Man, have I been down a Wallstreet-related rabbit hole this last week. I have learned a LOT, though.
First thing I kind of glommed onto was a knowledgeable sounding trader who pointed out a pattern of rises and falls in the $GME stock price in relation to when news comes out of how many short positions and interest are on the stock, and in the following days there are 'settlement' and 'due dates' in relation to the short position interest.
So, we waited with baited breath, end of market Tuesday to see the latest FINRA report on how many shorts were still reported on $GME. The numbers were... baffling. One number made it appear as though there was substantial covering of short positions, but there was still an absurdly high % of float shorted. What's more, the number for "total number of shares held by institutions" exceeded 120%.
How is that possible? A little process called "naked shorting" is the most common theory, something that is supposed to be illegal per an almost never enforced SEC rule. Now looking back at Elon Musk calling the SEC the "Shortsellers Enrichment Commission" has a little different view.
This is very bad for the market overall to have hedge funds able to basically generate conterfeit shares in order to sell short. This artifically depresses stock prices to at some point make a price plunge a self-fulfilling prophecy. They can do whatever they want with less risk this way and screwing the little guy in the process.
If you dive deep enough into the people who initiated the run on $GME, it's almost more about sticking it to the hedge funds and make them bleed some for doing such illegal actions with wreckless abandon knowing the SEC won't likely stop them.
There's now a movement within the wallstreetbets crowd to write to various members of congress who are on the finance committee that will be overseeing a hearing on the memestonks crowd this Thursday. They also have subpoena'd the guy that basically started this movement, call him DFV for short (the F part would get automatically bleeped out on this board if I were to spell it out I'm pretty sure).
The story I can see with DFV is he's actually been on the $GME train for two whole years, but it wasn't apparent how insanely shorted the stock had become until recently. He just saw some value in the company that it may go back to growing and have respectable profitability. But starting in December is where things really started getting very noticeably... not right, shall we say. Eventually that whole messageboard caught on, spread to other platforms and the partial short squeeze happened.
Here's the thing. Many of these WSB cats are still holding the bag on these shares, many of them way under what they bought them for. Some have cut their losses and left, but a hell of a lot more of them are not only continuing to hold, but they are doubling down. The squeeze isn't done, but it does need a catalyst to kick it into high gear again.
Two things to look out for is the short interest due date is this coming Wednesday and the congressional hearing that will involve DFV apparently as well as a couple hedge fund managers is Thursday. Those might be enough to light the fuse once more. The price was eerily calm this week. Started in the $70s market open on Monday, settled in at right around $60 with minimal movement, dropped another $10 to $50 for Tuesday with some up and down in the middle of the day then pretty much stayed put most of the rest of the week with some minor movement beginning on Friday.
Also, maybe just a coincidence, but the GME price was making a small run mid day Tuesday, then a WSJ article comes out suggesting the attempted short squeeze is done, and it almost immediately fell back down... WSJ hacks will write anything when their hedgie overlords pay them enough.
www.zerohedge.com
www.autoweek.com
www.bloomberg.com
www.wsj.com
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