A new theory - gentle investors/readersRecently one reader pondered why Home Capital was having such difficulty breaking through the $39 barrier. There seems to be endless holdings for sale at $39. Everytime the price rises to $39, there is significant volume and the price drops back down.
At August 31/05 short sale outstanding were 430,000. At September 15/05 - 510,000, an 80,000 increase in 15 days.
There are significant investors who think HCG is overpriced and act on their convictions, now at $39.
WHO IS GOING TO BLINK FIRST?
When the short sellers reach their limit and have to cover their short positions, we will see sharp increases to over $40.
On the other hand, if the short sellers wear down the 'longs', the price may well be driven down to where holders decide to get out and accelerate the decline in price.
The third quarter results may trigger.
P.S. I am concerned about significant sales by two insiders in September.