RE:RE:RE:RE:RE:RE:RE:What's up with the trades today?This post from letsgetready is worth repeating again. It explains what is happening with DML & FCU stock prices. Arbs are buying DML (covering shorts) and selling their longs in FCU (the other side of the original arb). What this is doing is giving us (another ) buying opportunity in FCU!
letsgetready wrote: repost..my opinion is we'll see somewhat of a short squeeze on the DML shorts from the anticipation of a No vote..I believe that's what we're seeing and its leading to some FCU weakness also.
letsgetready wrote: If there is a no vote, there will likely be a short squeeze on the DML shorts.
Its my opinion, todays trading was short covering to a degree, coupled with some selling of FCU to repurchase DML, as the market prices in a NO vote.
Initially, when the merger was announced there was a 4-5% gain to be made by shorting DML and going long FCU. People took advantage of this and DML's short position rose assuming the merger would go through. They bought FCU, and would cover the DML short postion by getting 1.26 shares in Denison (Energy) when the merger went through.
The problem with this, however, was there was no guarantee the merger would go through. A No vote, would mean the DML short postion would not be covered.
Today, the market realized the merger may not happen. People sold some FCU and started covering their DML short postion. Result: not such a great day in FCU, and a very good day in DML.
In addition, in a improving uranium market, DML shorts will want to cover and lock in profits.
Result: more buying of DML.
In my opinion, DML will likely have a good week if the FCU NO vote succeeds. There may be a short squeeze of DML shorts from those went for the 4-5% arbitrage opportunity that existed with an expected merger (and shorted DML and went long FCU) but doesn't exist without the merger. We will see.