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Message: Re: IW post from IHUB
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Jan 01, 2013 08:50PM

Jan 02, 2013 09:02AM

Jan 02, 2013 10:31AM

There is a lot of confusion and misinformation concerning shorting. You can count on every so often someone reporting the daily short report, which usually shows 30-70% of the daily trading is "shorts". This has nothing to do with real shorting, it's simply an artifact of the way the MMs operate- those "shorts" simply result from making the sale before making the buy to cover, even though the buy may occur immediately after the sale. Most of these daily "shorts" are covered the same day. True shorts occur when a MM "borrows" shares and then sells them, hoping to cover later at a lower price. These are the real "official" shorts you can see at a site like http://www.otcbb.com/asp/OTCE_Short_Interest.asp. Just put "SFMI" in the "View by Security" section, and get something like the following:

SILVER FALCON MINING (SFMI) OTC Type: OTCBB

Short Interest for December 14 2012
Short
Interest
Percent
Change
Average Daily
Sddhare Volume
Days to
Cover
85,769 (48.43) 2,838,600 1.00

Shorts Increase Daily Volume Days to Cover

Obviously, 85K shorts is not significant. However, there is a catch- the MM doesn't have to designate the shares to be "borrowed" before selling the shares. They have I think three days to do it after selling the shares. If the MM doesn't designate and "borrow" the shorts, it then becomes a fail to deliver, or FTD, otherwise known as a naked short. These don't show up in the official report, especially if the MM uses various tricks to move the shorts around, so that they aren't in any one place longer than the three days that trigger the FTD. Even though the "official" short count on SFMI is 85K, it's possible there are a lot more out there.

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