Replies to post #24020 on Telefix Communications Holdings Inc. (TLFX)

[BeachBum]

Market makers do not commit to cover a transaction that may not take place therefore when a market maker posts a transaction absent of shares, it will be short. When they get the shares from the broker, the trade is reconciled. This often happens intraday.

You argument that the stock is being shorted in anticipation of a bearish decline is no different than me claiming a short squeeze is coming because market makers will be unable to cover their trades against a bullish run.

Here is your counter>>

The essence of a squeeze is that brokers who have loaned out the stock are now requiring short-sellers to return the shares, meaning that the shorts must buy the stock themselves or risk a forced "buy-in" by the brokerage firm. Because brokerage firms aren't very picky about paying a good price on such occasions, the stock can spike dramatically, especially since market makers responsible for providing liquidity for a stock often see forced buy-ins as an opportunity to make a quick killing by temporarily raising their prices. Forced buy-ins may result from a trade going so much against a short-seller that he gets a margin call from the broker to either put up more cash or risk losing the position. Other times, it simply represents a change in short-term supply and demand exacerbated by increased trading volume and rapid turnover.