Anavex Life Sciences Corp (AVXL)

[Investor2014]

I have no idea what you are thinking here.

Understanding the Difference Between a Short Squeeze and Short Covering

Contrary to a short squeeze, short covering involves purchasing a security to cover an open short position. To close out a short position, traders and investors purchase the same amount of shares in the security they sold short.

What part of my message is fiction?

For George be correct that shorts are covering, the price of $AVXL should be going up rather than down.

An Example of Short Covering
Let's say the short interest in company GHI is 50%. Suppose many traders and investors are short from $50 due to bad earnings, and the stock is currently trading at $35. However, over the next quarter, the company reports stellar earnings and doubles in value to $70. Since many traders are short, they would need to cover their short positions to limit their losses; this creates buying pressure on the stock and causes the price to increase to $80.