. While that may transpire to be the case, I'd rather not wait. As I said before, if I were still long, I'd sell anyhow here as I'm willing to give up any gains here from short term rallies in GBT (like today's EOD run up) in the belief that the freed capital will perform better in other stocks. And while GBT's run up late in the day is better than a decline, it happened on low volume, and returns on other stocks I've picked up while the market was getting trashed Thursday have far outstripped anything GBT is likely to deliver within any foreseeable time frame.
Regardless, I wish all GBT shareholders the best - may the stock rocket. Certainly, this is one of the better small cap telecoms, and having invested a certain amount of DD in it, I like what I see. However, my investing/trading behavior is guided by the market realities as I see them, which at this point in time, rightly or wrongly, does not include holding a long position in GBT.
All IMO.
Morgan |
