Results 1 to 6 of 6
  1. stockh's Avatar
    Posts
    401 Posts
    Global Posts
    403 Global Posts
       #1  
    Looks like a good short squeeze is going on with the stock price jumping up +14pct.

    Couple this with the app store release and webos upgrade in a few days and stock could jump even more.

    Congrats to anyone still holding.
  2. #2  
    A short squeeze is people "puking" their positions. This causes a short term spike where people are paying up to "bad" (non-equilibrium) prices, and as a result lots of people are willing to sell at those inflated prices. It's basically the opposite of a fire sale; if you and a bunch of your friends got yourselves into financial trouble and had to dump your new BMWs for 10k, we'd happily take them off your hands but you can be sure the market would quickly correct as the deal was "too good to be true".

    Once the shorts have covered, the price comes back down to more or less where it "belongs". By its very nature a short *squeeze* is temporary.

    Last year a rather extreme example occurred when someone acquired enough of a share of Volkswagen (coupled with the huge chunk the German gov't holds) to basically tell the shorts "there isn't enough for you to cover, so you'll pay what I tell you to pay".

    VW's market cap that day made it momentarily the most valuable company in the world. Pretty crazy runup, and pretty ballsy move from the guy who thought everyone getting short VW was wrong and was willing to put his money on the line to smack them back into reality.
  3. SharonW's Avatar
    Posts
    402 Posts
    Global Posts
    640 Global Posts
    #3  
    Quote Originally Posted by jaguar717 View Post
    A short squeeze is people "puking" their positions. This causes a short term spike where people are paying up to "bad" (non-equilibrium) prices, and as a result lots of people are willing to sell at those inflated prices. It's basically the opposite of a fire sale; if you and a bunch of your friends got yourselves into financial trouble and had to dump your new BMWs for 10k, we'd happily take them off your hands but you can be sure the market would quickly correct as the deal was "too good to be true".

    Once the shorts have covered, the price comes back down to more or less where it "belongs". By its very nature a short *squeeze* is temporary.

    Last year a rather extreme example occurred when someone acquired enough of a share of Volkswagen (coupled with the huge chunk the German gov't holds) to basically tell the shorts "there isn't enough for you to cover, so you'll pay what I tell you to pay".

    VW's market cap that day made it momentarily the most valuable company in the world. Pretty crazy runup, and pretty ballsy move from the guy who thought everyone getting short VW was wrong and was willing to put his money on the line to smack them back into reality.
    The thing about Palm is that there's always a massive short position. LOL They've created a floor in the stock and a staircase has grown from that floor. And with the stock having recently had as much as 40% of its float shorted...there's so much more puking to be done.

    They could be puking up this stock for days if the climate is right and the OS has nailed another possible catalyst. I'm in total agreement with him/her and said as much on the front page earlier today. Another would be the imminent secondary stock offering which has done wonders in instilling confidence in the bank stocks that offered same.

    Long Palm in my IRA, and the trading outside of that has been wonderful, too.
  4. #4  
    It could very well be that there are large short positions who "see the light" and decide Palm is on the way up. I'm not saying that isn't the case.

    However, the "short squeeze" phenomenon is not a change in price as the stock finds equilibrium, but more like a rubberband snapping back (and overcompensating a bit). It's not something that continues because as soon as it's apparent what's going on everyone falls all over themselves to cover before it gets bought up further, so the run up accelerates into a spike that ends quickly.
  5. SharonW's Avatar
    Posts
    402 Posts
    Global Posts
    640 Global Posts
    #5  
    Quote Originally Posted by jaguar717 View Post
    It could very well be that there are large short positions who "see the light" and decide Palm is on the way up. I'm not saying that isn't the case.

    However, the "short squeeze" phenomenon is not a change in price as the stock finds equilibrium, but more like a rubberband snapping back (and overcompensating a bit). It's not something that continues because as soon as it's apparent what's going on everyone falls all over themselves to cover before it gets bought up further, so the run up accelerates into a spike that ends quickly.
    I know how short squeezes go. Nonetheless, the countless short squeezes in Palm have helped establish higher floors in the stock when equilibrium returns. Prior to now, you could have waited for Palm to dunk back down into the 12s and gotten in again for another ride. I don't believe that will happen again unless the entire market goes in the dumper.

    Here's some other analysis showing the "new" bottom might now be in the $14 range. Moreover, we've established a new high. Nothing like higher highs and lower lows.

    Options Edge: Palm, Inc., Goldman Sachs Group, Dendreon Corp., and Hoku Scientific
  6. stockh's Avatar
    Posts
    401 Posts
    Global Posts
    403 Global Posts
       #6  
    [QUOTE=jaguar717;1909829]Once the shorts have covered, the price comes back down to more or less where it "belongs".

    The problem with your statement is trying to figure out where the stock price "belongs".

    Did it "belong" at 1,3,5,7,9,10,.....you get the picture. Anyone who shorted is feeling extreme pain now that it's hovering around 16.

    Was the stock being artifically being held down due to the huge short position? How much more pain can the shorts take before covering?

    Good luck trying to figure out when the stock is trading at "equilibrium"

    Once again, congrats longs!!!

Posting Permissions