all EV stock jumped +10%

[Biturbowned]

This has nothing to do with shorts being in control and everything to do with dynamic hedging being done for options by market makers.

Market making mechanics 101
If shorts were in control, they would be offering me shares for $9.95 and not $14.52.

Longs control this company. Shorts own nothing and are on the hook for infinite losses.

I don’t agree, shorts definitely are in control, 66% of all shares were short yesterday.

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[MidnightRivian]

I don’t agree, shorts definitely are in control, 66% of all shares were short yesterday.

Short volume does not equal short interest.

You need months and months of short volume between 60%-70% to really make an impact. 50% short volume is the normal.

Short interest is what you should look at.

Short interest has been going down even before the news release.

Some shorts have closed, price popped up.

New shorts have been opened to capitalize on options volatility and temporary shorts have been opened by market makers for dynamic hedging which will be closed / bought once puts are expired / sold to close.

Now that volume is up, it’s even easier for shorts to exit.

Start tracking short interest. Short volume is a lot of noise.

 

[MidnightRivian]

I don’t agree, shorts definitely are in control, 66% of all shares were short yesterday.

Here is a good read on volume versus short volume.

Understanding Volume:

PREFACE

I am going to break down how market volume is reported daily, how short volume factors in, and finally what actionable information can be extracted from these two daily metrics.


EXCHANGE REPORTED VOLUME

Each exchange records its number of trades, referred to as volume, in real time and in a finalized (corrected) daily report. The total sums of those volumes from each exchange is what makes up the reported daily volume you see on your stock app or on Yahoo Finance.

There are three types of volume; Total Volume, Short Volume, and Short Exempt Volume. Short Exempt Volume is a short trade that is exempt from restrictions on short trades. On days when a stock is short sale restricted you can only short at a price higher than the last trade or when the stock price is climbing. Market Makers can mark shorts as exempt and trade them lower. For our purposes, short exempt volume is just a second type of short volume.

SHORT VOLUME

Most people on this board think of short volume as a measure of how much shorting traders are doing, but that is fundamentally incorrect.

Nearly all trading done on the market today goes through market makers. Our financial system has been built so that market makers, with special access to the exchanges stand between everyone trading and fills the orders. When you put an order in with your broker, say Fidelity, (who then may or may not pass the order to their clearing firm if they aren't self-clearing), that order is then sent to a market maker. The market maker then fills the order from their own pocket. If you want to buy, they sell you their share, if you want to sell, they'll buy your share. You aren't actually trading directly with another retail investor, you're trading with a market maker.

There are many market makers and they compete to fill the orders from brokers. Market Makers take their revenue from buying high and selling low the shares sold to them and bought from them. Ideally, when you sell a share, and someone wants to buy a share the market maker sees the two orders, buys the share at $100, then sells the share to the other person for $100.01. They use large volumes of trades to skim off cents or fractions of cents on each share traded. To justify their existence, they provide the service of fast trades, accurate price quotes, and competition between market makers keeps them from over charging. That's how it works on paper at least.

A short is effectively a debt. A promise to buy, an IOU. That's what's reported in short volume, how many trades were people buying IOUs. When you buy a 1 share, you buy from a market maker and they give you a synthetic share, an IOU. They are in debt 1 share. **Nearly all buys are short volume according to the exchange**, as the market maker is selling the retail trader one pretend share and promising to hand them a real share later. We'll dive down that rabbit hole a bit more later.

Read more about buys equating to shorts in this whitepaper

https://squeezemetrics.com/monitor/download/pdf/short_is_long.pdf?

According to RegSho

https://www.sec.gov/investor/pubs/regsho.htm

The market maker is supposed to buy the share (and clear their debt) within seconds, but they have up to six days (T+6) to actually buy that share before they lose their ability to short more. They have up to three days (T+3) to settle the trade, which involves processing the funds through the broker or clearing firm. When the money enters the Market Maker's bank account, they have to deliver the share they owe to the broker before the end of the trading day or it will be declared as a Failure To Deliver (FTD). FTDs have to be resolved (a share delivered) within the next 3 days (3 days to settle, 3 days in FTD gives a total of six days for T+6).

To slightly go off topic for a moment, it is at this point, during the second half of the T+6 period that an FTD is reported and a short share (a debt) can be delayed by 35 calendar days from the settlement (the first half of T+6) before they have to deliver the share they owe.

To break this down a little more: when you buy a share, your money is promised to the market maker but an actual buy does not yet hit the exchange. You get your share (apparently) but your money sits in a safety box until the trade is settled. The market maker then has 3 days to actually go out and fill that buy order on the exchange. They then buy the share at the time that will maximize their profits, if they ever buy a share at all. Therefore, when we buy a share, they get stuck with debt, but regardless if we buy or sell our shares, the market makers make money.

HOW WE CAN USE SHORT VOLUME AND TOTAL VOLUME

Based on the information above, a normal healthy stock should be trading at around 50% short volume. 51% short volume represents more buy pressure, while 49% short volume represents more sell pressure. Buy/sell pressure though doesn't necessarily affect price, as market makers can hold off on fulfilling the other end of the trade up to 6 trading days, or even 35 calendar days plus 3 trading days. On top of that they can fill orders in dark pool, where the trade wont affect price, or borrow shares, fulfilling their short with a new short and not changing the price.

All along that gumdrop trail are also opportunities for bad accounting and bad practices to accidentally mark short trades as long or loan out a share multiple times. A tiny trickle of extra shares getting born every day, by accident and intentional deception, diluting the value of a stock.

Then what value, if any, does short volume offer us? Well, it gives us one fantastic datapoint, it tells us approximate buy volume. Either a trader wanted to buy a share, or a trader wanted to borrow a share (which they have to still buy sooner or later).

 

[LetsgoRIVN]

Are we going to give back all the gains already ? :-(

 

[MidnightRivian]

Short term is all noise.

Focus on movement between leap option expiry.

I would be looking at price movement every 6 months on Jan / June.

As long as company is trending in the right direction, the stock will also trend in the right direction.

 

[LetsgoRIVN]

A big news and big move like yesterday should be followed by a confirmation today. Just like it happens with big moves down!

 

[MidnightRivian]

Don’t confuse consolidation with continuation.

Both have their pros and cons.

Just like dual motor / quad motor but only Rivian owners know what that’s about.

 

[LetsgoRIVN]

Not confusing anything!
high of post news was $18 and it’s trading at $13.7 now. That’s 24% drop and call it whatever you want ! ?

 

[MidnightRivian]

We’re up 42% for the week and consolidating looking to find support. Remember I said higher lows and higher highs. We broke our resistance and now we’re looking to turn that into support.

we found decent support; now we grind for 35 days allowing market makers time to settle our shares and eventually fail to deliver for up to 35 days.

Just chill till August and then look at price action around next earnings.

We still have a gap to fill around $12. Don’t freak out if we drop to that level and make 17 posts about it.

That will be my signal to load up.

 

[RivianRunner]

We are all enthusiasts and not egomaniacs.

Well, I have definitely met a few people, a small minority, who were both of the above!

 

[LetsgoRIVN]

Market ATH, Tesla above $200 but Rivian drops from $18 to $13 in 2 days. For some people NO shorts are not in control and it’s business as usual LOL

 

[Biturbowned]

From $15.12 at the open to 13.75 an hour later. Market cap lost $1B in 1 hour after the bleed out yesterday. Makes sense.

 

[LetsgoRIVN]

From $15.12 at the open to 13.75 an hour later. Market cap lost $1B in 1 hour after the bleed out yesterday. Makes sense.

That was a clear short attack !

 

[White Shadow]

Market ATH, Tesla above $200 but Rivian drops from $18 to $13 in 2 days. For some people NO shorts are not in control and it’s business as usual LOL

It's disheartening, but the rebound is going to take time. Personally, I just hope it actually happens.

 

[ThumprMN]

Perfect time for those who felt like they missed an opportunity to buy low to scoop up some shares.

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