A blogger did ask where I get my information from. I have...

A blogger did ask where I get my information from. I have multiple sources which includes official data, (e.g. ASIC data) and data from other contacts I have built up over years of investing.

Interesting to note that as expected the shorters have used the exit of EWC from the ASX 300 index to continue to cover.

How have they gone since they started covering their short in December 2016?

At a share price of 45 cents the short was down to 18.6 mill from 28 mill.

The share price was pushed down to around 30 cents and the short increased by 2.7 mill from 18.6 mill to 21.3 mill. This increase in short was the main reason for fall in the share price, i.e. the price was “manipulated” down to clear the volume of EWC shares exiting the index. This was easily concluded from studying the gross shorts on the days of the falling share price compared to other days. The average daily gross short during the days when the share price was being manipulated down was 210,000 compared to 30,000 per day when the price was not being manipulated down.

It was interesting to see the short covered not at 30 cents but at 33 cents. Maybe this was a reflection of the importance of ensuring others did not access this stock.

The first day after EWC exited the index enabled the shorts to cover 7 mill shares from 21.5 mill to 14.5 mill. This was a net cover of 4.3 mill i.e. they had to sell 2.7 mill to get the price down to cover 7 mill.

On the following day a further 2 mill was traded at 38 cents (showing how much the price has to move to get volume) and has yet to be reported as a further covering. As previously noted, the short reporting has often been misleading and this again may be the case, however as days pass the likelihood of this being a further short cover is diminishing – let’s wait and see.

OK so what now?

We should now be clear that the shorters are ongoing buyers covering their short. Again I would emphasis that they appear to be well informed so by implication it can’t be that long until we have some material progress on the projects.

In the last two posts I commented that the price would likely move up because of negativity and shorter behaviour, first at 25 cents and then again at 30 cents.

Once again we have been provided an opportunity to purchase shares cheaply from shorter behaviour. This will be the case again if the shorters carry out their usual month end manoeuvring and manipulate the price down in the last 2 or 3 days of the month. We have noted this by studying many month end movements and correlating this to shorter activity. March is probably an important month for quarterly reporting and bonuses based on performance so this shouldn’t be a surprise if this happened again.

However any move down into the end of the month will very likely be quickly reversed in the following weeks given the lack of supply of shares for sale, the clear direction the shorters are heading i.e. to cover, the value gap between underlying value and share price and the substantial progress having being made in the business.

When progress and or funding is announced the share price is likely to rapidly spike higher.

Given the end of easily accessible stock - is a short squeeze inevitable, (current run rate of 200,000 per day takes 3 months to cover)?