Great explanation. You know me though. I am going to shoot your rules full of holes.

In my other life I turn around troubled companies. This is a place where rules go out the door and reality sets in.

If I were a hedge fund shorting TRX and other shares and iIrealized I was in real trouble because iIwas millions under water, I'd get together with my BK attorneys and seperate the good assets from the bad. A lot of banks have donew that. they have put their toxic assets in a subsidiary to insulate the good assets. Hedge funds no doubt can do that too.

I would then have the company with the toxic assets and go for broke. This means I would keep shorting to see if could could collapse the stock in hopes of recouping my losses. If not I would take the fund into bk and tie it up for years. While I probably could not short anymore, I would not have to deliver the nakedly shorted shares and I would stiff the brikerage houses for the losses hence the wisdon of registering TRX shares.

It is my understanding that when a fund goes bust all the short positions go as straight losses and do not have to be delivered.

The other scenario that you may not have thought of is that none of the millions of shares shorted will be covered and the brokerage houses that did the lending will take the hit. This is highly, highly plausible when you consider the outrageous premium that is being charged for shorting TRX. Even this forum has reported premiums of 30-50% which means this is a very, very risky transaction for the shorts.

To take that kind of risk means desperation. The assumption is that they will cover. They can just as well go bankrupt and have the brokerage houses take the losses and there will be no covering. This is the real world of bankruptcy!

That is why we do not know which way this breakout will go. A lot of these shorting entitites can go bust and the squeeze will go no where.

Look at TRX' pathetic perfomance today on 1655 gold it is collapsing!