I am firmly in the camp that believes ECU is in play by short interests. Just the intensity of opinion that I see expressed on many BBs is enough to convince me that some plenty of people have a dog in the fight on both sides. This would include large institutional players that have the staying power to dump millions of shares and ride out intense volatility, and also the dumb money specs that short a few thousand shares and then sweat every uptick. I speak with analysts about the company frequently, and some like it while others do not, but I do not see the hostility towards the company that several people I know of seem to have and therefore one would assume that shorts are lurking. Fair enough. I just find it odd how the sentiment on this forum swings so wildly. Around xmas there was this notion that ECU would be a slingshot to much higher prices, and now it seems everyone is convinced that the shorts are going to blitz this company to new lows.

Lets just clear up one fact: if the shorts were in control of the stock, then it never would have broken out above a buck in the first place. Its that simple. Yes, there are high frequency traders at large, and some firms seem to pick opportune times to unload large chunks of stock into weakness such that the stock falls a long way quickly. But this is not the same as controlling the trade. It is more a reflection that investors are scared, bids are not stacking up to challenge the shorts, and during low volume days the shorts can overwhelm the buyers. Nothing has changed.

Lets also consider that many funds are selling right now on the assumption that the metals are due for a pullback. This is not shorting although it may look the same in turns of large blocks on the offer. I believe ECU is held by at least one ETF for the juniors and if investors are selling the ETF units then stocks like ECU get sold too as the allocation is reduced.

The point is, all of these inputs are probably short term. The opposite end of the trade can happen just as quickly. If the metals do not collapse then the funds will probably scurry to re-establish positions. Retail buyers will see ECU as a value and stack bids that cannot be overwhelmed by shorts. And shorts that are over-extended will buy on the way back up, fueling a rally.

I have chosen not to buy any more bullion at these levels, and have only nibbled a bit at some of my favorite juniors that are way down in price right now. The reason is because I too fear that we could have a move lower before things bounce higher. I am not selling, but I am not buying either. And I consider myself an optimist because I think we have much higher to go on this bull market, and because I think we are a long way from a mania, a crowded trade, a bubble, or whatever scare word people choose to use. But I also know volatility is a big part of this sector, and so I am sitting on my hands. And suspect many others are thinking like myself. If there are shorts of the same opinion, then I would expect them to short like crazy right now.

We cannot know the future. I think there is a very good argument that most of the selling on this move is already out of the system. That silver could explode higher and surprise everyone. And that a stampede of new money may race the shorts to bid the stocks higher as a result. I hope so but I am just going to ride this out and see how it goes.

What I am not going to do is panic and give up. I have not sold any of my traders which are now well underwater. I shrug my shoulders at the heavy selling across the board, not just affecting ECU. This is part of the price of admission to play this sector. The shorts are only in control of this stock to the effect that longs are discouraged and sell into them. It wont last forever.

cheers!

mike