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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: kathyh who wrote (59729)	9/15/1999 12:18:00 AM
From: booray	Respond to of 90042

ya yank on their short ones, buying pressure, It will do it every time. Takeout rumors in itself, that can cause a short squeeze. There is more to this than just a take out. IMHO, We cam thank Tman for that. eom

To: kathyh who wrote (59729)	9/15/1999 12:34:00 AM
From: R.E.B.	Respond to of 90042

kathy, as you know, when someone "shorts" a stock they borrow a share of stock (on paper) from someone else; you, me or anyone, without your knowledge; and then they sell the borrowed stock on the market hoping that it will later go down. If the stock goes down, the short seller can then "cover" their short position by purchasing a share of stock on the open market and by doing so they repay the share to the person they borrowed it from. They hope to pay less than what they sold it for... thus making a profit. If the stock goes up, instead of down, they will be forced to pay more for the stock than they sold it for (they lose money). If the stock goes way up, many short sellers will seek to cover in a hurry by purchasing stock on the market to cover their position. By doing so they increase the volume and price even more; thus pouring fuel on the fire, so-to-speak. A "squeeze" comes about when the true owners of the stock want their borrowed shares back and there are not enough shares available on the open market for the short seller to re-borrow. The result is a "short squeeze" and the short seller is forced to pay the asking price in order to find enough stock to buyback and repay the shares they are FORCED to return to the real owner. The reason the price goes up so quickly is because the condition known as a "short squeeze" typically affects all shorts at the same time, usually in proportion to the size of their short position. Sometimes the term "short squeeze" is incorrectly used to describe a situation when the stock goes up and the short seller is scared into covering due to mounting losses or margin calls. Shorting is a good strategy if done for sound investment reasons; but if often breeds malcontempt and negativism. It's sort-of like betting on the "don't pass" line at the crap table. I hope it helps... my apologies if I bored anyone.