how shorts are able to cover 52M shares holding the price in certain narrow range. Let's say everybody understands how this stock undervalued. so you are buying, institutions are buying, everybody is buying. Who would sell the stock for $1 that intrinsic value is 5-10 fold higher? As far as I can get the shorts have only 1 option: gradually increasing a short interest hold or even drive the price down until longs give up and begin sell their shares (very unlikely) or killing the stock shorting it to zero (naked of course). The last scenario is possible only if SEC is completely corrupted i.e. supports naked short selling (BTW: I am pretty sure SEC is on a naked shorts side). Otherwise a huge short squeeze must bring this stock to 10 within days (very unlikely).
Once again. I know many trading tricks but to cover 52M shares having an average day volume of less than 2M shares mostly on a buy side is impossible thing.
Market down, IAR Down - market up, IAR Down!!
Downgrades, IAR Down - Upgrades, IAR Down!!
"The Securities and Exchange Commission said it sued 38 people for stock-loan schemes which involved short selling. In short selling, a security is borrowed in anticipation of making a profit by paying for it after its price has fallen."
I don’t believe the huge short position will be covered substantially by holding the price in this narrow range but most of the low volume the last several days was likely cover buys from sellers using stop losses set at a few pennies below a purchase toward the upper end of the trading range that has existed. Also, I don’t believe even short selling can take this to zero – buyers would come out of the woodwork to snap up every share and there would be very few shares made available. And you may be right that the short interest is increasing but that would be folly for the sellers at current prices.
Watching the prices move in this tight trading range day after day is bound to be attracting some sellers who have a much higher cost per share to attempt to sell at say $1.20 with a replacement purchase of say $1.14. 6 cents divided by $1.14 is a healthy 5.26% gain with such a move. I have seen several comments on this board, perhaps including you, about holding a core position and a trading position – the trading position representing buying and selling within the current range. The risk here is the possibility that the stock will suddenly rise rapidly on an upward trend and the opportunity cost for getting the intended long position back could much more than offset the several gains from multiple selling and buying within this range.
All this is happening within the context of the meltdown in the financial sector and that condition is not likely to soon change. But daily volume has declined and I believe that there is support, even by the shorts, just north of $1 and so the number of folks participating in selling, whether it be shorts, naked shorts or day traders, is in decline. The stage is being set for an upward trend, perhaps kicked-off with the Q3 earnings release.
The solution for running IAR to 10 and killing the short sellers in the process is to buy long a ton of the stock, and advise the brokerage firm that you forbid them from using your shares for short sales. This will drive the price of the stock up, and kill the shorts in the process. They could lose hundreds of millions in the process.