Massive short covering for SuncorWhen Mr. Doom and Gloom has good news, maybe things are looking up.
In the first half of December, Shorts covered $4.425 billion (with a B) of short positions on suncor. That moved the short position needle from $5.5 billion to $1.1 billion which is massive.
To put that magnitude of the cover in perspective, the next largest covered position on the TSX for the same period was Manulife at $503 million and then Great West Life at $266 million
I openly admit that no matter how much DD that I perform, I just can't figure out the oil industry. There are simply too many external variables that don't have anything to do with specific company metrics that dominate the share price movement.
One of the things that I think I know after watching such things for the past 40 years is that when there is massive short covering (9x the next highest covered position and 16x the next largest covered position) of a stock in a short period of time, it is a pretty good indicator that the downside pressure is likely over.
The pros like to short and then cover as quickly as possible and then move on to the next low hanging fruit. However, the pros don't like leaving any crumbs on the plate so they typically don't buy back too soon. The pros will eventually return after the retail investors have bid the share price back up to the point where it once again becomes easy pickings for the shorts.
A gloomy market may push the SU share price lower for awhile, but I don't think the downside would exceed the macro as the shorts appear to have pretty much moved on.