The Short Report – 15 Oct 2020

Weekly Reports | Oct 15 2020

See Guide further below (for readers with full access).

Summary:

Week ending October 8, 2020.

Last week began with the ASX200 still wallowing in Wall Street weakness, until the mood changed on the Monday when the index shot up on pre-released budget details (tax cuts, infrastructure spending). Tuesday was a waiting game, and then Wednesday saw another surge after the budget was handed down in full.

Looking at the table below, the rally appears to have sparked somewhat of a short-covering scramble. I do, however, get nervous when I see so many stocks dropping in short position simultaneously, as often this signals inaccuracy in ASIC data, remembering ASIC has to rely entirely on the shorters themselves to report their positions.

But for now we’ll take it as read, given a strong rally can explain the movements. We’ll otherwise wait for confirmation next week.

Lo and behold, Myer ((MYR)) has dropped out of the 10%-plus club, falling to 9.3% from 11.0%. More money in consumer pockets?

All other movements to the downside represent only single-bracket shifts, with the exception of FlexiGroup ((FXL)) and Hub24 ((HUB)), which have fallen to below 5% from 6.1% each.

The 5%-plus shorted table reduced by a net four stocks last week, with EML Payments ((EML)) debuting to join fellow fintech Zip Co ((Z1P)) towards the bottom. Remember when Afterpay ((APT)) was one of the most heavily shorted stocks? Much blood spilt.

The only other stock to shift upward in shorts last week was Galaxy Resources ((GXY)), likely as a result of Elon Musk warning new batteries are going to require more nickel and less lithium.

Let’s see what happens next week.

No Movers & Shakers.

Weekly short positions as a percentage of market cap:

10%+
WEB   14.9
IVC     10.2


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