Zeev's Turnips - No Politics Message Board

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Strategies & Market Trends : Zeev's Turnips - No Politics

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To: LTK007 who wrote (68132)	5/17/2002 1:22:37 AM
From: Jon Koplik	Read Replies (3) of 99280

I saw Jim Grant today too, and had a 100% different "take" on it than you did. He said "zillions" of shares are now sold short on the NYSE and NASDAQ by entities that are novices and non-experts in the field of short-selling. They have no conviction or special insight into their prediction that XYZ shares "should" fall in price. The obvious implication is : if and when we reach some "straw that breaks the short-sellers back" level of rise in stock prices, we have the potential to see an unprecedented rally in stocks, as HUGE numbers of un-committed, unknowledgeable "shorts" start doing short-covering purchases. Since I have heard : "the sharpest rallies of all are the short-covering rallies" ... And, since Jim Grant has already laid out that we have historic highs levels of short interest ... I would predict that if and when we start some monster rally, you should not focus on (as you stated) : "real buying has been minimal" but, recognize that ANY sort of buying will make the price of something go up ! Jon.

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