Replies to post #16997 on QS Energy Inc (QSEP)

[jaymark]

Thanks Moorea9, a few temporary intraday lower prices helped me get more shares! I just found it odd to be pointed out so often if it was basically meaningless apart from an bit of up and down on a single day.

[pandavoine]

All they're doing is giving us shareholders the ability to buy at lower prices during the day... like I also did today.

[As I See It]

moorea9,

Thank you for remembering my posts. And, thank you zeroedin and jaymark for having the intellectual curiosity to question the "daily short volume" statistics that are so frequently posted on this board.

Let me start by saying again that the "daily short volume" statistics are probably one of the most misunderstood numbers cited on message boards like this one. Most of what is reported as a "short" sale is really a regular sale from a long position that for some technical reasons, that I will give below, is reported as a short sale. There is no large short position in STWA. As reported in the FINRA bi-monthly report the "Equity Short Interest" as of 1/30/2015 was 50,618 shares.

http://otce.finra.org/ESI

That's right! The number of STWA shares sold short was a paltry 50,618. There is probably little if any actual shorting on a daily basis. But, how can that be? How does that square with the numbers that zerosnoop, yankeedave, and others have cited from a website giving "daily short volume" that indicates millions of STWA shares being shorted over the last year?

Rather than repeating my explanation from past posts, I've found another excellent post dealing with this topic that I will share below.

An explanation of Finra's daily short volume.

(Courtesy of a post made by pantherj)

The daily short interest report from FINRA is as widely misinterpreted as any report ever put out. Yet, once a few basics are understood, it becomes very logical. The huge short volume seen in the daily reports are almost instantaneously covered; within a few milliseconds or a few hours at worst. The best explanation of this report, that I've ever seen, was posted by "Dave Patch" of "Investigatethesec.com."

Posted by: patchman Date: Wednesday, March 03, 2010 6:31:31 PM
In reply to: fourkids_9pets who wrote msg# 648 Post # of 951

Short Sale Volume Reporting’s are deceiving.
I spoke to FINRA today and found out some very interesting things that until now I did not fully understand. I knew there was something wrong with this transparency of information but was not 100% sure what it was. I think I have my answer and it was enlightening.

I was first directed to the Notice to Members memo dated 9/29/2009

www.finra.org/Industry/Regulation/Notices/2009/P120045

The individual I spoke with wanted to make clear that to maintain proper trade volume reporting accuracy, a trade with multiple legs in the trade would only be reported once in the volume reports. The example given would be.

Investor A is long 100 shares and wants to sell. They enter the order through their broker that is routed to a market maker. That market maker will go out and sell the stock into the market before they have bought the stock from you/your broker to close out their account. They do not take possession first as there is no guarantee they can sell the order into the market. By this Notice, the actual sale INTO the market is a short sale because the market maker sold the stock into the market BEFORE they had purchased the stock from you. It is a technicality since they know their position will be closed out minutes later when they go in and buy your shares. To avoid doubling up on trade volume and distorting the picture, only the sale into the market (consolidated tape) is recorded and not the second leg which was the sale transaction between seller and market maker.

So, this is why the short sale volume is high but also why the FTD’s and bi-Monthly short interest reports are not showing any indications of this volume. The short isn’t really a short it is the execution of a long sale by a market maker.

I hope this helps. My suggestion is to completely ignore the "daily short volume" report. It is a meaningless number for our purposes. I think that longs should take comfort in the fact that there is no real "shorting" going on. Nobody that believes STWA's prospects are poor is willing to put actual money on that bet.