Innovation Pharmaceuticals Inc (IPIX)

[loanranger]

A couple of years ago FINRA began publishing a report called the Daily Short Sales Volume Report. It was supposed to enhance the transparency of the mechanics involved in market maker activities, but instead it has caused nothing but confusion since it became publicly available. Some of that confusion surfaced in Karin's article.

Short interest for all public companies is reported twice a month in something called the Bi-Weekly Short Interest Report. The number in that report represents the number of shares that have been sold short but not yet covered. In terms of trying to assess how the short side of the market is viewing a stock, it's the only source of valuable information.
A few reports have been issued since Karin's article. Here are the numbers for the last 4 weeks:
12/1 - 874,458
12/15 - 1,201,499
12/31 - 1,161,317
1/15 - 1,319,833
Finra shows an average daily volume of 813,302 shares, which results in 1.62 days to cover (short position/avg daily vol.). Basically this means that, if everyone with short positions were to cover (and there was no other trading activity...obviously it's just a statistic without a likelihood of actually occurring), all of the short positions would be covered in 1.62 trading days.
If you take a look at some other companies you'll find that that is a relatively small number, which can be interpreted to mean that the market doesn't find it an attractive stock to short. It also means that should an extremely positive piece of news come along the resultant covering of short positions isn't likely to have an explosive effect on the share price. Positive yes, explosive no...the short interest just isn't big enough to do that.

Unfortunately, and ironically, the Daily Short Sales Volume report does not give a clear picture at all of the actual short positions reported in the bi-weekly report. The volume report includes market maker activities that don't relate to what we normally think of as short selling. I can't do the explanation justice, but suffice it to say that one would be wise to totally ignore the Daily Short Sales Volume report and any of the websites that present that data as if it actually represents short selling that leads to short positions....it doesn't. In fact, with a little bit of effort you can find days where the share price movement seems totally at odds with the "short volume". Take a look at January 20 in the table in Karin's article for instance...how much sense would it make for the price to close within a penny of the high for the day if 43% of the trades were sales sold short?

None of this is meant to disparage Karin's article in any way. I understand the desire of investors to fight back against articles like the last poorly crafted bash, but I felt that the issue of the actual short positions in CTIX could use some clarification, especially in regard to the use of short volume data in support of ANYTHING...it's of no value at all.

Hope this helps a little.


GL.



edit:
Get the data right from the horse's mouth.
http://otce.finra.org/ESI