The problem is not so much that the shorts are protecting their position and stacking up on the offer, it is that there is so little buying interest. There are just many small orders showing on the bid all the way down to the mid-80s. For whatever reason, retail specs are not getting excited about this deal, and larger players are content to wait and see.

The wildcard in this may be the action on the Alpha. The big shorts may be covering quietly on the Alpha and thus would not appear in my market depth. Alternately, if a large order shows up on the bid we may see someone hit that and clear out some of the overhang, or it may force other buyers to be more aggressive and start taking out the offer. If that happens then the overhang will likely disappear very quickly. I doubt there are really that many shares for sale from legitimate sellers, and more likely there are just large blocks showing to discourage longs. These orders would likely be pulled in a half-second if the buying pressure showed a hint that they could be filled.

Think about it: you cannot cover a short by offering more shares. This is a staredown. The shorts want to cover as quietly and cheaply as they can. If stacking the offer will help them do that in a zombie market, so be it.

If ECU came out with some kind of bullish news at all we could probably run the stock 4 or 5 cents higher by lunchtime.

cheers!

mike