GXY 2.12% 92.5¢ galaxy resources limited

lol - Well it all comes down to what you define as...

  1. 725 Posts.
    lightbulb Created with Sketch. 1130
    lol - Well it all comes down to what you define as "manipulation" versus "negotiating". What we call manipulation, the regulators call aggressive negotiating. Which is why we keep ending up in this endless debate about manipulation - we have different definitions for the observed behaviour.

    My argument is much simpler - if a company has a high short level - like GXY, its because the shorts have not achieved their expected target price at that point. Thus the shorts and the market have a different view of the "correct" price. The higher the shorts level, the more those views disaggree. Put simply, if the shorters were right in their view the price would quickly fall to the level at which the shorters considered they could not drive the price any further because the market would agree and the shares would be sold with no or few buyers down to that price, and they would exit. Once at "fair price" they would be able to exit as buyers would be present (by definition).

    So while there are still lots of shorts, they can not / have not reach/ed their price and there are more buyers than they can overwhelm - so they are clearly wrong in their price assessment (given the base assumption that the "market" is always right). Whether the price goes up or stays the same (or even falls some what) indicates how wrong they are - but while ever they are not at their target price we are just talking degrees of wrongness. A similar argument applies to the buyers and holders - if the price is falling in the absence of shorters they are wrong, but if the price is falling primarily due to shorters they are in fact correct (due to the previous reasoning) and we are talking a timing difference. As it costs nothing for the long to hold his position (assuming he doesn't need the cash, or has a better investment choice somewhere else), and assuming that the market is correct (ie. the company is transparent and both parties are properly informed) the long must win as the short has to rent his shares - so it costs him to hold his position.

    Now where the market is not fully transparent the two sides can have different views based on different knowledge and where these gaps are resolved (such as recent clarifications of spod pricing) the market should rapidly adjust. The more transparent the company becomes the less the different views are justified by information differences.

    The fact that GXY has recently had a dirty laundry clean out with the market now being significantly better informed, yet the price is still pretty much in the trading range, in spite of a renewed shorter onslaught pretty much tells us what we need to know. The shorts have gone from being better informed to the same level of information as the market and they are still not at their imagined target. If anything I'd say the write downs were significantly overdone (although no-doubt justified under today's market parameters) and we will see revaluations upwards in future years on a number of items. The longs were wrong before partly because they believed the implications of the previous pricing comments, but are much less wrong now (given almost perfect pricing knowledge now) ... and the SP has not crashed. Guess what that suggests?

    I am watching the trading with great interest now. The gross shorts for the last couple of days were 10% and 16% of trades, while the short level is running circa 16% of capital, yet we have all been watching clear sell queue stacking with aggressive purchasing at intervals through the day, which suggests that there is a lot of down pressure being threatened but not actually executed - i.e. "they" retreat before being sold. Add to that the volumes are pretty low on most days (comparatively). It looks to me that both sides are being cautious now. Some of the traders will be exiting to chase nickel and maybe gold, which will account for some of the sellers.

 
watchlist Created with Sketch. Add GXY (ASX) to my watchlist
(20min delay)
Last
92.5¢
Change
-0.020(2.12%)
Mkt cap ! $378.7M
Open High Low Value Volume
95.0¢ 95.0¢ 92.0¢ $1.978M 2.122M

Buyers (Bids)

No. Vol. Price($)
18 158660 92.0¢
 

Sellers (Offers)

Price($) Vol. No.
93.0¢ 41823 3
View Market Depth
Last trade - 16.10pm 17/10/2019 (20 minute delay) ?
(live)
Last
93.0¢
  Change
-0.020 ( 1.58 %)
Open High Low Volume
94.0¢ 94.5¢ 92.0¢ 355524
Last updated 15.59pm 17/10/2019 (live) ?
GXY (ASX) Chart
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.