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This stock is up 30% since I selected and purchased it for my real account two days ago. Given that there does not seem to be any public news, one must assume that this 1 of 3 equally BS things has happened:

 

1. There just might be some true "news on the street." This could be a rumor of positive information that is not yet public. If so, shame on them for not keeping it private or making an announcement. The last time that the company took a run like this, they had managed to piece together a decent quarter.

 

2. Or it could simply be trading activity (w/ perhaps a falsely spread untrue rumor.) Bringing up the volume on a stock that trades so cheaply and has such ordinarily low volume that it doesn't cost too much money to move the price around. With an upward push to rattle the jittery latecomers who sold short most recently and thus risk having their selections turn sharply red.

 

3. It could be some combination of the two. For those that want to add to their short position, but cannot find the borrow since MOVI is on the Reg SHO list, they simply need to create the price increase by some short term buying, which would lead the latecomers to cover, creating not only short-term profits from their long positions, but also creating new shares that could then be borrowed to sell short.

 

I presume that that this third possibility is the likeliest of all, and as far as I know, doesn't break any rules. (I am still chuckling from the article I read where some hedge fund had acquired enough shares long for a company to be forced to open its books to them - the threshold is 5% or something, but which, at the same time, had acquired a short position five times the size of its long position. This story is a quick reminder for those nonbelievers that the person with the most bullets typically wins the war.) In fact, it's such an amazingly simple strategy for the person with means.

 

Here it is for the person who has the fundraising ability, but not the brains to generate ideas that will create returns.

1. Watch the Reg SHO list for new entrants that meet market cap and volume requirements.

2. Make lumpy purchases to drive up the price and scare away the newcomers.

3. Sell as the upward momentum catches some speed and then start borrowing as many of those newly created shares as you can get your hands on.

 

As an aside: note that if a company is headed for bankruptcy, there is no advantage to getting in on the ground floor. If you sell it short at 30 or 3, your return is still going to be 100%. It's best to wait as long as you possibly can since it's the same triumph either way.

 

But still, I think that the odds are less than 20% that this company will head into Chapter 11. But now that I can sell for a tidy profit (in my real account, i.e.) I have to augment this with a decision about the likelihood of today's price reflecting points 2 and 3 in my analysis.

 

Ugggggghh! What is a person (without any real access to information) to do!

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