My understanding of shorting in the OTC/Pinksheet market is as follows:
1) No retail traders can short OTC/Pinksheet stocks or stocks under $5 for that matter
2) Generally a combination of market-makers and small hedge fund sell short OTC/Pinksheet co's in order to drive PPS to .0001 where the stock becomes trapped
3) Co's only assist the "shorting" activity with heavy dilution since they are not profitable enough to generate sufficient working capital and try and get as much as they can before .0001
4) The "Shorts" wait and watch the dilution which only assists them or even a R/S which adds another 50-90% gains to their position
5) When the "Shorts" (market-makers & small hedge funds) decide to cover they can do so easily & safely at .0001 and .0002 due to the significant volume required to move a company's stock out of this range.
Well, that's how I understand it.
In some cases, such as LCRE, they nearly had it "trapped" and then it broke upside due to 1) forthcoming software launches embracing handheld devices 2) Test pilots 3) anticipated business ventures 4) No R/S 5) Limited dilution etc...etc...
If they sense that the "trap" is not going to work, they begin covering which triggers a "significant rally".
LCRE could be on the "cusp" of such a major rally and only time will tell.
Just my 2c worth (if only we'd head there...lol)
