Garage likes trading the mechanicals of the market with mid / small caps. (MC < 1.5 billion > 200m)
One of the trading hounds jobs is to be across the time series in % shorts outstanding against particular 'growth stocks'. Growth stocks are recently profitable high transient PE's with all metrics improving and maybe still a few ? to be answered.
The hound is trying to pick up defined patterns (if any) over a short period of time and his source document is 100 top shorted stocks on ASX and starts from there his preferable time horizon < 3 mths.
Little bloke has been doing this for about 18 mths now and has been a component of some of our better trades, the team even has a name for this type of play the 'trading hound short pinchzer' THSP.
Fairly basic trade but no one suggests the market is sophisticated and the garage definitely not so.
The pattern the little bloke is after is sustained weakness in SP against % trend shorted.
we are tracking about 6 of these atm, one being SLC.
Was stopped out of SLC yesterday, thought support was 150 then 145 then 140 touched 131 yesterday you know the story got entry wrong no big deal that's what tight stops are for.
% shorts have been > 3 but are receding, current about 2.85 and trend defined and currently being watched closely.
As above have no idea where support really is although volume suggested not far off, 2H results due feb to further inc transparency and near term catalyst, a comfirmation of stellar metric trends more than probable.
You only get about 8 to 10 patterns like this per annum, in my experience most work (some don't
)
This type of trade profile is quite large looking for 25% ish with managable risk, so if you are looking to triple bag 5k not for you.
We have no emotional baggage being stopped out and trading team is highly confident a THSP still in play, one for WL for forum to ponder if nothing else.