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Monday, June 23, 2008

Today's Thoughts - PDO Short Massacre

PDO is now up an astounding 750% from my first buy 46 days ago ($4.47). In the $5-$7 range I was posting endless research and repeated assertions why I thought this stock was going to $15+. Well it hit $37.99 today. Lately, on an day that oil pulls back, I have witnessed many message board posters stating why PDO is junk and why it is going down. Grant it the stock has well surpassed my rationale for it deserving to be much higher than a $5-$7 stock. It seems apparent to me that repeated short squeezes Read More Here have helped fuel PDO to great heights. So I decided to look at the short interest history posted by Nasdaq for PDO, MXC (another low float oil high flying short squeeze), and NTI, which I believe to be the next mover along the lines of PDO and MXC.

(I rounded numbers in this analysis)
Link to Short Interest Numbers
Bloomberg to Check Stock Floats


PDO had a low to high range between $4 and $8 during the last few weeks of April. During that time, short interest increased to 89,000 shares from 5,000, an increase of 1,660%.
PDO had a low to high range between $8 and $29.98 during the month of May. During that time, short interest increased to 206,000 shares from 89,000, an increase of 131%.
PDO had a low to high range between $8 and $29.98 during the first few weeks of June. During that time, short interest increased to 219,000, remaining fairly constant from the 206,000 at the end of May. And today, June 23, 2008 the shares hit a new high of $37.99.


MXC had a low to high range between $9 and $34 during the month of May. During that time, short interest increased to 148,000 shares from 36,000, an increase of 311%.
MXC had a low to high range between $30 and $51 during the first few weeks of June. During that time, short interest decreased to 106,000, from the 148,000 at the end of May. And in after hours today today, June 23, 2008 the shares hit $51.


NTI had a low to high range between $8 and $15 during the last few weeks of May. During that time, short interest increased to 26,000 shares from 3,000, an increase of 767%.
NTI had a low to high range between $13.50 and $20.85 during the first few weeks of June. During that time, short interest increased to 78,000, from the 26,000 at the end of May, an increase of 200%. And today today, June 23, 2008 the stock closed at $16.99.

Some Observations:

1) All three stocks made initial moves and attracted a higher short interest after the initial moves.

2) In the case of PDO and MXC, after that initial move and increase in short interest, an event (press release or earnings release or just a strong upward move) launched them to even higher highs seemingly setting off a short squeeze to the lofty levels they have remained.

In NTI's case they seem to be at the launching point prior to the event - meaning, that in my opinion, with news or a catalyst (or just a strong upward move) it could be launched into the same patterns as PDO and MXC.

3) Even after the event and the corresponding move to higher highs, short interest remained at a level fairly higher than when this entire sequence began.

4) If PDO and MXC are the result of a short squeeze then does it only take 100k-200k short shares or approximately 5-30% of the outstanding float short on a stock to cause these squeezes? Or are there large amounts of "naked shorts"Read More Here that are not accounted for in the Nasdaq short interest numbers?

These are comments about stocks I am interested in and are to document my thoughts only. This should not be considered investment advice. See Disclaimer at bottom of the blog.

No comments:

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Welcome to super-trades.com, blog home of Superman. Purpose of this blog is for me to discuss my trades and stock ideas (As well as opinions and rants on stock market related issues). I will mention the date and price I enter. As far as exits, I always try to take half off when I have some profit and if I believe in the stock, let the rest run further. I always also use mental stop limits, at which time I would exit and minimize any losses. I do not like to give price targets unless I can support them by P/E in some way or by comparison to another stock. I just post stock trades and ideas that I believe will go higher (or lower for shorts) and the reason I believe that. Individuals should have their own strategies for managing profits and losses. My stock picks tend to NOT be daytrades at all and many take time to move. I am not an investment advisor and this blog should not be considered or followed as investment advice.